Qualitative analysis of financial statements

Abstract: With the business community on the level of disclosure of accounting information have become increasingly demanding, but also the continuous development of the financial statements Financial Statements.. Just from the data on the financial statements can not be directly or fully explain the financial situation, especially not explain the business condition and operating results of the level of quality, only the company's financial indicators and qualitative analysis of data related to that enterprise's financial situation so to conduct financial statement analysis.

Keywords: financial statements, assets from debt sheet, income statement, cash flow, qualitative analysis

First, the concept and meaning of financial analysis

With the business community the extent of accounting disclosure requirements of increasingly high financial statements also growing. Include: balance sheet (balance sheet), profit and loss account (income statement), cash flow statement (statement of cash flow). Financial Statement Analysis, also known as financial analysis, through the collection, collation corporate financial accounting reports to the relevant data, and combined with other relevant additional information on the company's financial position, operating results and cash flows for comprehensive comparison and evaluation of the financial management accounting reports provide users a basis for decision-making and control of management.

Financial statements to fully reflect the financial position, operating results and cash flows, but purely from the data on the financial statements can not be directly or fully explain the financial situation of enterprises, in particular, is not that good or bad business conditions and operating results level, only the corporate financial indicators to compare the data with the financial situation of enterprises in order to explain the status. so to the financial statements. doing the financial statements of work, you can properly evaluate the financial position, operating results and cash flows, revealing the company's future returns and risks, you can check the completion of corporate budgets, management of staff performance appraisal for the establishment of a sound and reasonable incentives to help.


Second, qualitative analysis of the financial statements

(I) an overall assessment of the side. The first is the company's social reputation, corporate reputation is the internal management practices and progress of the fundamental driving force. Employees and business relationships are built on top of the ties in good faith, the integrity of any link will do lead to the breaking of this bond. enterprises the full confidence of the staff to fully mobilize the enthusiasm of the staff and the initiative, the better for business advice and services, employee trust in the enterprise, can promote the business to recruit more high-quality personnel, and to bring about growth and development of enterprises confidence in the stability. so companies reputation is the fundamental expression of their own harmony, but also long-term statements reflect an important basis for sound development of enterprises. followed by the departments and personnel to determine the objective, and if the correct management decision-making maintain good records, the smaller the change in sales statistics department staff, accounting staff no bad record, from the side of the foundation reflects the accuracy of the report. Finally, grasp of policy and market, a major event on the enterprise focus, reflected in the consumer issue tracking survey. billion Lin Wood MLM system has been able to continue for a long time, reflecting the existence of empty words and false statements, but also reflects the company's vulnerability assessment system and inadequate.

Links to Research Papers Download http://www.hi138.com (b) detailed analysis of the financial statements.

1, the income statement (profit and loss account) of the qualitative analysis
Come net profit is a measure of the income statement are clear indicators of the accuracy of the objective, comprehensive measure of corporate profitability is an important criterion for qualitative analysis of the income statement. A look at the profits of companies main business is not its total profit. Two to see support whether the scale of the main items of profit and competitive in the industry, three to see whether the growth of profits within a reasonable, profit growth has several important judgments based on, first look at the overall company's industry profitability Gaobu Gao, competition are not so big, followed by mode of operation to see whether a company had a higher gross margin, and finally to see whether there is revenue growth or decline in the cost of the enterprise.

From the income statement, it can reflect the following four questions: (1) measure the operating results of the enterprise. Profit, including monthly and annual profits profit. When we look at profits but also to measure its future trends. Do not use short-term test results way to measure a long-distance athletes. (2) the composition of corporate profits may be to assess their operational risks. corporate profits mainly come from the operating profit, which, operating profit is most important. enterprises of foreign investment risk, the benefits stability is relatively poor. operating income is the chance of profits, can not rely on it to increase profits. If the firm's overall profit mainly from investment income. because investment income is uncertain, therefore higher risk. (3) Income Statement can measure whether the enterprise tax law, which has some business relationship between the development cycle. (4) examine the trend of corporate profitability, gross margins as the industry began to decline, the net profit began to decline, need to attract businesses close attention. This is a gradual process, according to the income statement to promptly determine based on the ability of corporate profits and future trends.

