Financial And Risk Analysis Of Feed Industry Among Listed Compannies In China

With the capital market rapid developing in our country, many public companies and group of companies turn to capital oriented operating from asset oriented operating. Under this economic situation, financial management will become the kernel of business management and the most important parts of financial management are risk management and prediction based on financial analysis.Our country feed industry started in the late 1970s and rapidly developed in the middle of 1980s.With over 20 years' development, China has become the second biggest country among the countries that produce feed and been only inferior to the United States. Feed industry has become one of most important industries in our country and plays more and more important role to Chinese economy. As outstanding ones of feed enterprises– feed public enterprises, although they are small proportion of feed enterprises presently, most of them have strong influence in the feed industries market. Their developing and competences have direct influence on the development of our country feed industry.This paper will choose four feed public companies from the web http://www.stockstar.com to do the financial analysis and they are Zheng Hong Technologies, Xin Xi Wang, Tong Wei, Zhong Mu. This paper will do the financial and risk analysis based on the financial report and financial material of period during 2005-2006 for above four companies. The financial analysis includes debt paying ability analysis, profitability analysis, cash obtaining ability analysis, developing ability analysis and main business characteristic analysis. Risk analysis includes fixing quantity analysis and determining the nature analysis.With the financial analysis result, the following conclusion can be obtained. The debt paying ability of feed public companies is below average level and it should be improved in the future. The profitability of feed public companies is better than the average level. The cash obtaining ability of feed public companies is inferior and it should be improved. Feed public companies developed well in 2005 but their development was decelerated by material cost rising and product price falling in 2006. The business characteristic of feed public companies is brilliance, however it also indicate that there is potential risk for the companies'development. So the feed public companies should develop with diverse business. From the risk analysis result, it can be concluded that feed public companies has inferior risk defending consciousness and it should be improved in the future.This paper will give several suggestions to feed public companies for financial management and risk prevention improvement. The first is to enhance receivable account management and debt management. The second is to enlarge the business scale and benefit from scale economy. The third is to establish own research center and develop technology innovation. The fourth is to train employees and improve stall quality as well as optimize the mechanism of employee appraisal and prompting.Based on the microcosmic financial analysis on the feed companies and the macroscopical country economic background, we can conclude that china has huge quantity of feed companies but has few strong feed enterprise groups. There are many challenges and opportunities for china feed industry. The rapid economy development and increasing people life level will provide huge market for our country feed industry. The feed industry will have great development scope and bright future in our country.