ИССЛЕДОВАНИЕ ФИНАНСОВОГО АНАЛИЗА LUCKIN COFFEE

УДК 658.155.2 Сунь Шэнтао студент 2 курса магистратуры Институт управления экономики и финансов Казанский (Приволжский) федеральный университет, Россия, г. Казань e-mail: 2504332183@qq.com Научный руководитель: Алеткин Павел Александрович доктор экономических наук, профессор Казанский (Приволжский) федеральный университет, Россия, г. Казань ИССЛЕДОВАНИЕ ФИНАНСОВОГО АНАЛИЗА LUCKIN COFFEE Аннотация: Выбрав Luckin Coffee в качестве объекта исследования, эта статья проанализировала ее финансовые отчеты. В частности, в нем подробно говорится о платежеспособности, операционной способности, прибыльности и способности развития Luckin Coffee. Было обнаружено, что преимущества и недостатки Luckin Coffee могут привести к некоторым типичным характеристикам, включая низкий потенциал и эффективность корпоративной прибыльности, высокую стоимость разработки, высокий риск возникновения краткосрочной задолженности. В этом документе также предлагается несколько стратегий решения этих проблем, направленных на повышение будущей финансовой выгоды предприятия. Ключевые слова: финансовые отчеты; рабочее состояние; стратегия развития. Shengtao Sun 2st year master student Institute of Management, Economics and Finance Kazan Federal University, Russia, Kazan Scientific adviser: Aletkin Pavel Alesandrovich doctor of Economic sciences, professor, Kazan Federal University, Russia, Kazan RESEARCH ON FINANCIAL ANALYSIS OF LUCKIN COFFEE Abstract: Choosing Luckin Coffee as the research object, this paper analyzed its financialstatements. More specifically, it stated the solvency, the operating ability, the profitability and thedevelopment ability of Luckin Coffeein detail. It is found that the 1 Журнал «Трибуна ученого» Выпуск 11/2020 http://tribune-scientists.ru advantages and disadvantages ofLuckin Coffee can lead to some typical attributes, including the corporate profitability low inpotential and efficiency, high development cost, the high risk of short-term debt. This paper also putforward several strategies to settle these problems, targeting in improving the future financialbenefit of the enterprise. Key words: financial statements; operating status; the development strategy. 1. Introduction 1.1 Purpose of financial analysis Financial analysis refers to that the enterprise stakeholders use a series of special analysistechnology and method to analyze and evaluate the profitability of the operation ability of solvencyand development condition based on accounting reports and other related information. Theprofitability of the operation ability are relevant to the investment business activities anddistribution activities of financing activities which belong to the enterprise and other economicorganizations in the past and present. To make investors, creditors, enterprise operators and othersconcerned about enterprise organization or individual and understand the past, the enterprise statuswas evaluated, the future was predicted and the right decision was made by provided accurateinformation or on the basis of the economic application of the discipline. According to the financialstatements of Luckin Coffee in the past two years, this paper analyzed the overall situation of thegroup from four aspects, including the enterprise's profitability, operating ability, debt-paying abilityand development ability and predicted the company's future development prospects. 1.2 Study Overview This paper took Luckin Coffee's financial statement data in 2017 and 2018 as the research object.By comparing the changes of the balance sheet, income statement and cash flow statement ofLuckin Coffee, its solvency, operating capacity, profitability and development ability were analyzedand then the corresponding improvement strategies were proposed, which provided certainreference for the development of Luckin Coffee. 2. Group Strategy and Accounting Analysis 2.1 Strategic Analysis 2 Журнал «Трибуна ученого» Выпуск 11/2020 http://tribune-scientists.ru As a typical representative of China's new retail coffee, Luckin Coffee dedicated to becoming theleading high-quality coffee brand and professional coffee service provider in China [1]. Byoptimizing product raw materials, exquisite coffee technology, innovative business model andleading mobile Internet technology, Luckin Coffee strives to bring consumers a new experience ofhigher-quality coffee consumption and promote the popularization and development of coffeeculture in China. 