五粮液财务分析报告作业(英文版)

WULIANGYE YIBIN CO.,LTD

Corporate Finance Assignment

——Analysis report of

WULIANGYE

YIBIN CO.,LTD Group members：

杨旭祥 0920010304

张菁 0904020085

杜泽薇 0917010020

林绳业 0920010156

汪雪霁 0920010235

刘欢 0911030045

December 5, 2010

Total words :1999(without appendix)

Contents

1.Abstract····································page 3

2.Introduction to the company···················page 3

3.Financial ratios······························page 3

4.Calculations and analysis······················page 5

5.Conclusion·································page 12

6. Appendix ·································page 13

1. Abstract

Our group analyse the major ratios of Wuliangye by using techniques of time-trend analysis and peer group analysis.We choose the year 2006,2008 and 2009 to do the time-trend analysis.As for the peer group analysis, we choose Luzhoulaojiao, Guizhoumaotai, Shanxifenjiu and Tuopaiqujiu to get the industry average level and make a comparison.

2. Introduction to the company

Wuliangye Yibin Company Limited is located in Yibin Sichuan province.Wuliangye is one of the most famous white spirit and it is a well-known trademark in China. The company distributes its products all over the domestic market and exports to overseas markets.It also produces other products.As a whole,Wuliangye is a company with deep enterprise culture.

3. Financial ratios

(1)Short-term solvency

Current ratio: (current assets)/ (current liabilities). The higher of the ratio,the richer of a firm’s capital turnover and the stronger of the firm’s solvency.Current ratio is a firm’s representative indicator to evaluate the solvency.The world’s universally acknowleged criterion is 2:1.

Quick ratio: (current assets-inventory)/(current liabilities).It is a measure of a company’s liquidity and ability to meet its obligations.The general criterion is 1:1

(2)Long-term solvency

Total debt ratio: (total assets-total equity)/(total assets).For the creditors，The higher of the firm’s total debt ratio, the more liabilities it has and it may have a high potential profit margin,but at the same time, they have a high loan risk to take on.

(3)Asset Management, or Turnover ,Measures

Inventory turnover: (cost of goods sold)/inventory.The faster this turnover is, the stronger the liquidity will be, so high inventory turnover ratio shows that the firm is able to change directions quickly.

Receivable turnover: Sales/(accounts receivable).It represents the ability that the company receiving their payment.The management efficiency is good when the ratio is high.

Total assets turnover: Sales/(total assets). It measures how efficient a company use its assets.

(4) Profitability Measures

Profit margin: (net income)/sales.It measures how much the company can earn per dollar.

ROA: (Net income)/(total assets).It gives the idea that how efficient the management is at using its assets to generate earnings.

ROE: (Net income)/(total equity).It measures a company’s profitability by revealing how much profit a company generates with the money of shareholders have invested.

(5) Market Value Measures

Price-earnings ratio: (Price per share)/(earnings per share).It measures how much investors are willing to pay per dollar of current earnings,high PEs are often taken to mean that the firm has significant prospects for future growth.Of course,if a firm has no or almost no earnings,its PE would probably be quite large.

Market-to-book ratio:( Market value per share)/(book value per share). It compares the market value of a firm’s investments to their cost.