Research On Cash Flow Management Of MJ Company

Affected by the COVID-19 pandemic,US trade protectionism and unilateralism are on the rise.The US has provoked a trade war,suppressed Chinese high-tech companies,and imposed tariffs on goods imported from China.In addition,the foreign new crown pneumonia epidemic has been slow to be controlled,the virus is still raging,and the epidemic is still very serious,causing a negative impact on the global economy and leading to a global economic recession.Although my country controlled the epidemic earlier and resumed work and production,many enterprises regardless of size are facing cash flow problems,and they are on the brink of business failure.To evaluate the pandemic impact on business cash flow,the institutes from top universities surveyed among some SMEs,and the survey revealed that approximately six-sevenths of enterprises can maintain the normal business operation for 3 months most judged by the cash and its equivalents they own.In such cases,the authority and enterprises are paying more and more attention to the management of cash flow.By managing cash flow,the corporate board and senior management hope they can prevent and cope with the shortage to help business operation.Under the current economy,enterprises need to ensure their production and operation could empower themselves back and yield more profit to keep their cash flow running smoothly.Based on the above,this paper took MJ Company as the research object to analyze its cash flow management.Referred to relevant theories and the views and conclusions from other scholars,the case study method can help conduct a financial evaluation of MJ’s current management status.And in the respect of business strategy,this paper discussed the problems and their causes in MJ’s cash flow management,and brought forward a optimizing solution.Meanwhile,this paper also predicted the outcome of the solution and prepared a precaution for its implementation.There are two conclusions drew by analyzing and studying MJ Company.On the one hand,enterprises that intend to have a healthy cash flow must introduce the concept of value creation into their business strategies.Corporate value creation is the main resource of sustainability for a business.MJ’s strategy focused on a low-level target of profit maximization.Hence,MJ should enhance its cash flow management by introducing the concept of value creation to yield more profit.On the other hand,a successful cash flow should meet two standards: keeping cash flow smooth and creating value.Analyzing MJ’s cash flow,its free cash flow has been negative in the last three years,which exposed that MJ failed to add more value through its production and operation.Thus,when managing cash flow,enterprises should keep it healthy.In the long term,the management based on value creation could yield more profit to the enterprises.