How to find problems from the analysis of corporate financial statements

Financial statements are mainly balance sheets (reflecting the assets owned by the enterprise at a certain date, the debt to be repaid, and the net assets owned by investors

); income statement (reflecting the results of the enterprise's operations for a certain period of time, and the profit or loss, indicating that the analysis of corporate financial statements using the assets owned by the enterprise's Profitability); cash flow statement (reflecting the inflow or outflow of cash during a certain period of time, indicating the ability of the enterprise's financial access to cash and cash equivalents) and other schedules.

Balance Sheet Total Assets = Liabilities + Owners' Equity

Mainly look at:

Monetary Funds (including cash, bank deposits and other monetary funds)

Accounts Receivable (accounts receivable, should look at the details of the goods, should be timely to collect)

Other receivables (other receivables, should look at the details of the treatment)

Inventory (including inventory, raw materials, etc., look at the details)

Inventories (including inventory, raw materials, etc., look at the breakdown). Inventories (including inventory commodities, raw materials, etc., you can see the details to understand the actual inventory)

Short-term investment (less than one year), long-term investment (more than one year)

Fixed assets (more than one year of use)

Short-term borrowings (bank borrowings of less than one year), long-term borrowings (bank borrowings of more than one year)

Accounts payable (payable for goods, should see the details to arrange for payment)

Other receivables (other payable transactions, should see the details of payment)

Other accounts receivable (other payables) Other payables (other payable transactions, should see the details of timely processing)

Share capital or paid-in capital (basically equal to the registered capital)

Undistributed profit (the cumulative profit or loss of the enterprise)

Income statement:

Income from main business (revenue from the main business)

Cost of main business (cost of the main business)

Costs of main business (cost of the main business)

Income statement:

Income from main business (income from the main business)

Cost of main business (cost of the main business)

Taxes and surcharges

Operating expenses (sales department expenses)

Administrative expenses (management expenses)

Finance costs (mainly interest on deposits and loans, negative amount is interest on deposits)

Subsidy income (subsidies for losses allocated by the state, VAT refunds, etc.)

Non-operating income (income from fixed asset Non-operating expenses (fixed asset losses, fines, donations, etc.)

Total profit = Profit from main business + Profit from other businesses - Operating, administrative and financial expenses + Investment income (minus investment losses

+ Subsidy income + Non-operating income - Non-operating expenses

Many Managers are busy every day to develop business,

dealing with staff issues,

but in the busy,

but forget to pay attention to some of the company's

long-term problems, so that in the end the problem has been so serious as to the disease into the blind, only to wake up.

Product sales. If you're only looking at revenue reports,

there are a lot of traps out there. For example, one company's turnover and profits are rising, but sales are actually falling and

market share is shrinking.

The reason for the growth in revenue was

because of a price increase in the product. Therefore, it is important for managers to track sales on a regular basis in order to have a clear picture of the company's business.

The break-even point.

Often,

you have to wait for the financial statements to come out each month, and then

you know how the company is doing

. But this time lag is likely to affect the speed of your decision-making.

If you can ask your finance person to provide you with an analysis of your company's

profit/loss balance;

that is, how much of your product you need to sell in a month to balance it out,

with that number in mind at all times, you

can immediately determine whether you are making money, or losing it, at the same time.

Raw material purchase ratio.

Just what percentage of your company's money is spent

on raw materials such as paper,

plastics, and so on? Compare this figure

to your turnover. Generally speaking, this ratio should be very stable,

one or two months with fluctuations is not relevant,

but if there is a trend of increasing, or decreasing, we need to pay attention. It is likely that your inventory is too much, the cost is not controlled, or the inventory is too small, encountered a sudden increase in orders, you may not be able to digest.

Bank statements. Every month the bank will send you a statement, do not think that the accountant will be sure to check. In fact, everyone is so busy doing so many things every day that

no one pays any attention to this important work.

Did you know that

it's likely that your company has

not had anyone checking its accounts for years?

Backlog of orders. Some orders come in,

but are never processed, causing delays in delivery. All you have to do is ask to see that

backlog,

and you'll know if the company has a problem,

and how serious it is.

Each backlogged order represents an

angry customer, so see how many angry customers your company is accumulating.

