Accounts Receivable Management of Midea Group: An Empirical Analysis Based on Financial Ratios and Aging Structure

Abstract

This study conducts a comprehensive analysis of accounts receivable management at Midea Group from 2019 to 2023. Utilizing financial ratio analysis, comparative benchmarking with industry peers (Xiaomi Group and Gree Electric), and aging structure assessment, the research identifies significant challenges in the company’s receivables management. Key findings indicate a continuous expansion in accounts receivable balance, with growth rates frequently exceeding operating revenue growth. The proportion of receivables to operating revenue and current assets remains elevated relative to industry averages, signaling potential liquidity constraints and heightened capital occupation. Furthermore, the accounts receivable turnover rate is comparatively low, and the aging profile demonstrates a rising trend in longer-term receivables, accompanied by an increasing bad debt provision. These issues are attributed to factors including overreliance on credit sales for market expansion, lenient credit policies, inadequate internal controls, and customer credit risks. To address these challenges, the study proposes targeted recommendations such as strengthening customer credit evaluation, optimizing credit policies, enhancing collection mechanisms, improving internal management processes, and employing financial instruments for risk mitigation. Implementing these measures can enhance accounts receivable liquidity, reduce bad debt risks, and bolster the overall financial health of Midea Group, while offering insights for similar manufacturing enterprises.