2.2 Accounting Analysis The interpretation of balance sheet is mainly analyzed from the aspects of enterprise asset scale and structure, asset quality, liability scale and structure, operating income and cash flow. 2.2.1 Asset size and structure analysis As the proportion of various assets in the total assets of an enterprise, asset structure mainly refersto the proportion of fixed investment, securities investment and liquidity investment. Generallyspeaking, enterprises pay more attention to the liquidity of capital which is the proportion of currentassets to total assets. The current assets of Luckin Coffee Co., Ltd. are 2428676,000 yuan (RMB), which has increased compared with the previous year. This change is mainly due to the increase ofcash and cash equivalents and net receivables in combination with the increase of fixed assets,which is helpful to form a realistic production capacity [2]. Moreover, the total assets are3485076,000 yuan (RMB) and the assets structure is 69.69%. And the current assets of LuckinCoffee account for a large proportion of the total assets, which belongs to the conservative assetsstructure. Under this kind of assets structure, the liquidity of the company's assets is better, whichreduces the risk of the company. However, the proportion of non-current assets with higher incomelevel is smaller, the company's profitability level is lower. At the same time, it also reduces the riskand benefit level of the company. Apart from that, asset quality is the basis of operational efficiency. Operational efficiency refersto the effective degree of enterprises by using their assets. It reflects the turnover status ofenterprises' funds. The turnover speed of assets is the main index to measure the operationalefficiency of enterprises. The total asset turnover rate of Журнал «Трибуна ученого» Выпуск 11/2020 http://tribune-scientists.ru 3 Luckin Coffee in 2018 is -83.62%, which islower than the average level of the industry. The faster the speed is, the more opportunities assetscan be used, the higher efficiency is, and vice versa, the worse the efficiency is [3]. Through theanalysis of Luckin Coffee assets turnover rate, it shows that its asset utilization efficiency is notstrong. It may also be that in the past two years, with the expansion of market share, the number ofstores in the country has increased so much that business income has been neglected, that is to say,high-speed growth has been achieved with huge losses. This is also one of the corporate strategies,which is helpful to occupy more market share and attract more customers. 2.2.2 Liability scale and structure analysis Liabilities are the outflow items of future cash flow of enterprises. The total liabilities of LuckinCoffee in 2017 are 388,295,000 yuan (RMB), and the total liabilities of Luckin Coffee in 2018 are780,890,000 yuan (RMB). The liabilities of Luckin Coffee are gradually decreasing. If an enterprisehas too many liabilities, the impact on the enterprise will be as follows: 1) Serious risk ofbankruptcy and bankruptcy of enterprises through debt management. Though enterprises can raise alarge amount of funds, the effect of the use of funds is crucial. In the production and operationprocess, if the operator does not pay attention to the market dynamics and the product sales are notsmooth, the recovery of funds will be tough, which will inevitably make the enterprise unable topay back the principal and interest of matured debts and shareholders' remuneration, resulting inrevenue and expenditure financial risks. This risk is a holistic one, which will adversely affect therepayment of all debts and the payment of shareholders. Especially when the loss occurs (whichmeans receives fail to offset), the shareholder's rights and interests will also be reduced, thusreducing the total amount of assets as a guarantee of debt repayment. The greater the enterprise lost,the smaller the ability to repay debt with assets will have. This means that enterprises are facingbusiness failure. 2) Excessive debt and unreasonable term structure lead to cash financial risk. Profitstatement reflects the main source and composition of enterprise operating performance, judging thequality and risk of net profit, which is beneficial for users to predict the sustainability of net profitand make correct decisions. In 2018, the Журнал «Трибуна ученого» Выпуск 11/2020 http://tribune-scientists.ru 4 proportion of shareholders' equity and liabilities was 55%and 45% respectively. The proportion of assets and liabilities was not high and the financial riskwas small. Only through the above analysis, it is difficult to judge whether this financial structure isappropriate[3]. Additionally, only according to the profitability of the enterprise, can we use theownership structure to explain. 2.2.3 Operating income analysis Luckin Coffee business income states the income in 2017 was -112 414,000 yuan (RMB) and in2018 was -1598 006,000 yuan (RMB), which shows a lot of decline. Net profit was -112,742,000 yuan (RMB) in 2017 and – 1,619,152,000 yuan (RMB) in 2018. At the same time, net profit alsodeclined. 