A company found that customers often responded to delivery delays, and after an in-depth review, they realized that the problem was actually in the transportation

department every time from the top of the stack of orders to start processing.

As a result, every time the last order comes in, it is completed the earliest, and the orders below it are always delayed for a few days. Knowing how many orders your company has backlogged, and what the problem is, makes it easier to fix.

Returns records. If there is an increase in the number of returns, it is an indication that there is an internal quality control problem. Therefore, keeping track of the number of returns is an important key so that you don't have to deal with the problem until it gets out of hand.

Number of employees. Count how many employees you have each month. As business grows, the number of people a company employs

can grow without you even realizing it, or even when business isn't growing, the number of employees is still growing silently.

For example, if your company has twenty-five people, adding another five is really nothing.

Ask your staff to give you a monthly chart so you can keep track of the number of employees and the growth curve. Find out if the company is overstaffed. In the busy work, grasp these basic but important figures, you can quickly grasp the company's operating conditions. It's another kind of one-minute management.

Corporate financial statement analysis

Tell you a website, you can go to the Tsinghua Tongfang library, Chongqing Vipu library, Beijing Wanfang library this to see, there are many papers inside, I believe that you pumped a little bit on it

This problem is so big ah, only a small point to write it from the principle of finance such as the substance is more important than the form, the use of corporate cash flow statement of the cash and the income statement of the difference between Difference step by step to extend the rise, write the financial accrual system under the system of profit and realize the system of net cash, analyze the reasons for the solution, from the point of view of the business owners continue to ask, the enterprise realized the profit why not so much cash? There can be inventory occupied, accounts receivable occupied .....

How to analyze the financial statements of enterprises

This you have to have a certain accounting foundation, to be able to read and understand the financial statements of enterprises, but also have a certain knowledge of financial management

An introduction to the analysis of financial statements of enterprises

An introduction to the analysis of financial statements of enterprises

Abstract: Financial statements are a comprehensive reflection of all economic activities of enterprises, providing the management of the enterprise decision-making required by the information. In this paper, the interpretation and analysis of financial statements, to help us remove the financial statements of the "whitewash", a fair assessment of the enterprise's decision-making performance issues are analyzed and discussed.

Keywords: financial statements; interpretation

Financial statement analysis is an "art", hidden behind the enterprise's mystery. Financial statements are a comprehensive reflection of all the economic activities of the enterprise, which provides the information needed by the management of the enterprise to make decisions. Carefully interpreting and analyzing financial statements can help us eliminate the "whitewash" of financial statements, and fairly assess the performance of the enterprise's decision-making.

1 interpretation of the key elements of the financial statements

To read the financial statements, in addition to the basic knowledge of financial accounting, should also master the following aspects in order to see hidden in the financial statements behind the enterprise mystery:

1.1 Browse the statements, to detect whether there are significant financial aspects of the enterprise

The first thing to get the enterprise's statements is not to do some complex ratio calculations or statistical analysis. The first thing you should do when you get the statement is not to do some complicated ratio calculations or statistical analysis, but to read through the three statements, i.e., the income statement, the balance sheet and the cash flow statement, to see if there are any unusual subjects or unusual amounts of subjects, or to see if there are any abnormalities in the distribution of the amounts of different subjects in the statement. For example, in domestic accounting practice, "receivables, payables is a basket, anything can be loaded into it." Other accounts receivable is too large often means that the enterprise's funds are occupied by other enterprises or people, or even long-term occupation, this occupation either may not accrue interest, or may become a bad debt. In the analysis and evaluation should be excluded from the part of the receivables may become bad debts and will be reflected as the current bad debt expense in order to reduce profits.

1.2 Study the historical long-term trend of financial indicators to identify problems

The performance of a company with consecutive profits is generally more reliable than the performance of a company that has lost money in the previous three years, but has made a large profit in the current period. Our research on domestic listed companies shows that the performance of a listed company must be viewed for more than 5 years before it can be seen clearly. If the return on equity is used as a performance indicator to assess the listed company, there will be a pattern that the listed company's performance in the year of listing will fall by more than 50% relative to the average of the 3 years prior to the listing, and it is impossible to recover to the pre-listing level in the following years. There is only one explanation for this. There is only one explanation for this: the pre-listing statements are "packaged" too much.

