Research On The Relationship Between Advertising Expenditure And Financial Performance Of Pharmaceutical Manufacturing Listing Corporation

Advertising as an important marketing tool has been valued by enterprises. Pharmaceutical manufacturing as one of the closet industry linked to our daily life, in order to achieve their own development better, is expanding investment in advertising to enhance the corporate image, reputation and business performance. There is no doubt that advertising spending and business performance has inherent correlation. On the one hand, advertising will expand the market share of their products and services; on the other hand, advertising spending as the cost of sales has a direct impact on corporate profitability. This paper mainly studies the relation between performance of listed pharmaceutical manufacturing companies and their advertising spendingThis paper firstly describes the concepts of advertising spending and corporate financial performance as well as their relations. At the same time, it gives indicators and methods of measuring the intensity of advertising expenditures and financial performance.Secondly, it describes the basic situation of Chinese pharmaceutical manufacturing listed companies and screens some companies out as representative study samples to make statistical analysis of their indicators of advertising expenditures and financial performance from 2011 to 2013. The following step is to build econometric models of itemized financial performance and overall financial performance, and to measure the company’s sub-metering sample financial performance scores and overall financial performance score. Finally, the paper analyzes the correlation between the advertising expenses and the financial performance of the listing Corporation in the pharmaceutical manufacturing industry. Then according to the results of the correlation analysis it reaches a conclusion.The basic conclusion of this paper is that the advertising expenses of the listing Corporation of the pharmaceutical manufacturing industry in China between 2011 and 2013 shows a growing trend, and from the view of the classification of expenditure scope of listed companies, their investment in advertising project began from centralizing low expenditure to decentralizing high expenditure. The advertising spending is significantly positively related to the profitability, while a significant negative correlation with the debt service ability. The advertising expenditure ratio 1 is positively related to the company’s overall financial performance, which means it can improve the financial performance of the company. And the proper scale between operating revenue and advertising spending can improve the financial performance of the company; while advertising spending ratio 2 which includes all the company’s income and expenses is not significantly correlate with the company’s financial performance.