How To Analyze Financial Statements?

< p > < strong > 1. main target and function: < /strong > < /p >

< p > the purpose of financial statement analysis is to provide relevant parties with information that can be used to make decisions.

Specifically, there are three main types of financial statements: < /p >

< p > (1) the managers of the company.

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< p > (2) the existing investors and potential investors of the company.

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< p > (3) creditors of the company.

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< p > the function of financial statement analysis has three points: < /p >

< p > by analyzing the balance sheet, we can understand the company's financial position, and judge whether the company's solvency, capital structure and liquidity are adequate.

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< p > by analyzing the profit and loss statement, we can understand and analyze the profitability, profitability and operational efficiency of the company, and judge the competitive position and sustainable development ability of the company in the industry.

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< p > by analyzing the statement of changes in financial position, we can understand the company's working capital management capabilities, determine the company's ability to make rational use of funds and support the adequacy of its capital adequacy and sustainability.

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< p > < strong > 2. financial statements analysis < a href= "//www.sjfzxm.com/news/index_c.asp > > basic method < /a >: < /strong > /p >

< p > the method of financial statement analysis includes three types: ratio analysis, level analysis and common ratio statement analysis.

Financial ratios refer to the ratios formed between important or intrinsic indicators in an enterprise's statement.

Here it is important to note that when using the ratio analysis method, there must be a link between the items involved in a specific rate.

It doesn't make any sense to calculate the ratios of two financial data that are not associated with each other.

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< p > horizontal analysis can sometimes be called trend analysis. It is the simplest method of analysis.

The specific method of analysis is to compare the data of a certain enterprise in a number of accounting years in different years in order to determine the difference or difference rate between different years, so as to analyze the changes and trends of the enterprises' reports.

The common ratio statement analysis method concretely refers to the longitudinal analysis of the current profit and loss statement or balance sheet but not for several years.

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< p > < strong > 3. < a href= "//www.sjfzxm.com/news/index_c.asp > > financial statement < /a > main points of analysis: < /strong > /p >

< p > the object of financial analysis is financial statements, and the financial statements mainly include balance sheets, changes in financial position and profit and profit distribution tables.

From these three tables, we should focus on the following four main points: (1) the profitability of the company.

The growth of corporate profits and profits is a sign of their vitality and management effectiveness.

As an investor, when buying stocks, of course, the first thing to consider is to choose lucrative companies to invest.

Therefore, to analyze the financial statements, we should first analyze the profitability of the company's invested capital in the current period.

(2) the solvency of the company.

The aim is to ensure the safety of investment.

Specifically, it analyzes from two aspects: first, analyze its short-term solvency and see whether it has the ability to repay its debts due to maturity, which must be judged from the analysis and inspection of the company's capital flow; and the two is to analyze the strength of its long-term solvency.

This is done by analyzing the relationship among different equity items in financial statements, the relationship between rights and benefits, and the relationship between equity and assets.

(3) the ability of the company to expand its business.

That is, growth analysis is the most important issue for investors to buy stocks for long-term investment.

(4) the operating efficiency of the company.

The main purpose is to analyze the speed of capital turnover in financial statements, so as to test the efficiency and efficiency of various funds in stock issuing companies.

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< p > < strong > 4., evaluation of enterprise < a href= "//www.sjfzxm.com/news/index_c.asp > > financial status < /a > indicators: < /strong > /p >

< p > (1) sales profit margin: the profit level reflecting the sales revenue of the enterprise.

Formula: sales profit margin = gross profit / product sales net income x 100% product sales net income: net sales excluding sales discount, sales discount and sales return.

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< p > (2) total assets rate of return: used to measure the ability of enterprises to use all assets to make profits.

The formula is: total assets return ratio = (gross profit + interest expense) / average assets total * 100% < /p >

< p > (3) capital yield: it refers to the ability of enterprises to use investors to invest capital to get profits.

Formula: capital yield = net profit / paid capital * 100% < /p >

< p > (4) capital preservation and appreciation rate: mainly reflects the capital integrity and preservation of investors.

Calculation formula: capital preservation and increment ratio = end owner's equity total / initial owner's equity total * 100% capital maintenance and increment ratio = 100%, for capital preservation, capital preservation and appreciation rate is greater than 100%, for capital appreciation.

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< p > (5) asset liability ratio: used to measure the level of corporate liabilities.

Formula: asset liability ratio = Total Liabilities / total assets * 100% < /p >

< p > (6) turnover ratio: the ability to measure an enterprise's debt maturity at a certain point, also known as the short-term solvency ratio.

Calculation formula: current ratio = current assets / current liabilities * 100% quick ratio: it refers to the ratio of quick assets to current liabilities. It is a measure of the ability of an enterprise to repay its due debts at any time by using realizable assets.

The quick ratio is a supplement to the current ratio.

Formula: quick ratio = quick assets / current liabilities * 100% < /p >

< p > (7) accounts receivable turnover rate, also known as the collection ratio, is used to measure the turnover speed of accounts receivable.

Formula: accounts receivable turnover = net credit / average receivables balance * 100% credit net = sales income - cash sales - sales returns, discount, discounts.

Due to the fact that business credit information is not disclosed as a commercial secret, receivables turnover is usually based on credit sales and total sales, that is, sales net income.

Average accounts receivable balance = (initial accounts receivable balance + end account receivable balance) 2 /p

< p > (8) inventory turnover ratio: used to measure the turnover times of memory assets of enterprises in a certain period, reflecting a scale of the efficiency of the purchase, production and sale balance of enterprises.

Calculation formula: inventory turnover = product sales cost / average inventory cost X 100% average inventory cost = (initial inventory cost + end inventory cost) 2 /p

< p > (9) social contribution rate: it is a measure of the ability of enterprises to use all assets to create or pay value for the state or society.

Social contribution rate = total corporate social contribution / average assets total * 100% < /p >

< p > (10) the rate of social accumulation: how much of the total contribution of the enterprise society to the state finance.

Formula: the rate of social accumulation = the total financial contribution of the upper hand to the state / total contribution of the enterprise society * 100% < /p >

< p > enterprises should constantly improve their financial analysis according to their actual situation, so that financial analysis can be more perfect and reasonable, so as to achieve the goal of financial management and improve the economic efficiency of enterprises.

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