Research On Financial Performance Evaluation Of Konka Company’s Diversified Operation

The manufacturing industry is the main body of the national economy,and the home appliance industry is an important pillar industry in China’s national economy.After nearly 40 years of development,China’s home appliance industry has developed a wide range of home appliances,and the home appliance market has been oversupplied by the previous demand to the current overcapacity,and the enterprises are fighting price wars and pursuing cost performance,so home appliance enterprises have long faced the problem of strategic transformation.Diversification strategy provides a new choice for many enterprises in the maturity period.Diversification can enhance the core competitiveness and comprehensive strength of enterprises,but at the same time,they may also face the corresponding risks.Since each company faces different market conditions,the impact of diversification on financial performance varies greatly,so diversification needs to be carried out in accordance with the actual situation of the company.This paper selects Konka Group in the home appliance industry as a case study,which has been upgrading and transforming from a single hardware terminal development model to a "hardware + software" and "terminal + user" development model since 2016.During this period,the company has also been trying to develop new businesses.It is necessary to evaluate the financial performance of Konka and propose improvement measures from the perspective of diversification.This paper firstly explains the background and significance of the study,and summarizes the literature related to diversification and financial performance;introduces the concepts and theoretical basis of diversification and financial performance,and analyzes the mechanism of diversification affecting financial performance.Secondly,we introduce the basic situation of Konka Group,sort out the development history of Konka’s diversification and measure the degree of diversification,and explore the motivation of Konka’s diversification with related theories.Then,by constructing a financial performance evaluation system,we compare Konka with 29 other companies in the same industry,and the results show that the financial performance of Konka is at a low level in the same industry;from the results of vertical analysis,diversification has a positive impact on financial performance,and can explain 55.3%of the change in financial performance of Konka.Combining the financial index method to analyze the financial performance of Konka under diversification from 2014-2021 from five dimensions,it is found that in the context of the company’s implementation of diversification,Konka has experienced weaker solvency;unstable profitability and development capacity,poor profit quality of main business,and stronger reliance on government subsidies.In order to effectively improve the company’s financial performance,this paper proposes corresponding suggestions in terms of optimizing capital structure and improving debt-servicing ability;cultivating core competitiveness;and adjusting diversified business structure.The purpose of this paper is to evaluate the financial performance of Konka,identify the problems of its diversified business,and propose targeted optimization measures according to the actual situation of Konka,so as to provide reference and reference for Konka to enhance its financial capability and improve its business condition.