Reasons For Year-End Financial Inventory

Annual end

In China's enterprises, there are 4 key financial statements: balance sheet, profit and loss account (profit statement), cash flow statement and profit distribution table.

Through the analysis and inventory of these forms, we can quickly find out the various problems existing in enterprises and guide them in the next year's production and operation.

Inventory one: assets

The balance sheet can provide the specific status and proportion structure of enterprise assets and liabilities.

It reflects the assets and distribution of enterprises and their respective rights and interests of creditors and owners.

Through the analysis of the table, we can understand the financial strength of enterprises, short, medium and long-term solvency and payment ability.

By looking at the structural proportion relationship between assets and liabilities to monitor financial risks, whether liabilities are reasonable, whether long loans are short or short debts are long, accounts receivable is excessive, and whether fixed assets are idle or not.

Case study:

Qingyuan electronics accessories factory reached the end of the year. When the financial manager summed up the financial affairs, the financial manager smiled and put the reports in front of the general manager: "Liu, this year's financial situation is very good."

This is still the case, looking at several key subjects in the report and finding problems. Although the liabilities and asset structure of the balance sheet are very reasonable, accounts receivable is excessive in assets, and most of them are concentrated in one of the largest buyers.

Usually, this buyer can pay in accordance with the account period. Why is it in arrears this time? And the amount is huge. If the buyer has any problems, the capital chain of the enterprise will be dangerous, because there are also raw material suppliers in the upstream, and there are credit sales accounts. If the money is not paid in time, it will not be able to pay on schedule. If the upstream fails, the production will be seriously affected.

President Liu immediately issued an order: to suspend investment in new projects, turn the funds left into the working capital as reserve funds, and stop selling credit to the purchasers, and timely charge accounts.

It turned out that there was a problem in the operation of the buyer, and a major investment decision error led to a tight turnover of funds, and the payment of Liu's total business was still unable to be repaid in a short time. At that time, some of the bank loans of Liu's company expired. Fortunately, Liu had prepared in advance, and the company did not present any major problems.

Comment:

It is not that the financial manager is incapable of finding the problem, but that the financial manager is proficient in financial knowledge, but lacks the general knowledge of enterprise marketing management. The examination of financial figures can not be combined with the production and marketing work, so it is very easy to produce errors in judgment or not to find any questions at all.

Therefore, it is suggested that the enterprise marketing and production personnel should know some financial knowledge, while the financial personnel can understand some production and marketing knowledge, and at least manage the marketing finance personnel to attend.

Inventory two: profit and loss statement

Through the inventory profit and loss statement (profit statement), we can grasp the information about the profitability of enterprises.

It helps to understand and evaluate the economic efficiency, profitability and solvency of enterprises, and can make predictions for the future. It helps enterprise managers find problems in production and business activities, find out the causes and make the right decisions.

Case study:

Tianxin office furniture factory has done a good job in the market, sales in the local is regarded as the boss, the surface of the wind and light, let peers envy.

But the profit is much lower than the average profit of the industry.

At the end of the year, the general manager was very helpless when he looked at the meager profits he had earned in a hard year.

So in every link to find out why the poor profit, production, market, channels......

There was nothing wrong with it. Finally, we found a problem from the profit and loss statement: the gross profit margin of the product is very high, and it is no difference from that of the peers, but the net profit is very low. From the report, we can see that the bad debts are too much, the management cost, the procurement cost and the promotional expenses are too high, and the profits are dragged down.

The reason was found, so we took strict control of credit sales conditions, cut down unnecessary departments and personnel, optimized the procurement process, reduced unnecessary promotional expenses, and gradually increased the profits of enterprises.

Comment:

Many problems in an enterprise can be found from the financial statements.

Therefore, the profit and loss account is made monthly by enterprises, so as to detect problems in time.

Inventory three: cash flow statement

The significance of the analysis of cash flow statement is to understand the inflow, outflow and surplus of enterprises' cash, evaluate the current and future solvency and payment ability of enterprises, and scientifically predict the future financial situation of enterprises, so as to provide an effective basis for their scientific decision-making.

There are three main sources of corporate cash: business activities, investment activities and fund-raising activities.

It is necessary to maintain good cash inflow in main business activities so as to enhance the profitability and risk tolerance of enterprises.

Once the cash inflow generated by the business activities is abnormal, its book profit can be regarded as a normal financial norm.

We should also pay attention to whether the proportion of cash inflow and outflow is normal and whether it is in line with the financial safety ratio.

Under normal circumstances, the extent of cash outflow is usually not too large, and if there is a big change, it needs attention.

The cash outflow of investment activities is usually caused by the purchase of fixed assets or foreign investment. At this point, it depends on whether the decision of the business operator is correct or not.

The cash outflow of fund-raising activities is mainly to repay debts due.

case

Hongda Chemical materials factory has made a good profit in recent years, and the prosperity of the company is encouraging all over the business.

Only financial managers are worried because he knows that profits now come mostly from investment income and financing income, while the main revenue is negative growth.

In the long run, the emphasis of marketing is on those non main businesses. Enterprises do not have core competitiveness. When external environment or capital fails, the consequences may be devastating.

But several times, the chairman and the general manager raised no questions.

The idea is: as long as we do not violate the law, how to make money is not important.

After grasping the main business, it was discovered that the main business was left unused.

Comment:

Delong, Jianlibao and other enterprises are good at capital operation, but the result is not ideal.

To do business is the foundation of the survival and development of enterprises, and excessive capital to do and waste the main business is the water without the end.

When most of the profit source of a company is not the main business, but the investment or financing, the enterprise must reflect on its own business strategy, otherwise it will easily happen in the case.

Inventory four: profit distribution table

The profit distribution table is an accounting treatment for the undistributed profit on the premise that the profit statement is compiled and the profit after tax is calculated.

It includes distributing dividends, stock dividends and earning surplus provident fund.

Its role is to allocate profits after tax to your business.

Case study:

The year-end settlement of the Limited by Share Ltd in the East Lane found that the enterprise did not earn money for the year, and decided to keep the profit distribution in order to stabilize the confidence of the shareholders.

But there is no net profit and no profit has been allocated at the beginning of the year. Finally, the majority of the provident fund is decided to be distributed to shareholders to boost morale. However, if the proportion is not correct, it violates the state regulations.

Comment:

The profit distribution table seems to be lighter in these four forms, because it is not directly related to the production and operation of enterprises, but the distribution of profits must be consistent with the laws of the state. On the one hand, the right distribution can effectively mobilize the enthusiasm of all parties.

It is also an important reference for enterprise management.

Financial management is the lifeblood of the survival and development of enterprises. It is very important. But nowadays, most enterprises do not attach enough importance to finance.