1.3 Comparing profit levels with cash flow levels

If some companies reflect high operating profit levels on their income statements, but are poor in cash flow from operating activities, then we should ask the question: "Why are profits not being converted into cash? Is there a problem with the quality of profits?" Yin Guang Xia in the year before it was exposed to the profitability far more than the average level of the industry, but its net cash flow from operating activities is poor relative to the level of operating profit, after the fact that the company is proved to be wholly owned import and export subsidiaries in Tianjin, false customs declarations, and then falsely increased accounts receivable and sales revenue in the way of accounting to blow up the profit of "balloons ". And these false so-called accounts receivable is never likely to be converted into operating cash, it is no wonder that its cash flow from operating activities is so poor.

1.4 Compare your business with your peers

Comparing your performance with the standards of your peers may give us a deeper picture of your business: a company comparing itself may be making good progress, e.g., a 20% increase in sales, but looking at it at the level of the industry as a whole may lead to different conclusions: if the industry average is 50%, then the industry average is 50%, then the industry average is 50%, and the industry average is 50%. If the industry average sales growth level is 50%, then lower than this speed, running slow business will eventually lose to their competitors.

2 Beware of the "whitewash" in the statements

Some of the techniques used in the financial statements to whitewash the statements and create bubbles are prone to bias in the assessment of the performance of the enterprise's decision-making, or even completely wrong phenomenon.

2.1 Non-recurring business profits to disguise the main business profit shortfalls or losses

Non-recurring business profits refers to infrequent or occasional business activities of the enterprise's profits, usually in investment income, subsidized income and non-operating income and other subjects. If we find that the net profit after deducting non-recurring business profit or loss is much lower than the total net profit of the enterprise, for example, less than 50%, then we can be sure that the enterprise's profit is not mainly from its main products or services, but from infrequent or occasional business, such a level of profit is unsustainable, and does not reflect the managers of the enterprise in the management of the operation and management of the improvement of the results of the enterprise. The results.

2.2 Capitalization of revenue expenses or period costs to overestimate profits

This is a common practice of Chinese and foreign enterprises to "whitewash" profits, for example, by reflecting income statement items that should be expensed as current expenses as balance sheet items of amortized expenses or long-term amortized expenses. In the domestic real estate development industry, we can often see the enterprise will be real estate project development during the sales costs, management costs and interest expenses arbitrarily and for a long time "accounted for" in the long-term amortized expense account, so that the profits of these enterprises will be seriously overestimated.

2.3 "Improving" operating results through connected transactions

A classic example of this tactic is the now-defunct "Qiongminyuan" company. In order to cover up the loss of the situation not hesitate to use to sell land to its subsidiaries in order to realize the current profit, and then the next year from the subsidiary to buy back the land of the trick, and later "window", by the Ministry of Finance and the Securities and Futures Commission's severe punishment. Therefore, we should pay attention to the situation of related-party transactions in the analysis of the enterprise, the study of its proportion of total sales, purchases, borrowing and profits, and should review the price of these transactions is not fair.

2.4 Mergers and acquisitions to "increase" profits

Certain enterprises, whose products or services have lost their profitability, use mergers and acquisitions of other profitable enterprises to "increase" their consolidated profits. The accounting masters of these enterprises take advantage of the "loopholes" in the domestic accounting standards for consolidated accounting statements and in the current provisional regulations for consolidated statements to inappropriately incorporate the full-year profits of the merged enterprises into the consolidated statements. In the analysis, special attention should be paid to the date of acquisition, the profit level of the merged enterprise before the acquisition, and whether there are any abnormal accounts other than income tax and minority shareholders' income between the total profit and net profit in the consolidated income statement.

2.5 Cash Flow Disguise through Internal Funds

Some enterprises in the supply, production and sales of cash flow generated by operating activities is insufficient, so they use the internal financing of funds to affiliated enterprises, and the inflow of these funds as "other cash received in connection with operating activities" approach to cash flow statement of cash flows, the cash flow of operating activities is not enough. The cash flow from operating activities looks better in the statement of cash flow from operating activities.

