Analysis Of Midea Group’s Financial Performance In The Context Of Digital Transformation

"During the 14 th Five-Year Plan period,China’s digital economy has entered a new phase of development.In order to meet the new challenges,many enterprises have already started to carry out digital transformation to open up new space for economic development.The digital transformation of enterprises can not only increase their revenue,but also enhance their competitiveness and promote national economic development.Midea Group,a large home appliance enterprise in China,has been undergoing digital transformation since 2012 and has been developing through various paths.Exploring the study of the impact of digital transformation on the financial performance of Midea Group,we can fully understand the benefits brought by the transformation path and establish a link between transformation and performance,bringing reference to the digital transformation of related enterprises.Through literature analysis,case study analysis and comparative analysis,we explore the motivations for the digital transformation of Midea Group,summarise the digital transformation path of Midea Group,briefly describe the financial situation of Midea Group from three aspects: balance sheet,cash flow statement and income statement,integrate the digital transformation with the financial performance of Midea Group from 2011 to 2021 by means of horizontal comparison and vertical comparison,analyse the shortcomings of the financial performance of Midea Group in the context of digital transformation,and put forward corresponding recommendations.The study found that,firstly,intense industry competition,support from national policies,the decline in the Group’s profits and the advantages that digital transformation can improve efficiency and reduce costs have led to the digital transformation of Midea Group.Second,in terms of financial performance,a longitudinal comparison shows that digital transformation has had a positive impact on Midea Group’s financial performance,and Midea Group’s digital transformation has had a significant and stable impact on the company’s profitability and growth capacity.In a peer-to-peer comparison,Midea’s short-term solvency and growth capacity are better,while profitability,long-term solvency and operating capacity still need to be improved,and problems with Midea’s current financial performance are identified,such as high production costs,insignificant competitive advantages,high gearing and low operating efficiency.Thirdly,recommendations are made to improve the financial performance of Midea Group.In terms of profitability,digital technology should be used to reduce production costs,strengthen the construction of digital platforms,reasonably formulate multiple sales plans,develop new digital products and improve competitive advantages;in terms of solvency,reasonable financing plans should be formulated,capital requirements should be reasonably forecasted,financing channels should be accurately selected,the capital structure of the enterprise should be optimised and long-term solvency should be improved.In terms of solvency,we will develop a reasonable fundraising plan,reasonably forecast capital requirements,accurately select funding channels,optimise the capital structure of the enterprise and improve long-term solvency.In terms of operating capacity,we will improve the efficiency of operating capital turnover,strengthen the management of accounts receivable,optimise the amount of inventory held and enhance the efficiency of capital utilisation.