How Do Financial Experts Interpret Balance Sheets?

The balance sheet, also known as the financial statement, is used to express the financial status of an enterprise in a specific period. The financial condition refers to the assets, liabilities, owner's rights and interests and their mutual relations. The balance sheet is based on the equation of "assets = Liabilities + owners' equity", which can be used to analyze the company's financial position.

A good company does not need to borrow money. If a company can get a brightest result at a very low debt rate, then the company is worth our investment. When investing, we must choose those companies with low debt ratio, and try to choose companies that are simple in business but simple in business, but not very simple.

Whether free cash flow is abundant is one of the main signs of a company's greatness. Free cash flow is more important than growth. For companies, there are usually three ways to get free cash: A, issuing bonds or shares; B, selling part of the business or assets; C, and maintaining operating income, cash inflow is greater than that. operating costs Cash outflow.

Debt management is like a thorny rose to an enterprise. If there are many thorns on the roses, how can you be sure that you will be careful not to be stabbed? The best way is to try to choose enterprises without thorns or little thorns, so that the odds will be bigger.

When observing the debt ratio of an enterprise, it is reasonable to compare it with the liabilities ratio of other enterprises in the same period. Although the debt ratio of good companies is relatively low, it is impossible to compare the debt ratio of enterprises in different industries.

Different accounting standards can calculate the far different results of the same data. So when we analyze the enterprises to invest, we must try to understand what the company is using. accounting standard 。 If the company has a subordinate company, we must pay attention to whether all the data of all the subsidiaries are included in the company's report.

When choosing a company to invest, if you find that the company has high debt rate because of the high cost, you must be careful about it. After all, how can enterprises that do not know how to save costs produce products of high quality and low price? If there are no products of high quality and low price, how can they make substantial returns for shareholders?

Zero coupon bonds are useful financial instruments that can save taxes and bring benefits to investors. But investment risks also exist. When buying zero coupon bonds, be careful not to pay cash on time. Carefully observe the credibility of the enterprise, do not be deceived by the appearance of the enterprise. Zero coupon bond is a double-edged sword. It can save people or hurt people. We must try to make zero interest bonds a helper rather than an enemy.

When choosing an investment enterprise, try to choose those enterprises that do not need to continuously update their products. Such enterprises need not invest too much money in updating the production plants and machinery and equipment, so that they can create more profits for shareholders and allow investors to get more returns.

Enterprise intangible assets As important as tangible assets, investors should know more about the reputation of an enterprise when they choose to invest in it. Obviously, by virtue of 10 yuan, tangible assets generate 1 yuan of profits and profits of 1 yuan, and intangible assets, which generate 1 yuan of profits, of course, enterprises are different.

Long term loans are not necessary for excellent companies, but it does not mean that companies with high long-term loans are not good companies. It is necessary to analyze the causes of liabilities and see if they are leveraged buy-out.