Research On The Impact Of Diversification On Financial Performance

Diversification management strategy is an important choice in the process of business development.At present,the domestic economy is in the process of continuous development.Most of the enterprises have the internal power to carry out the diversification strategy,and diversification is an important node of the sustainable development of most enterprises.But up to now,there is not a unified conclusion on diversification research in our country’s economic field,and there are still many deficiencies in the diversification development of enterprises.Whether the diversification strategy can affect the financial performance of the enterprise,and what is the influence path? Whether to choose diversification and how to do so are the questions that must be considered when we explore the impact of diversification on financial performance of enterprises.This paper begins with a detailed discussion of the current research background of diversification and the significance of exploring diversification,and then quotes the research status of experts at home and abroad on diversification performance.Then it defines the concepts of related diversification,unrelated diversification,diversification management classification and measurement,financial performance and so on.Then,it introduces the basic situation of Wintime Energy,from the reasons and choices of Wintime Energy’s diversification strategy,to understand its diversification strategy.And choose long-term liabilities and financing,investment cash flow to analyze the impact of diversification on corporate financial performance path;Then,by relying on the comparative analysis method and the data ratio analysis method,the financial indicators and non-financial indicators are used to compare and analyze the profitability,solvency,operating capacity and growth capacity of the four financial performance indicators of the enterprises during the operation period of the relevant diversification and non-related diversification strategy,and the Z scoring model and the Tobin-q value are used to make an overall analysis of the risks and values of the enterprises.Based on the above analysis,this paper finds and summarizes the influencing factors of Wintime Energy’s diversification on financial performance.First,Wintime Energy diversification financing cash flow is too high and a large number of debt backlog;Secondly,it is difficult for Yongtai to play a synergistic role due to its ambiguous strategic positioning of diversified management of energy.Third,Wintime Energy unrelated to the diversification of business expansion over the lack of professional management.In view of the problems existing in Wintime Energy diversification,this paper puts forward some suggestions so that Wintime Energy and other similar enterprises can effectively avoid or control the risks brought by the diversification,and maximize the favorable situation and role of the diversification strategy.Through the analysis,we find that the beginning of Yongtai’s diversification strategy is affirmative,but the unrelated diversification of Yongtai’s energy development reduces the financial performance,and the unrelated diversification failure is caused by many factors.The research of this paper is helpful for Wintime Energy to pay more attention to its diversification strategy and prepare for its long-term development.I hope the results of this paper can also provide reference for other diversified enterprises to guide the stable and sustainable development of diversified management.