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Business analysis of China Changcai Company
be able to reduce its financial expense for 2003 compared with that of in 2003.
f. We assume the impairment loss for tangible assets have been fully accrued in 2003, thus there are no further loss for 2003.
The result from above forecast, for 2003 Changchai will make a big improvement of its performance compared with 2001 and 2002, but the company still suffered in loss.
The major reason still is the bad debt loss for the heavy burden for the company to further development.
CONCLUSION & SUGGESTIONS
From above analysis we can find the key issue for the company is attribute to the piled accounts receivable from the give loose to the credit sales. A company to sacrifice the operation cash flow and only focus on sales volume is short sight even dangers.
Strictly control the credit policy is highly recommend, the management should do effort to lower down the accounts receivable¡¯ balance and settle the aged A/R as soon as possible, so as to mitigation the loss on it and to get cash back early, support the company¡¯s further development.
Following the market and competitors changes, the Changchai should further restructuring its product composition as well as its industry orientation, and input many efforts in research and development of high-speed multi-cylinder diesel engines, combine harvesters, agro-vehicles and light trucks. It also needs to explore opportunities to cooperate with famous domestic and foreign companies in term of product, technology asset restructuring, relevant business, and etc.
JOhn is a IMBA student in Lingnan(University)College of Sun Yat-sen University, China