The so-called financial statement analysis is based on financial statements, using scientific evaluation standards and applicable analysis methods, following standardized analysis procedures, and analyzing the company's financial status, operating results, cash flow, etc. An economic management activity that conducts comparative analysis of important indicators to make judgments, evaluations and predictions on an enterprise's financial status, operating conditions and operating performance. The purpose of corporate financial statement analysis is mainly to provide information users with the more intuitive information they need. At the same time, the purpose of corporate financial statement analysis is also different for different information users. In this article, the author elaborates on the key points of financial statement analysis.
1. Interpretation of financial statement analysis
The so-called financial statement analysis is based on financial statements, using scientific evaluation standards and applicable analysis methods, and following standardized analysis procedures. , an economic management activity that makes judgments, evaluations and predictions on the financial status, operating conditions and operating performance of the company through the comparative analysis of important indicators such as the company's financial status, operating results and cash flow. The purpose of corporate financial statement analysis is mainly to provide information users with the more intuitive information they need. At the same time, the purpose of corporate financial statement analysis is also different for different information users. For investors, they can decide whether to invest by analyzing the assets and profitability of the company; for creditors, they can decide whether to lend to the company by analyzing the risks and rewards of the loan, and by analyzing the asset flow status and profitability to understand its Short-term and long-term solvency; for operators, financial analysis is conducted in order to improve financial decisions, operating conditions, and improve operating performance. Due to the different purposes of financial statement analysis, different analysis purposes may use different analysis methods and focus on different assessment data indicators.
2. The subjects we should focus on when reading financial statements
1. The increase or decrease relationship between accounts receivable and other receivables. If the same amount of the same unit is adjusted from accounts receivable to other receivables, it indicates the possibility of profit manipulation.
2. The relationship between accounts receivable and long-term investment. If the decrease in accounts receivable of a unit results in an increase in long-term investment in the unit, and the increase or decrease amounts are close, it indicates the possibility of profit manipulation.
3. The amount of deferred expenses and pending property losses. If the amount of deferred expenses and pending property losses is large, there may be a problem of delaying the inclusion of expenses in the income statement.
4. Comparison of borrowings, other receivables and financial expenses. If the company has large amounts of other payables to related units and its financial expenses are low, it indicates that it is possible to use related units to reduce financial expenses.
3. Analysis of key indicators in financial statements
1. Analysis of solvency indicators
The solvency of an enterprise reflects its financial status and operating capabilities An important symbol, solvency is the ability or guarantee level of an enterprise to repay maturing debts, including the ability to repay short-term and medium- and long-term debts. Generally speaking, the pressure of corporate debt repayment mainly comes from the following two aspects: first, the repayment of the principal and interest of general debt, such as various long-term loans, bonds payable, long-term payables and various short-term settlement debts; second, rigid debt Various taxes payable must be paid by the enterprise. The main financial indicators of corporate solvency include current ratio, asset-liability ratio, etc. The current ratio (current assets/current liabilities) is an indicator to evaluate the company's ability to use current assets to repay current liabilities. If the current ratio is too low, the company may face difficulties in paying off its due debts; if the current ratio is too high, it indicates that the company's asset utilization rate is low and the inventory is low. Backlog, slow turnover. The asset-liability ratio (total liabilities/total assets) reflects the extent to which a company's assets cover its debts. The smaller the ratio, the stronger the company's solvency. It is generally believed that the asset-liability ratio should be less than 50%, that is, liabilities should be less than owners' equity. This ratio varies according to different industry standards.
Example analysis: Assume that the claims in the total assets of listed company A have accounted for 75% of the total assets, and of the total claims, the amount receivable from the parent company has reached more than 80%. In July 2000, Company A's parent company faced the danger of bankruptcy liquidation due to severe insolvency. So how should we evaluate the quality of Company A’s claims and its impact on Company A’s future at this time?
Example analysis: Company A’s claims account for 75% of total assets, of which the amount receivable from the parent company exceeds 80%, that is, Company A’s claims receivable from the parent company exceed 75% of its total assets ×80%=60%. Currently, Company A's parent company is facing bankruptcy liquidation, and 60% of Company A's total assets are at risk of bad debts, so the quality of its claims is extremely poor.
