LED listed company cash flow management to be strengthened?

On July 18, Lianjian Optoelectronics announced that in order to meet the daily business development needs of the company and provide funds for the company's business development, the company intends to borrow RMB 50 million from individuals or non-bank financial institutions for a period of not more than three months. It is understood that the annual interest rate of this loan is 10%, and the relevant taxes and fees involved are borne by Lianjian Optoelectronics.

In fact, this is not the first time that Lianjian Optoelectronics has borrowed money. On June 28, Lianjian Optoelectronics announced that it had borrowed RMB 40 million from the natural person Wu Shaoyong for a period of no more than three months. The annual interest rate of this loan is also 10%.

In just 20 days, Lianjian Optoelectronics has initiated two external loans, with a loan amount of 90 million yuan. As a listed company with a total market capitalization of over 4 billion yuan, frequent external borrowing will inevitably lead investors to suspicion of its cash flow. In fact, the industry's concerns are not unfounded. The first quarter report of Lianjian Optoelectronics shows that the net cash flow generated by the company's Q1 business activities is -37,625,723.08 yuan. The embarrassing situation of "no money on the books" has forced Lianjian Optoelectronics to borrow frequently.

Cash flow management is an important function of modern corporate financial management activities. Establishing a sound cash flow management system is an important guarantee for ensuring the survival and development of enterprises and improving their market competitiveness. Measuring cash flow is a very important indicator to measure whether a company's operating conditions are good, whether there is enough cash to pay off debts, and the ability to realize assets.

Some people in the financial industry pointed out that cash flow is more representative of the profit quality of enterprises than traditional profit indicators. Therefore, cash flow control and management along with the entire workflow of enterprises has become the core task of corporate financial management.

For the LED industry, the capital chain break is regarded as the chief culprit in the end of the industry, which is also caused by the lack of control over cash flow. In 2017, the cases of Ford's, Beisen Technology and other companies failing due to the break of the capital chain are still vivid. In fact, the closure of a family company has repeatedly sounded the alarm for the industry.

In order to understand the net operating cash flow of each listed company in 2017 and the first quarter of 2018, Gaogong LED has sorted out the annual report of some listed companies and the first quarterly report of 2018 for reference in the industry.

(Data comes from the listed companies in the first quarter of 2018 and the 2017 annual report)

As can be seen from the above 43 data, the net cash flow generated by only 5 companies in 2017 was negative, and in the first quarter of 2018, the number reached 23, accounting for 53.49%. According to the information obtained, under normal circumstances, net cash flow from operating activities>financial expenses+depreciation for the current period+amortization of deferred assets intangible assets+amortization of amortized expenses. If the calculation result is negative, it indicates that the enterprise has incurred losses in the current period, and the cash income from the operation cannot cover the relevant expenditure.

Taking the highest negative Xiamen Xinda as an example, it can be seen from the consolidated cash flow statement that the company received cash of RMB 8,411,354,612.88 in the first quarter of 2018 for selling goods and providing services, plus tax refund and other cash. The total income was 8,816,767,037.77 yuan, a decrease of about 8% compared with the same period of last year; the cash outflow due to the purchase of goods, the payment of cash for labor, the payment to employees and the cash paid for employees, and the various taxes and fees paid were 14,582,175,646 yuan. As a result, the net cash flow generated by Xiamen Xinda's first quarter operating activities was RMB -5,765,408,608.23.

In yesterday's "19 performance warnings: LED boom continues, growth has slowed significantly" mentioned that from the overall recovery last year to the gradual differentiation of the first half of this year, the LED industry is already in the second half of the variable, competition Under the influence of intensification, falling prices, rising raw materials prices and the Sino-US trade war, the entire industry will face the risk of slowing performance growth. Therefore, in this situation, enterprises should pay more attention to the issue of financial security.

Some insiders said that due to the drastic changes in the competitive environment, the industry may be ahead of schedule, and enterprises may face difficulties in recovering funds from the industrial chain. Therefore, enterprises need to do a good job in preventing capital security risks and manage cash flow. To maintain the sound development of the company.

Shenzhen Kate Technology Co., Ltd. , https://www.katevape.com

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