There are many methods of financial analysis, including: horizontal analysis, vertical analysis, trend analysis, ratio analysis, and factor analysis.

(1) Horizontal analysis method

The horizontal analysis method refers to combining the information that reflects the financial status of the company during the reporting period (that is, the accounting statement information) with the information that reflects the company's previous period or historical period. A financial analysis method that compares information on a company's financial status over time and studies the development and changes of an enterprise's operating performance or financial status.

The basic points of the horizontal analysis method: compare the same data in different periods in the report resources.

Types of horizontal analysis:

There are two specific methods in horizontal analysis: Comparative Financial Statements and Index-number Teries

1. Comparative analysis method

The comparative analysis method is to compare and analyze the financial statements of listed companies in two years, aiming to find out the differences between individual projects in each year in order to discover certain a trend.

When conducting comparative analysis, in addition to studying the trends of individual projects, the relationship between specific projects can also be analyzed to reveal hidden problems.

For example, if it is found that when sales increase by 10, the cost of sales increases by 14, which means that costs increase faster than revenue, which is contrary to our usual assumptions. We usually assume that between products and When raw material prices remain unchanged, sales revenue and sales costs increase at the same rate.

Now that this difference has occurred, there are generally three possibilities:

First, product prices have dropped;

Second, raw material prices have increased;

Third, production efficiency is reduced.

To determine the specific reasons, further analysis requires the use of other methods and data.

2. Index trend analysis

It is suitable for comparing financial statements of more than three years.

The specific method of index trend analysis is to use the data of one year as the base period data (usually the earliest year as the base period) when analyzing the financial statements of consecutive years. Set as 100, the data of other years are converted into percentages of the base period data, and then the relative numbers are compared and analyzed to obtain the trend of the relevant projects.

When using the index, it should be noted that the percentage change trend obtained from the index is based on the base period and is a comparison of relative numbers. The advantage is that you can observe the changes in values ??in multiple periods and draw a period. The trend of numerical changes over time. If you take the inflation factor into account and divide the index by the inflation rate, you will get the actual change in the amount after removing the inflation factor, which is more illustrative.

This method is useful when using past trends to speculate on future values. You can also observe the magnitude of changes in values, find important changes, and indicate the direction for the next step of analysis.

(2) Vertical analysis method

Vertical analysis method is an analysis method, which can be used in the analysis of financial data. In a financial statement, the data of each item in the table is compared with the overall number (or report total) to obtain the position, importance and changes of the item in the overall number.

Through vertical analysis, we can understand whether the enterprise's operations have developed and progressed, as well as the degree and speed of development and progress. Therefore, it is necessary to combine the horizontal analysis method with the vertical analysis method in order to give full play to the positive role of financial analysis.

Steps of vertical analysis method

(1) Calculate the proportion of each item in the table to the total;

(2) Judge the proportion based on this proportion The position of the project in the report and its importance;

(3) Compare the proportion with the proportion data in the base period or the previous year and observe its changing trend.

After accounting reports are processed by the vertical analysis method, they are also called same-measure reports, overall structure reports, and ***year-on-year reports.

(3) Trend analysis method

Trend analysis method, also known as horizontal analysis method, is to compare the same indicators in two or consecutive financial reports to determine their increase or decrease. A method to illustrate the direction, amount and magnitude of a company's financial status and operating results.

There are three main ways to use the trend analysis method:

1. Comparison of important financial indicators

It is the comparison of financial reports in different periods. Compare the same indicators or ratios, directly observe their increases, decreases and changes, examine their development trends, and predict their development prospects.

There are two methods for comparing financial indicators in different periods:

(1) Fixed base dynamic ratio. It is a dynamic ratio calculated based on the amount in a certain period as a fixed base period amount. The calculation formula is:

Fixed base dynamic ratio = analysis period amount ÷ fixed base period amount

(2) Chain-to-month dynamic ratio. It is a dynamic ratio calculated based on the previous period amount of each analysis period as the base period amount. The calculation formula is:

Monochrome dynamic ratio = analysis period amount ÷ previous period amount

2. Comparison of accounting statements

The comparison of accounting statements is to compare consecutive numbers. It is a method to juxtapose the amounts of accounting statements for each period and compare the amount and range of increases and decreases in the same indicators to judge the development and changes of the company's financial status and operating results.

