Analysis Of Financial Statements Based On The Perspective Of Development Strategy

At present, financial statement analysis has become an important task of management, financial statement analysis is also increasing emphasis on the combination of strategy, through the analysis of the macroeconomic environment and industry environment, and combined with the financial data of company, we can find out the position determination of the company in the industry, the development strategies choice and the results of strategy implementation. In this paper, we build a financial statements analysis framework based on Harvard analysis framework, and take Ningbo A Pharmaceutical Co., Ltd. as an example, put the theory into practice, analysis the reasons that cause the company’s development bottlenecks and give some recommendations for strategy improvement.Ningbo A Pharmaceutical Co., Ltd. was established in2004, it is a professional company engaged in pharmaceutical raw materials, intermediates and formulations development, production and marketing. It now has seven subsidiaies in Zhejiang, Anhui, Shanghai and other places, they are responsible for the development, production and sales of the product. Development strategy adopted by the company is the integration strategy, product development strategy and related diversification strategy, but in recent years through revenue and net profit data can be seen A company’s development encountered a bottleneck, revenue stop growing, net profit even in a decline. Therefore, in this paper we build a financial statements analysis framework with the perspective of strategy view based on Harvard Analytical Framework, analysis A company’s strategy choice, strategy implementation and financial data comparison analysis, solve the problem of development stagnation.First we analysis the lack of the traditional financial statement analysis framework and the advantages of Harvard financial statement analysis framework, and build a new framework which is more focus on development strategy with three parts:strategy choice, strategy implementation and financial data analysis. Also we describes the relationship between the financial statements and development strategies, lists characteristics in the balance sheet, income statement and cash flow statement that reflect to the different development strategy and competitive strategy. After industry environment analysis, judgement of company’s life cycle, industry’s competition capacity analysis, and SWOT analysis, we concluded that the selection of development strategy of A company is scientific. However, the implementation of the strategy in the process of developing was not significant, A company’s integration strategy is well taken placed, but the implementation of product development strategy is not good, and diversification strategy not even begun. With the analysis using financial statement analysis tool, we find out that the company is using a radical financial strategy while the debt paying ability is poor.After understanding the main reason that cause the company’s development stop is because of the problem of strategy implementation and high risk of debt payment, we further analysis the revenue and bad assets, we think the company’s earning is in a high concentration of customers, and A company’s actual controller occupied money to invest in real estate market, so the actual controller do not pay enough attention to the development of the enterprises. Based on all above, we give some recommendations for development strategy improvement.At last, summaries the disadvantages during the case analysis.