Analysis Of The Role Of Qualitative Analysis In Financial Analysis

　　 1. quantitative analysis Qualitative analysis

(1) what is quantitative analysis?

Quantitative analysis, popularly speaking, refers to the use of "numbers" to describe the characteristics of a thing. According to the statement of corporate balance sheet profit, the figures provided by the cash flow statement can be used to quantify the financial status of enterprises through the calculation of the liquidity ratio, the quick ratio, the property rights ratio and the net assets yield, and so on. To put it simply is to use numbers to speak.

(2) what is qualitative analysis

Qualitative analysis refers to the use of "language" to describe the characteristics of a thing. Based on the intuition and experience of the analyst, the method of judging the nature, characteristics and development of the object is based on the analysis of the past and present continuity and the latest information.

　　 2. Why should we attach importance to qualitative analysis?

Long term plan economic system In China, financial analysts only attach importance to quantitative analysis, do not attach importance to qualitative analysis, and are mainly based on quantitative analysis.

The ultimate goal of compiling and providing financial reports is to achieve the rational allocation of social resources. Therefore, the existing and potential investors, creditors, governments and their organizations require enterprises to provide financial reports that reflect the financial situation, operating results and cash flows of the enterprises in a real and fair manner. In order to occupy more social resources and achieve the purpose of illegal gain, enterprise management deliberately deliberately whitewash financial reports, and set up traps for financial reporting through various means. At present, the distortion of accounting information and the serious phenomenon of accounting fraud have made China's accounting work shrouded in the shadow of false accounts. Especially the consumer credit business, most of the customers are not in their own group of enterprises, many are not very familiar with the dealer.

Moreover, the financial statements are only the result of the company's business activities, rather than the reasons for the company's growth. The growth of a company depends on the growth space of its industry, and depends on the competitive advantage and core competitiveness of the company. The financial statements reflect the past and present of the company, and it does not reflect the future. If we only use quantitative analysis method, it is difficult to fully reflect the real operation and financial changes of enterprises, and can not make correct financial statement analysis conclusion.

Moreover, the production and operation activities of enterprises are complex, and are often influenced by many factors. These factors can not be directly expressed by numerical value, such as the quality of the management of the company, integrity, business environment, management, development and innovation, and even the corporate culture. Such factors that are not easy to draw conclusions from financial indicators need to be examined through a series of qualitative methods. Qualitative analysis can transform a large amount of accounting data into useful information for decision makers and reduce the uncertainty of decision making. Only in this way can we accurately evaluate the various abilities of enterprises and find out the existing problems, and reduce the decision-making errors caused by the conclusion of financial analysis.

　 3. The main contents of qualitative analysis.

　 (1) analysis of notes to accounting statements

As an important part of accounting statements, the annotations of accounting statements are supplementary explanations and detailed explanations of contents and items that cannot be adequately expressed by accounting statements themselves. Through the analysis of the annotations of accounting statements, financial analysts can fully understand the basic accounting assumptions, accounting policies and accounting estimates changes, related party relations and transactions, balance sheet events and other financial statements that can not be reflected but are very important for financial analysis.

For example, because of the existence of contingent liabilities, the liabilities recognized by the balance sheet do not necessarily reflect the total liabilities of an enterprise. Therefore, the analysis of corporate solvency should combine the notes of accounting statements. If there are contingent liabilities, it will obviously weaken the liquidity of the current assets of enterprises. If there is a contingent liability which is not disclosed, the accuracy of the debt paying ability index will be greatly reduced. The ratio of assets and liabilities that does not take into account liabilities has exaggerated the solvency of enterprises.