2.2.4 Cash flow analysis The cash flow generated by Luckin Coffee business activities in 2017 is - 190052,000 yuan, in 2018is -1310,694,000 yuan (RMB), the cash flow generated by investment activities in 2017 is-145,844,000 yuan (RMB), in 2018 is -128,3218,000 yuan (RMB), the cash flow generated byLuckin Coffee financing activities in 2017 is 774,438,000 yuan (RMB), in 2018 is 398,402,000yuan (RMB). As can be seen from above, cash flow generated by business activities decreaseddramatically, indicating that cash received by the group in selling goods and providing services, taxand fee returns received, and cash received in connection with other business activities decreased;cash flow generated by investment activities of Luckin Coffee Company decreased, mainly due tocapital expansion leading to cash flow. The decrease in volume is the main reason for cash outflowsfrom investment activities, and the increase in cash outflows from financing activities indicates thatthe pace of enterprises absorbing capital or borrowing debt is accelerating. Linked to the net cashflow of investment, the net cash flow generated by investment activities is - 1283218,000 yuan(RMB), and the net cash flow of investment is also quite obvious. This means that the enterprise hasaccelerated the pace of investment and business expansion, which may mean that the enterprise hasa new profit growth point, net cash flow related to business activities and business activities [4]. Thecash flow outflow was - 1310,694,000 yuan (RMB). If the cash flow of operating activities isobvious, it means Журнал «Трибуна ученого» Выпуск 11/2020 http://tribune-scientists.ru 5 that some of the capital absorbed or borrowed lead to supplements theinsufficiency of operating funds. 3. Analysis summary 3.1 Analysis of Debt-paying Ability and Operating Ability of Enterprises Solvency refers to the ability of an enterprise to repay various liabilities. According to the analysisof enterprise's solvency, creditors can make corresponding lending decisions to ensure the safety offunds; for investors, they can observe financial risks, predict the difficulty of raising funds andcalculate the cost of raising funds; for operators, they can analyze the financial situation, evaluatethe degree of risk, predict the prospect of raising funds and make relevant decisions[5]. Financialactivities with operating capital and liquidity ratio are important indicators to analyze the short- termsolvency of enterprises. The operating capital of Luckin Coffee in 2017 was -129 187 thousandyuan (RMB), the operating capital in 2018 was 164 7786 thousand yuan (RMB), and the liquidityratio in 2017 is 66.73%, the average of the same industry is 2, 311.01% in 2018, and the average ofthe same industry is 2. Although it was lower than the average level of the same industry in 2017, itshowed a growth trend and exceeded the average level of the industry in 2018. It is also found thatthe liquidity of the company's assets and the short-term solvency are gradually enhanced. Theasset- liability ratio of Luckin Coffee was 33% in 2017 and 115% in 2018, which shows that thefinancial risk is relatively high. When the cash flow is insufficient, the capital chain will break. Ifthe debt cannot be repaid in time, it will lead to the bankruptcy of the enterprise. Therefore, thecompany should pay attention to it [6]. The analysis of operation capability can evaluate theliquidity of enterprise assets, the benefit of utilization and the potential of enterprise assetsutilization. The total assets turnover rate of Luckin Coffee was - 33.36% and - 45.85% in 2017 and2018 respectively. The continuous decline indicates that the total assets turnover of the company hasslowed down and the sales ability has weakened. This may be related to the expansion of thecompany's stores in recent two years and the excessive development of new products. Nevertheless,over-concentration of stores leads to higher sales costs and various products. Shop sales ability isnot strong, and excessive development of new Журнал «Трибуна ученого» Выпуск 11/2020 http://tribune-scientists.ru 6 products leads to higher operating costs, thecompany should improve marketing strategies and open up sales channels. 