Strategy Prospective Financial Analysis

Financial statements provide information of the enterprises' financial status,operating turnovers and cash flows of the fiscal year.Learning to use these information is of great help to summarize previous performance and make appropriate predictions accordingly.However,traditional financial analysis framework focuses on number and ratio too much,and always ignored the industry situation,the corporate's strategy and other non-financial information.In consideration of this situation,this paper chooses Lenovo as example to make a financial analysis from strategic view by analyzing the strategy's reasonability,the ways of strategy implementation and the outcome of implementation.In recent years,the growth of PC industry began to slow even decline,therefore,Lenovo put forward the PC+ strategy.To realize this strategy,Lenovo acquired some subsidiaries,formed strategic alliance with multinational enterprises,built new plants,and so on.So the revenue did increase rapidly,but at the same time,the liabilities also increased a lot,and the resources are scattered.According to the 2015/16 interim financial statement,Lenovo got its first negative profit after the economic crisis in 2009.Therefore,Lenovo's financial analysis needs to be combined with strategy to get the conclusion.First,we used Porter five models and SWOT to analyze the correctness of PC+ strategy.Second,we used financial information to check whether the strategy was implemented,and came to the conclusion that Lenovo implement its PC+ strategy mainly by acquisition,strategic alliance and setting up new entities.Third,we analyzed the financial effect of PC+ strategy,and came to the conclusion that Lenovo's Aggressive acquisition strategy increased the debt burden,and huge operating cost of Moto mobility dragged down Lenovo's profit to minus.Last,we made the conclusion of Lenovo's financial and operating performance,and provided some suggestions on Lenovo's operating strategy.We hope this paper would be useful to management of Lenovo,and the analysis framework could be used for reference to other enterprises.