2. Profitability index analysis
An enterprise must be able to make profits to have existing value. The purpose of establishing an enterprise is to make profits, and increasing profits is the most comprehensive goal. As an investor, your main concern is the rate of return on corporate investment. For ordinary investors, they are concerned about the issue of corporate dividends and dividends. For investors who have corporate control rights, they will consider more how to enhance corporate competitiveness, expand market share, and pursue the sustainability of long-term interests. , stable growth. The main indicators for measuring corporate profitability include gross sales profit margin and capital profit margin. The gross sales profit margin (gross sales profit/sales revenue) indicator reflects how much money can be used for various period expenses and profit formation for every 1 yuan of sales revenue after deducting sales costs. Generally speaking, the higher the gross sales profit margin, the stronger the profitability of the main business and the stronger the market competitiveness of the main business. The capital profit rate (total profit/total capital) can measure the effectiveness of the use of assets and reflect the overall investment effect. If the asset profitability of an enterprise is higher than the average asset rate of profit of society and the average asset rate of the industry, the enterprise will be able to absorb investment more easily, and the enterprise's development will be in a more favorable position.
3. Analysis of operating capability indicators
The role of operating capabilities is reflected in its contribution to the value of various economic resources, that is, asset turnover rate and turnover, and then through this role Impact on the achievement of value-added goals. In this sense, operating capability not only determines the company's solvency and profitability, but is also the core of the entire financial analysis work. Through the analysis of operating capabilities, we can not only evaluate the business management efficiency of an enterprise, but also determine whether it has the ability to make profits. The main indicators for measuring operating capabilities include current asset turnover speed indicators and fixed asset turnover indicators. Among them, the indicators that reflect the company's current asset turnover speed include: current asset turnover rate and current asset turnover days indicators. The former is the ratio of the company's net operating income to the average current asset balance within a certain period, that is, the average number of times the company's accounts receivable are converted into cash during the year; the latter is the turnover rate expressed in time, which is called the average current asset recovery period. The current asset turnover ratio indicator is a positive indicator. Generally speaking, the higher the ratio, the faster the collection of accounts and the shorter the age of accounts; the stronger the liquidity of assets and the stronger the short-term solvency. The number of days of current asset turnover is an inverse indicator. Generally speaking, the lower the value of this indicator, the better. The main indicator that reflects the turnover of fixed assets of an enterprise is the fixed asset turnover rate, which is the ratio of the net operating income of an enterprise to the average net fixed assets in a certain period. It is an indicator used to measure the efficiency of utilization of fixed assets. This indicator is a positive indicator. Generally speaking, the higher the ratio, it indicates that the turnover amount completed with the same fixed assets is more and the utilization effect of fixed assets is better.
4. Analysis of development capability indicators
Development capability refers to the development prospects and potential of an enterprise in the coming years. The main indicators that reflect an enterprise's development capabilities include: operating income growth rate and three-year average profit growth rate. The operating income growth rate refers to the ratio of the current period's operating income growth to the total operating income of the previous year. It reflects the increase or decrease in the company's sales revenue and is an important indicator for evaluating the company's growth and development capabilities. If the indicator is greater than 0, it means that the company's operating income has increased this year. The higher the indicator value, the faster the growth rate and the better the company's market prospects; if the indicator is less than 0, it means that the company's products are not marketable and of inferior quality and price. High and shrinking market share. The three-year average profit growth rate indicates the company's profit growth and efficiency stability for three consecutive years. The higher the indicator, the more accumulated the company is and the stronger its ability to sustain development.
When analyzing financial statements, you must also read the notes to the statements, pay attention to the history and main business of the company, pay attention to the impact of changes in accounting treatment methods on profits, and analyze the impact of subsidiaries and related parties on profits to gain a comprehensive understanding. Understand the company's financial status and operating results. At the same time, the quality of accounting statement analysis is also affected by the analyst's experience and business capabilities.