Financial Diagnosis And Countermeasures Of DL Geological Exploration Company Under Harvard Analytical Framework

The impact of the new coronavirus epidemic has led to a significant slowdown in global economic growth and increased downward pressure on domestic and foreign economies.In addition,influenced by national macro policies and the lowering of market entry thresholds,the domestic engineering survey industry has become increasingly competitive and survey companies are facing unprecedented challenges.In this paper,DL Company,a wholly state-owned company with a long history of establishment,comprehensive qualifications,a wide range of industries and a good reputation,is selected as the diagnostic subject.A comprehensive diagnosis is conducted in conjunction with the Harvard analytical framework.Firstly,a strategic analysis was conducted to identify the impact of changes in external macro conditions on the implementation of the strategy through PEST analysis,and to identify its strengths and weaknesses through SWOT analysis.The second is accounting analysis,which identifies the accounting policies and estimates for key accounts,focusing on accounts receivable,fixed assets and long-term equity investments.Again,the financial analysis focuses on changes in indicators related to financial risk,operating capacity,profitability,earnings quality and development capacity,selecting the company’s financial data from 2016-2020 for vertical comparison,as well as selecting two strong and representative survey companies in both industries for horizontal comparison and analysis.In order to be able to truly reflect the financial health,cash flow was introduced for a comprehensive Dupont analysis.Finally,a prospect analysis was conducted to qualitatively analyse the internal and external challenges and opportunities.The results of the financial diagnostic are summarised in a hierarchy of strategic,accounting,financial and outlook.The results of the strategic diagnosis include: reliance on reputation is effective in attracting customers,team building is unreasonable,and the ability to withstand market risks is weak;the results of the accounting diagnosis include accounts receivable management needs to be strengthened,fixed assets are inefficiently utilised,and the book value of long-term equity investments is unrealistic;the results of the financial diagnosis include financial risks are generally controllable,cost control is beginning to bear fruit,earnings quality needs to be strengthened,and cash flow is short.Finally,based on the diagnostic results,strategic improvement suggestions were made to optimise the staff structure,focus on talent training and cultivate core competitiveness;accounting improvement suggestions to strengthen the management of accounts receivable and fixed assets and focus on the management of long-term equity investments;financial improvement suggestions to strengthen the construction of financial systems,implement comprehensive budget management and enhance capital management;and prospective improvement suggestions to cultivate sustainable development capability.