How To Analyze Financial Statements?

< p > < strong > 1. main target and < a href= "http:// www.91se91.com/news/index_c.asp" > function /a >: < /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 statement analysis < a href= "http:// www.91se91.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= "http:// www.91se91.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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