2, qualitative analysis of the balance sheet.

(1) of bad debts and other receivables business contacts. Some companies products are sold, but the money not being paid, balance sheet, many accounts are placed inside the old Chan, hide the truth of the registered capital, should be noted that capital is not in place. "equity" or "paid-up capital" is the fundamental guarantee of limited liability, which should be highly valued. At the same time should further note that "capital reserve" the amount of the project, if the project amount is too large, should further understand the "capital reserve" the composition of the project. because some companies do not have the statutory assessment of assets by the conditions, inflated by a false assessment of the net assets of the enterprise, thereby to adjust the company's assets debt ratio to deceive investors or creditors, investors or creditors, which should cause great attention
(2) analysis of the corporate debt ratio and liquidity ratio, understand the business interests of various creditors, the level of assurance. Through asset-liability ratio, we can understand the long-term business interests of the creditors on the level of protection, the greater the ratio, indicating that the creditors the greater the risk. And through the current ratio and quick ratio, you can understand the business the ability to repay short-term debt. In general, the larger of these two ratios, the more short-term protection of the interests of creditors. Although the current ratio, quick ratio also reflect the solvency or liquidity of the assets, but this reflects some limitations, this is because the real debt that can dry of cash, cash flow and debt compared to better reflect the ability to repay debt. should be combined with the quality of corporate liquidity flow analysis, the ratio of the two further amendments.

(3) projects of various types of asset specific analysis as to the quality of the enterprise to make fundamental financial judgments, can be specified according to the first, after dark, the first order of the easier to start. Analysis of enterprise projects to be processed on the business-related to judge the credibility of the project. enterprises pending projects, including "net current assets pending loss", "Once the net loss on disposal of fixed assets" and "Disposal of fixed assets," the three projects. in the accounting statement, the three the amount of items, usually zero. amortization of assets of various categories of amortization of the situation, the reliability of corporate profit and loss account to make inference. amortization of assets consist primarily of "fixed assets", "intangible assets", "Delivery extension of assets "," prepaid expenses ", which should be developed according to business accounting policy, combined with the" cash flow "as disclosed in note of the" depreciation of fixed assets "," amortization of intangible assets and other assets "project amounts, respectively, beginning with the four items and end of the year compared to the average balance of the amortization of corporate assets, amortization of the situation to make specific judgments, if the calculation of the various types of assets, amortization amortization rate is high under the accounting policies below the amortization rate, then the existence of the business is suspected of inflated assets and profits. computing enterprise accounts receivable and inventory turnover, current assets to determine the flow quality. accounts receivable turnover the greater the that the liquidity of corporate accounts receivable, the stronger, the better the quality of accounts receivable. And the greater the inventory turnover rate, indicating that the production cycle is shorter, more marketable products.

3, the cash flow statement of the qualitative analysis.

Mainly reflects the cash flow business, investment and financing of three aspects, to fully understand the ins and outs of corporate cash and cash balance composition, evaluation of business conditions, the cash capacity, financing capacity and financial strength. First look at the cash flow is stable, led by Li Ka-shing the strength of enterprises are huge fight against the crisis, according to the words of one of his caution, = is to keep a good cash flow business. Second, the existence of related party transactions of Enterprises, with particular attention to the years of major shareholders listed company to borrow money to repay bank borrowings at the end of re-use, thus can not reflect on the report at the end of the loan practices of major shareholders. Finally see whether the normal cash flow statement reflects the flow of funds, pay attention to the future and outflows of cash into the causes and matters.

The financial statements for qualitative analysis to help you grasp the qualitative nature of the problem, ask a few "why" and "is not" the potential for finding links and trends is also very practical method of mining the report content. To further improve the system of accounting statements, investment, and debt to investors to provide more comprehensive and useful information is the common business and financial responsibility. Links http://www.hi138.com Research Papers Download