Study on the Profitability of Fenjiu Group Based on the Financial Index System

Abstract

In recent years, the Baijiu industry develops rapidly and contributes to China’s GDP. However, with the market competition becoming more and more fierce, the Baijiu industry may be impacted. Facing the potential risk, the Baijiu industry has to improve the profitability to fit the changeable market. Fenjiu Group’s micro and macro analysis results are presented in this paper as an example. Literature research method, case analysis method, and experiential summary method are taken for deeper research. Through the calculation of Fenjiu Group’s financial index, Fenjiu Group’s gross profit margin showed a small fluctuation from 2015 to 2018. Fenjiu Group’s ROTA declined from13.2% to 12.8% between 2018 and 2019, indicating the growth of profit can't match the recent expansion of Fenjiu Group's asset size. In terms of investor profitability, Fenjiu Group’s ROE grew from 11.8% to 26% between 2015 and 2019. According to the above analysis, some suggestions are put forward to the existing problems, such as brand diversification propaganda, optimizing the capital structure, broadening financial channels, and controlling the expansion of asset size. The research results of this paper hope to help Fenjiu Group improve better and enhance the business value in the future.