Abstract:
This essay focuses on the effect of different combinations of equity and debt on
profitability of Tongrentang Group during the period from 2011 to 2019 quarterly in
Chinese medical industry on the basis of the methods of correlation and regression
examination, to prove whether the different combinations consists of the equity and
debt over different periods affect the profitability. The paper collected the main
financial data from related documents posted on annual report and Shanghai Stock
Exchange as well as Tonghuashun iFinD. Through correlation analysis and regression
analysis, the main findings tell that a positively relationship exists between debt (over
different period) and profitability. It proves that debt acts as the main source for
Tongrentang to finance their daily operations. Based on the main findings of this paper,
Tongrentang Group should consider the components and proportion of its capital
structure so as to generate maximum profit. Further research should concentrate on
international medical market beyond Chinese market.
