Financial Risk Analysis of Beijing Tongrentang Health Pharmaceutical's RMB 770 Million Sudden Dividend

Based on publicly available information and financial analysis models, I provide a detailed analysis of the financial risks exposed by Beijing Tongrentang Health Pharmaceutical’s RMB 770 million sudden dividend:

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According to public reports, Beijing Tongrentang Health Pharmaceutical distributed a

in 2024 and held a shareholder meeting from December 15 to 16, 2025 [1]. Such “sudden large-scale dividend” usually refers to a large dividend plan announced suddenly in the middle of the year or near the end, which easily triggers market attention to the company’s financial status and capital use efficiency.

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Based on financial model calculations (assuming RMB 4.5 billion in current assets and RMB 1.5 billion in monetary funds before the dividend), the main indicator changes after the RMB 770 million dividend are as follows [0]:

Financial Indicator	Before Dividend	After Dividend	Change Rate
Current Ratio	2.25	1.86	-17.1%
Quick Ratio	1.75	1.36	-22.0%
Cash Coverage Ratio	0.75	0.36	-52.0%
ROE	15.7%	20.1%	+4.4%

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• Current ratio falls below the warning line of 2.0
  : From 2.25 to 1.86, lower than the 2.0 level that healthy enterprises should maintain
• Quick ratio drops sharply
  : From 1.75 to 1.36, indicating a significant weakening of the company’s ability to cover short-term debts with quickly realizable current assets
• Risk level assessment
  : Medium risk, liquidity pressure [0]

• The dividend consumed
  51.3% of the monetary fund reserve
  , reducing RMB 1.5 billion in cash to RMB 730 million
• Cash coverage of current liabilities plummeted
  : From 0.75 to 0.36, meaning the company’s cash buffer for short-term debts shrank significantly
• In case of sudden capital demand or operational difficulties, the company may face cash flow tightness [0]

• A current ratio below 2.0 means the company needs to rely more on accounts receivable recovery or inventory turnover to pay short-term debts
• If the industry environment deteriorates or downstream customers extend payment cycles, the company may face
  short-term debt default risk

• Net assets decreased by RMB 770 million at once, weakening the company’s capital strength
• Large dividends instead of reinvestment may affect the company’s:
  • R&D investment capacity
  • Capacity expansion plans
  • Strategic M&A opportunities
  • Reserve funds to cope with market competition

• Management confidence signal
  : Sudden large dividends are sometimes interpreted by the market as a signal that management is cautious about the company’s future growth expectations
• Balance of minority shareholders’ interests
  : Although ROE rose superficially due to the reduction in net assets (from 15.7% to 20.1%), this “paper” improvement comes at the cost of sacrificing the company’s future development momentum
• Market trust
  : Frequent large dividends may trigger regulatory attention and investors’ doubts about the rationality of the company’s capital use

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Risk Type	Risk Level	Key Focus Areas
Liquidity Risk	Medium-High	Closely monitor cash flow status, focus on whether subsequent operating cash flow can fill the gap
Solvency Risk	Medium	Focus on short-term loan arrangements and debt maturity status
Development Risk	Medium	Focus on whether R&D investment and capital expenditure are reduced due to capital constraints
Governance Risk	Medium-Low	Focus on the sustainability of dividend policies and compliance of decision-making procedures

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Beijing Tongrentang Health Pharmaceutical’s RMB 770 million sudden dividend led to a sharp drop in net current assets, exposing the following core financial risks:

1. Sudden Liquidity Risk
   : Both current ratio and quick ratio fell below warning lines, putting pressure on short-term solvency
2. Excessive Cash Consumption
   : Over half of the monetary funds were consumed by dividends, weakening the ability to respond to unexpected situations
3. Insufficient Development Momentum
   : Large dividends instead of reinvestment may affect the company’s long-term competitiveness
4. Market Signal Risk
   : May be interpreted as management’s lack of confidence in future growth prospects

: Focus on the recovery of cash flow in subsequent quarters, debt repayment arrangements, and whether the company will adjust its development strategy due to capital constraints.

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[1] PharmaCube - Arrangement of Shareholder Meeting and Dividend Information Disclosure of Beijing Tongrentang Health Pharmaceutical (https://pharmcube-bydrug.oss-cn-beijing.aliyuncs.com/)

[0] Jinling AI Financial Analysis Model and Calculation Data