Analysis of financial statements and methods

Paper Keywords: interest in current affairs reporting solvency margin capital structure
Abstract: The financial statements evaluation of business conditions is the main basis? Analysis of the financial statements or related to the evaluation of the scientific accuracy and visitors are of. This article describes a systematic analysis of the financial statements on the content and methods.

First, the financial statements of the meaning and purpose:
Summary financial statements reflect the financial position during a given period and operating results of the written documents and other information? Its content has two aspects: First, business results? Including corporate business income, cost control and cost savings case, profits How much and investors receive dividends; Second, the financial situation of enterprises is good or bad? including funding, liquidity and business development potential. also known as financial analysis, financial statement analysis? to the financial statements and other information as the basis and starting point ? using special methods? system analysis and evaluation of past and present business operating results, financial condition and its changes? purpose is to understand the past, the evaluation of the present and predict the future? interest groups to help improve decision-making. financial analysis of the most basic function is to report data translate into a lot of useful information for specific decision-making? reduce decision uncertainty.

Published financial statements of foreign companies? Is based on the general requirements of all users of the design? For different users? The purpose of their analysis are not identical:
Investors: In order to decide whether to invest? Analysis of enterprise's assets and profitability; to determine whether the transfer of shares of John? Of profitability? Stock changes and prospects for development; to examine the performance of the operators? To analyze the profitability of assets, bankruptcy risk and capacity; To determine dividend policy? to analyze the funding situation.

Creditors: To determine whether a business loan? To analyze returns and risks of the loan; In order to understand the short-term solvency of the debtor? To analyze the current situation; In order to understand the long-term solvency of the debtor? To analyze its profitability; to determine whether transfer credit? to assess its value.

Managers: To improve financial decision-making and financial analysis? Involving the contents of the most widely used? Includes almost all the external concerns among users of problems. Government: financial analysis to understand the business through tax situation; compliance with government regulations and market order situation? Workers income and employment status.

Analysis of the general purpose financial statements can be summarized as: To evaluate the operating results of the past? Measure of financial status now? Predict future trends.

Second, the content of financial statement analysis
Different users of financial statements? Because of their different needs for financial information? Analysis of the financial statements and thus the corresponding content is also different. But be summed up? Content analysis of financial statements includes the following aspects:
1, the capital structure
Companies working in the production process to use the funds? By people and businesses from its own creditors, the two parts? In a different form of distribution and use. The establishment and capital structure is reasonable or not? Directly related to the business and strengthen our economic strength the basis of the stability of the business or not. of the capital structure of the business operators, investors and creditors are of great significance.

2, solvency analysis
Enterprises in the production process? To make up for lack of its own funds? Often raised by borrowing part of the production and operation funds. Thus enterprise managers through financial statement analysis? Determination of the solvency of enterprises? Is conducive to raising to make the right decision. While creditors? solvency strength of its fundamental basis for making lending decisions.


3 Profitability Analysis
Profit is the ultimate goal of the enterprise? Is the basic purpose of investors. Profitability of the size of the show the success of the enterprise management and business prospects for the future good or bad.

4, the capital efficiency of
The level of utilization of funds is directly related to the size of corporate profitability? Indicates that the company's future prospects? Is the business of financial statement analysis and investors an important part.

5 Analysis of changes in financial position
Analysis of changes in financial position primarily through changes in financial position or cash flow statement of the purpose of Research and evaluation? Understand the business when the inflow of funds during the period the number of channels? Number of outflows and their uses? Compared to the beginning and end of business capital increase or decrease the amount? what causes it? to correctly evaluate the enterprise's solvency and ability to pay? provide a sufficient basis for decision-making.

6, cost analysis
In the market economy? Product prices are market-determined. If companies can reduce costs? Reduce costs? Will get higher profits? To compete in the market in a favorable position because of the cost, the cost of the report are internal Using the Report? investors, creditors generally can not get? which cost analysis is the business of the financial statements are an important part.

Third, the method of financial statement analysis
Many ways to analyze financial statements? Basic methods of trend analysis, structural analysis, financial indicator analysis, comparative analysis and factor analysis of several.

1, trend analysis
Trend analysis is by observing the successive phases of the financial statements? Comparing the amount of the related projects? Analysis of changes in some indicators of change? On this basis, determine trends? Which may arise in the future to anticipate the results of A method using trend analysis? statement users to understand the basic trend of changes in the project? determine whether this trend is beneficial and to predict the future development of enterprises.

For example? A mall for a June 1, 2000, the sale of products information such as the table below:


According to Table 1 digital information? Further the purpose of calculating the percentage trend. Trends percentage is divided into two kinds of fixed ratio and chain. (1> in January as the base? The rest of the period and base period? Calculate the percentage trend? That set ratio. Table 2 for a June 1, fixed ratio.