3 Do not exaggerate the role of the financial statements

The analysis of financial statements can help us to grasp the company's financial situation and assess the performance of decision-making, but we should also be aware of the limitations of the analysis of financial statements:

First of all, the assets of the enterprise and the cost of goods sold in the income statement is recorded in the amount of money paid for the acquisition of assets or inventory, so assets and cost of sales are not based on assets and cost of sales are not based on assets or inventory. Therefore, assets and cost of goods sold are not reflected at the current value of assets or inventories. In the case of inflation, this may result in an overstatement of the return on assets or return on equity. In addition, the principle of historical cost also leads to difficulties in comparing new and old enterprises in the same industry. For example, suppose A, B two enterprises to produce exactly the same products, the same production capacity, this year's sales revenue is exactly the same, are 100 million yuan, A enterprise was established 10 years ago, due to the purchase of fixed assets is relatively early, so the cost of the original cheaper, and then due to the use of depreciation in the sake of the book value of fixed assets is low, only 20 million yuan; and B enterprise is just established 3 years of the Enterprise B is just three years old, the fixed assets of the purchase cost is higher, the accumulated depreciation is less, so its book value is higher, for 60 million yuan. We calculate the turnover of fixed assets of A and B enterprises can be obtained: A enterprise for 10000/2000 = 5 (times), and B enterprise for 10000/6000 = 1.67 (times). If we compare the turnover rate of the two enterprises, we will get the turnover rate of enterprise B is only 1/3 of enterprise A, enterprise B's asset management efficiency seems to be far worse than the conclusion of enterprise A. However, such a conclusion is obviously not the case. However, such a conclusion is obviously unfair. The solution to this limitation is to use the current value of assets to measure the value of assets in the internal assessment of the enterprise, such as the comparison of A and B enterprises, we can replace the book value of fixed assets by the cost of re-purchase and construction of the cost of the replacement cost.

Second, the prevalence of accounting method selection and accounting estimates. Financial accounting standards and systems often allow the same business to take more than one optional method of one, even if the same type of fixed assets are depreciated using the straight-line method, different enterprises on the asset's useful life, the use of the life of the asset is not able to be realized in the market value (salvage value) of the estimate may also be different. The ways to overcome these problems are: first, before the performance appraisal within the enterprise group, the enterprise accounting system should be harmonized according to the industry to minimize or even prohibit different accounting treatments for the same type of economic operations. Secondly, as analysts, they should adopt some measures to eliminate the impact of inconsistent accounting policies on financial indicators.

In addition, financial indicators have limitations. Whether the enterprise's internal control program is effective and how the enterprise as an organization's innovation and learning ability can not be reflected by financial indicators or can not be fully reflected, must rely on other non-financial indicators, or even difficult to quantify the indicators to assess.

Financial statement analysis is an "art", just as the same piece of natural scenery, painters and masters of the pen interpretation will have a big difference, different analysts in the analysis of the same statement may get very different conclusions.

[References]

[1] Corporate Financial Reporting and Analysis. Beijing: Caijing Publishing House.

[2] Financial Statement Analysis. Dalian: Economic Science Publishing House.

The objects of financial statement analysis are the basic activities of the enterprise. Techniques for analyzing company financial statements can be divided into four types, including horizontal analysis, vertical analysis, trend percentage analysis, and financial ratio analysis.

First, the horizontal analysis of financial statements

The premise of the horizontal analysis, is the use of the former and later comparison of the preparation of comparative accounting statements, that is, the enterprise's accounting statements for several years of information arranged in parallel together, set the "absolute amount of increase or decrease" and "percentage increase or decrease The two columns of "absolute amount increase/decrease" and "percentage increase/decrease" are set up to reveal the absolute amount and percentage increase/decrease of changes in each accounting program during the comparison period.

Second, the vertical analysis of financial statements

Horizontal analysis is actually a comparative analysis of the accounting statements of different years of the same project; while the vertical analysis is the same annual accounting statements of the ratio analysis between the projects. Vertical analysis also has a premise, that is, must be used "comparability" form of preparation of financial statements, that is, the accounting statements of an important item (such as total assets or sales revenue) information as 100%, and then the accounting statements of the other items of the balance of the form of this important item of the percentage of the form of the vertical arrangement, so that This reveals the relative significance of each line item in the financial statements. Financial statements prepared in this manner make it possible to compare the operations and financial position of several enterprises of different sizes. Since the balances of the individual line items are converted to percentages, the line items remain "comparable" even when the size of the enterprise varies greatly. However, there are certain prerequisites for comparisons to be made between different enterprises, namely, that several enterprises must belong to the same industry, and that the accounting methods and financial statement preparation programs used must be approximately the same.