3. Comparison of the item composition of accounting statements

This is developed on the basis of comparison of accounting statements. It takes an overall indicator in the accounting statement as 100%, and then calculates the percentage of each component of the overall indicator to compare the increase or decrease in the percentage of each item to determine the change trend of relevant financial activities. .

However, when using the trend analysis method, the following issues must be paid attention to:

(1) The indicators of each period used for comparison must be consistent in calculation caliber;

(2) Eliminate the impact of incidental items so that the analyzed data can reflect normal operating conditions;

(3) Apply the exception principle and focus on certain indicators that have significant changes. Analyze and study the causes in order to take countermeasures and seek advantages and avoid disadvantages.

(4) Ratio analysis method

The ratio analysis method refers to an analysis method that uses the ratio of two related values ????in financial statements to reveal the financial status and operating results of an enterprise 1. Composition ratio.

1. Composition ratio, also known as structural ratio, is the ratio of each component of an economic indicator to the whole, reflecting the relationship between the part and the whole. The calculation formula is:

Composition ratio = amount of a certain component/overall amount

Using composition ratio, you can examine whether the formation and arrangement of a certain part of the whole are reasonable for coordination. various financial activities.

2. Efficiency ratio. It is the ratio of expenses to income in a certain economic activity, reflecting the relationship between input and output. Efficiency ratio indicators can be used to compare gains and losses, examine operating results, and evaluate economic benefits.

3. Relevant ratio. It is based on the interdependence and interrelationship that exist objectively in economic activities. It reflects the interrelationship of relevant economic activities by comparing a certain item with related but different items. Such as current ratio.

The advantage of the ratio analysis method is that it is simple to calculate, the calculation results are easy to judge, and it can make certain indicators compared between enterprises of different sizes, and even to a certain extent, it can transcend the differences between industries. Compare. However, when using this method, you should pay attention to the following points when using contrast ratio indicators:

(1) The correlation between the contrast items. The child and parent items used to calculate a ratio must be related; it is meaningless to compare unrelated items.

(2) Compare the consistency of caliber. The child and parent items for calculating the ratio must be consistent in terms of calculation time, scope, etc.

(3) The scientific nature of the measurement standards. When using ratio analysis, certain standards need to be selected for comparison in order to evaluate the financial status of the company.

Generally speaking, scientific and reasonable comparison standards include: ① predetermined goals, ② historical standards; ③ industry standards; ④ recognized standards.

(5) Factor analysis method

The factor analysis method is also called the factor substitution method and the serial substitution method. It is used to determine several interrelated factors and synthesize the analysis objects one by one. A method of analyzing the impact of financial indicators or economic indicators.

The starting point for adopting this method is that when several factors have an impact on the analysis object, it is assumed that other factors have not changed, and the impact of each factor changing individually is determined sequentially.

Extended information:

Basic requirements for financial analysis

1. The object of financial analysis--the full text of annual or interim financial reports of listed companies in my country

Relevant regulations on financial reporting of listed companies in my country require listed companies to regularly announce the full text of their annual or interim financial reports on designated websites, and simultaneously publish report summaries in designated newspapers and periodicals (such as China Securities Journal, Shanghai Securities News, Securities Times, etc.) .

Because the content and form of financial reports of listed companies published in newspapers and periodicals are restricted, and there are so-called "important reminders".

That is, "The board of directors of the company guarantees that the information contained in this report does not contain any false records, misleading statements or major omissions, and is severally and jointly responsible for the authenticity, accuracy and completeness of its contents." .