3.2 Analysis of Enterprises' Profitability and Development Ability The analysis of enterprise's profitability can reflect and measure the enterprise's operating performance and reveal the problems existing in the enterprise's operation and management. Thereturn on net assets is the core index to reflect profitability. The return on net assets of LuckinCoffee was 84% in 2017, and the return on net assets was 2.19 in 2018. It is understood that itsrapid expansion after the rapid listing is one of the culprits. With the expansion of the market,market costs and higher operating costs as well as product costs remain high. Although good resultshave been achieved in total income, net profit is still not impressive and it has become the focus ofattention of investors and creditors. Besides, development capability of enterprise usually refers tothe development trend and potential of enterprise's future production and operation activities.Enterprises are supposed to pursue healthy and sustainable growth so that the rise of shareholder'swealth and increase of the value of enterprises can be achieved. The analysis of enterprisedevelopment capability can predict the future growth of enterprises, and then evaluate it.Assessment of the value of the enterprise, the total asset growth rate of Luckin Coffee in 2018 is 934.28%. The asset growth rate is positive, indicating that the company's asset scale has increasedin the current period and the asset growth rate has increased considerably [7]. 4. Suggestions It is suggested that some funds should be invested in financial projects to obtain stable interest.Apart from that, the current good sales situation is maintained so that investors and creditors havesufficient confidence in future development. In addition, data show that with the expansion of stores, the number of employees is increasing,and management costs are also rising. It is suggested that the recruitment mechanism, pre-jobtraining, performance appraisal and reward and punishment measures of deerskin coffee should befurther promoted in the future development. They should start from the first step of recruitment andthe skilled management personnel needs selecting to avoid unnecessary management costs. Журнал «Трибуна ученого» Выпуск 11/2020 http://tribune-scientists.ru 7 More importantly, with the expansion of stores, the distribution of some stores is more intensive,which has no good effect on expanding the market and achieving greater net profit. Therefore, weshould rationally divide the market and make sure not to expand the market blindly. Although theoutstanding performance of Luckin Coffee in developing new products and expanding tolightweight foods will help to expand sales, new products must be developed appropriately in orderto make some necessary expenditure on R&D costs. 5. Conclusion Luckin coffee is a new kind of Internet company, which was founded in 2017. Its slogan isprofessional coffee fresh type with self-developed APP and entity stores as the carrier. Forcustomers and enterprise users, the professional fresh coffee and better services experience wereprovided. Through the report analysis, the net profit in 2018 was -1.619152 billion yuan, LuckinCoffee business revenues was - 1.598006 billion yuan. Net profit in 2018 continued losses, whichcan be said to be in huge losses for rapid growth. As running ideas gradually becomes mature, theoperation of the store is stable, and the net interest rate of Luckin Coffee has been improved.However, the price war and large-scale marketing in the initial stage of opening still caused thecompany's net interest rate loss of 228.5% in the first three quarters. In order to improve the operating conditions, it is recommended that the current good salessituation be maintained and the investment information of creditors be maintained. Secondly, themanagement of recruitment and training should be strengthened to reduce the management cost.Last but not least, it is necessary to control the scale of market development and strengthen r&dinvestment reasonably. The above strategies can be used for reference to improve Luckin Coffee'sfinancial situation. 1. Dong Zhijun Luckin Coffee spoiler, who can touch the mobile cafe? Business school. 2018. Vol. 6. Pp. 42-44 2. He Linqing Can Luckin Coffee keep lucky? // China economic report. 2018. Vol.6. Pp.70-71. Журнал «Трибуна ученого» Выпуск 11/2020 http://tribune-scientists.ru References: 8 3. Yu Xiaoyi Research on the New Retail Model in the Internet Era: Take Luckin Coffee as anexample // Modern Marketing (Late issue). 2018. Vol.7. Pp. 84-88. 4. Dong Zhijun, Chen Qian Qianlina Carnival of coffee wars spoiler // Business school. 2018. Vol. 7. Pp.48-56. 5. Hou Jun. The battle of a cup of coffee // China Economic Weekly. 2018. Vol 32. Pp.77-78. 6. Dong Zhijun The new retail war of coffee opens up whether Luckin Coffee can become anindustry behemoth // Business School. 2018. Vol. 8. Pp.19-21. 7. Gu Chunxiao Luckin Coffee: A New Model of Online and Offline Multi- Channel IntegratedPlay Marketing // Soundscreen World. Advertiser. 2018. Vol. 10. Pp.153-154. Журнал «Трибуна ученого» Выпуск 11/2020 http://tribune-scientists.ru 9