Third, trend percentage analysis

Trend analysis also looks like a horizontal percentage analysis, but different from the horizontal analysis of the increase or decrease in the percentage of the situation prompted. Horizontal analysis is the use of ring comparison, while the trend analysis is the use of fixed-base approach, that is, the financial statements for several consecutive years in some important project information together, the same period of the year for the corresponding information for the percentage of the comparison. This type of analysis is quite useful in indicating the trend of business activities and financial position of an enterprise over a number of years. Trend analysis must first be selected for a fiscal year as the base year, and then set the base year accounting statements of a number of important special case balance of 100%, and then the subsequent years of the accounting statements of the same special case information according to the base year special case number of percentage to show.

Fourth, financial ratio analysis

Financial ratio analysis is the most important financial statement analysis. Financial ratio analysis is to divide the two relevant accounting information, with the resulting financial ratios to suggest that the same accounting statements between different projects or different accounting statements of the relevant projects between the existence of a logical relationship between the analytical techniques. However, the role of calculating various financial ratios alone is very limited, it is more important that the calculated financial ratios should be compared and analyzed in a variety of dimensions to help users of the accounting statements to correctly assess the operating performance and financial position of the enterprise, in order to adjust the investment structure and business decisions in a timely manner. Financial ratio analysis has a significant feature, that is, the standardization of the economic information conveyed by the financial information of enterprises of different sizes. It is because of this feature that horizontal comparisons among enterprises and comparisons of industry standards are possible. For example, the International Business Machines Corporation (IBM) and Apple Corporation (Apple

Corporation) are both famous enterprises in the United States to produce and sell computers. In terms of sales and profits in the accounting statements of these two companies, IBM is many times higher than Apple. However, a comparison of totals in general terms alone does not mean much because IBM's total assets are much larger than those of the latter. Therefore, the analysis of the absolute number of comparisons should give way to the relative number of comparisons, and financial ratio analysis is a relative relationship between the analysis of skills, it can be used as an assessment and comparison of the two size differences in business operations and financial condition of the effective tools.

Acute Corporate Financial Statement Analysis Assignment

1.d

2.c

3.a

4.a

5.b

6.d

7.c

8.a

9.c

10.a

11. 12.b

13.c

14.d

15.d

16.d

17.b

18.d

19.d

20.c

Questions on the category of "Analysis of Financial Statements of a Business... Guru Entry.

The reference answers are as follows:

Question No. 1: ABD

Question No. 2: B

Question No. 3: C

Question No. 5: D

Question No. 8: B

Question No. 10: A

Question No. 12: C

Question No. 13: C

Question No. 16: B

Question No. 20: D

How to do a good job of analyzing corporate financial statements

To do a good job of analyzing corporate financial statements:

(1) Define the purpose of the analysis

(2) Design the analytical program

(3) Gather information

(4) Divide the whole into its various parts

(5) Study the special nature of each part

(6) Analyze the results of the analysis and the results of the analysis. (v) Study the special nature of each part

(vi) Study the relationship between the parts

(vii) Draw conclusions

How to do a financial statement analysis of a business?

First of all, you should find out the profile of the company you are analyzing, to have a general grasp and understanding of the enterprise, and then download the corresponding statements to analyze the information, you can analyze the indicators from the operating capacity, development capacity, profitability, solvency, and then look at the current period compared to the previous period's changes, and then find out the reasons for the changes, and then you can combine with the Dupont analysis to analyze the enterprise's operating profitability policy and financing policy. The analysis can then be combined with DuPont analysis to analyze the profitability and financing policies of the enterprise. At the same time, you can also analyze the enterprise's investment, financing, capital operation, profit distribution and other aspects to analyze the enterprise's situation. Analyzing financial statements is a very interesting thing, you will look at those millions of hundreds of millions of dollars in the turn around.

I hope my answer helps you.