The summary of this annual report is extracted from the annual report. Investors who want to know the details should read the annual report. "Therefore, regardless of whether this report summary is misleading due to intentional or unintentional omissions or inversion of importance." sexual statements, thus exempting the board of directors from some of its responsibilities.

Based on the principle of soundness, the object of financial analysis should be based on reliability, rather than just considering the difficulty of obtaining data. In addition, the Internet is also very popular, so we require the above listed companies to The full text of the financial report published online is used as the object of financial analysis.

If possible, while conducting financial analysis, make full use of the advantages of the Internet and search for relevant information about a specific company on the Internet to make up for the shortcomings of financial reports alone.

2. General requirements and basic analysis steps of financial analysis

Step 1: General financial report analysis

(1) Conduct individual capability analysis. Detailed analysis of the listed company's solvency (including financial strength), operating capabilities, profitability, development capabilities, etc. (if possible, productivity analysis, operating analysis, etc. can also be conducted), and conclusions on the evaluation of various capabilities can be drawn ;

(2) Carry out basic structural analysis. Specifically analyze the listed company's revenue and income structure, cost and expense structure, asset structure, and capital (liability) structure, discover existing and potential problems, and point out measures to solve the problems;

( 3) Use the DuPont analysis method to conduct a comprehensive analysis, analyze the impact of each factor on ROE (profit rate on net assets, profit rate on equity capital) and its degree (contribution), and find out the main ways and methods to increase or improve ROE;

(4) Conduct performance evaluation and economic benefit evaluation on listed companies from different analysis purposes and perspectives, use multiple index system scoring methods to weight each index, calculate the total score of the company, and use this to judge listed companies.

At the same time, combined with the full text of the listed company's financial report and other information, it analyzes its operating conditions and major events to obtain an overall evaluation of the listed company.

Step 2: In-depth analysis of financial reports

Since most listed companies in my country have problems such as untrue accounting information and low information quality, from the perspective of improving analytical capabilities, we hope In the process of financial analysis, current accounting, financial and other standards are combined.

Discover the irrationalities in the financial reports of listed companies, reveal the risks faced by financial analysis, and further evaluate various risks and even all risks of the enterprise.

(1) Discover the profit-dispatch projects of listed companies, and estimate their scale and impact; specifically, analyze whether the overall profits of listed companies are falsely reported or concealed? Discover methods, approaches, projects and structures for profit manipulation, analyze the absolute amount of profit scheduling, and calculate its impact on all profits.

(2) Discover the inaccuracies in the assets and liabilities of listed companies and estimate their impact; combined with the profit manipulation situation, reveal the specific methods, approaches and projects for the inflated or concealed assets and liabilities, and estimate Its amount and its impact on assets, liabilities and profits are calculated.

(3) Analyze related transactions and judge the necessity and fairness of related transactions; specifically the necessity of each related transaction item, the rationality and openness of pricing, and the timeliness and completeness of information disclosure. Analyze aspects such as sex.

Estimate the benefits and impact it will bring to all parties involved in related transactions, and further estimate the losses and impact it will have on other parties.

(4) If possible, conduct relevant risk analysis.

Step 3: Where possible, compare the differences between the parent company’s statements and consolidated financial statement analysis to reveal the limitations of using comprehensive data, and then discover the company’s actual ability to control resources and its impact on relevant The impact and extent of the project;

Step 4: From an investment perspective, conduct an in-depth analysis of the profitability and development capabilities of the listed company, tap the profit potential, eliminate false and unreal profits, and evaluate the listing company value.

Compare it with the market value and find that the value is undervalued or overvalued. Finally, make the following conclusions and explain the basis:

(1) Whether to invest in the listed company;

(2) If you come to the conclusion of investment, what size of investment (holding, more than 20, equity participation, etc.), how long to invest, what method of investment, etc.

(3) If possible, analyze and evaluate the core competitiveness of the listed company and evaluate the company's value based on this.

Reference source: Baidu Encyclopedia--Financial Analysis Method