As can be seen from Table 2? Reflect trends in percentage compared with the absolute number (Table 1)? Better able to explain A light shopping for 6 months to increase sales revenue by 45%? While sales grew by 67% profit? higher than the growth in sales revenue? The main reason is cost of sales increased less than sales growth? thus affecting the sales of profitable growth.

(2> the early phases of the project number and the number of comparison? Calculate the percentage trend? The chain. Table 3 to 1 ratio of a ring in June.


As can be seen from Table 3? Cost of sales increased month by month? And the growth rate is increasing; sales are growing, though? But slower growth? As a result, although the month by month in sales profit growth? But the growth rate in the reduced ? and the June growth rate was only 111% 0 Links to Research Papers Download http://www.hi138.com 2, structure analysis
The so-called structural analysis refers to the financial statements of a number of key projects as the base (ie 100%)? Then calculate the various components of the project and the overall percentage? To analyze the overall changes in the composition? Thus revealing the financial statements the relative position of the objective and the overall structure of relations.

A mall in Table 1 is still the sales data of income and other projects? To sales revenue is 100%? Calculate the percentage of the structure of other projects? Table 40

Percentage from each of the changes in the structure can be seen? By the cost of sales on the decline? Cause the product to the profit share of total sales revenue decreased year by year. Structure of the balance sheet and income statement analysis is useful. As a base project? usually in the income statement sales income? in the balance sheet? usually total assets, total liabilities and owners equity.


3, when the ratio analysis
Comparative analysis is to some of the items in the financial statements or the ratio compared with other relevant information to determine the quantitative difference? To demonstrate and evaluate the financial position and operating results of the analysis of a report. In accordance with the contrast between the two sides can be divided the following aspects:
(1) the actual data with the previous period (last month, last quarter, year, etc.) compared to the data? To reflect the state of development of production and business activities? Study and improve the situation.

(2) the enterprise's data and other enterprises with the industry or industry-wide average, compared to the advanced level? To find companies with the advanced level? Identify potential lies.

(3) The period of the actual number and plan number, compared to budgeted? Inspection program completion? To provide direction for further analysis.

(4) End of the number compared with the beginning? That current production operations and financial condition of the latest changes.

In short? Comparison of financial data by business? Can reveal business achievements and gaps? Find problems? To further analyze the causes and explore the potential direction or provide clues.

4, factor analysis
Factor analysis is to analyze the factors affecting the financial indicators and their impact on the index? Shows the actual and planned or current period compared to a change in the base period, and the main financial indicators of the variations on the impact of changes in a analysis.

Suppose B company? Relevant data are as follows:
Net profit margin x asset equity interest in two years
Second, the first year of 14.93% 7.39% x2.02
12.12% the second year of the second 6% x 2.02
It can be seen through the decomposition? Interest margin decline is not the capital structure? But the asset utilization or cost control a problem? Net assets caused interest rates.

For example, they can decompose the net interest margin on assets:
Net profit margin x asset turnover = sales
The first year of 7.39% = 4.53% x 1.6304
Second year, 6% = 3% x 2
It can be seen through the decomposition? Improve the efficient use of assets? But not enough to offset the resulting sales of net interest income due to reduced losses.

Factor analysis using the general procedure? First clear indicators by which a financial factors; followed by a variety of factors determine the quantitative relationship between the index? Is the relationship between addition and subtraction or multiplication and division relationships? On this basis? Lash An analytical formula; re-calculate a variety of factors determine the degree of change in the amount of financial indicators.


5, ratio analysis
Ratio analysis of financial statements with a different project or between different classes? Or different between the financial statements of the project? With the ratio to reflect their relationship to each other? According to evaluate the financial position and results of operations? and identify business problems and solutions.

Financial ratios can be divided into four categories:
(1) liquidity ratio? Such as current ratio, quick ratio.

(2) Asset management ratios? Such as inventory turnover, current asset turnover, total asset turnover, receivable turnover rate.

(3) debt ratio? Such as asset-liability ratio, equity ratio, debt ratio and tangible net interest earned multiples.

(4) profitability ratios? Such as sales margin, net interest and net assets, return on assets.

Description of the different rates between different? Different because users of financial statements? Analysis of the ratio of focus, purpose, different purposes? Which are different standards of comparison. Another? Because it was only involved in every process of production and operation a relationship? and the production and operation activities is complex? the various ratios should therefore be organically combined conclusions? the ratio analysis and trend analysis, structural analysis, combined? to draw the right conclusions. reposted elsewhere Free Download Center http://www.hi138.com Papers