Four Ways To Interpret Financial Statements

< p > < a > href= > //www.sjfzxm.com/news/index_c.asp > Enterprise Management > /a > the key is whether the business decision is correct.

Whether the decision is correct or not depends to a large extent on whether the financial analysts provide real, reliable and useful financial analysis information. Generally speaking, there are four ways of financial analysis: < /p >

< p > < strong > 1. comparative analysis < /strong > < /p >

< p > is the most commonly used method in the analysis of < a href= "//www.sjfzxm.com/news/index_c.asp > > financial statement < /a >, and it is also a basic method.

It refers to the analysis of the difference between the actual data and the specific standards, and the difference analysis and trend analysis.

According to the comparison of different objects, the comparative analysis method can be divided into absolute comparative analysis, absolute number increase or decrease comparative analysis, percentage increase and decrease analysis and ratio increase or decrease change analysis.

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< p > < strong > 2. trend analysis < /strong > < /p >

< p > is to reveal the changes of a href= "//www.sjfzxm.com/news/index_c.asp" > financial status < /a > and the changes of business results and their causes and characteristics, so as to help predict the future.

The data used for trend analysis can be either absolute or percentage or percentage data. If accounting statements are not used by analytical techniques and without analyzing tools, simply browsing the surface numbers, it will be difficult to obtain useful information and sometimes even be misled by accounting data and be deceived by surface appearances.

In order to make the users of the report correctly reveal the relationship between various accounting data, in order to fully reflect the business performance and financial status of the enterprises, western developed countries have developed four kinds of analysis skills for financial statements in the practice of financial management for people to use flexibly.

These include: horizontal analysis, longitudinal analysis, trend percentage analysis and financial ratio analysis.

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< p > < strong > 3. factor analysis < /strong > < /p >

< p > factor analysis method mainly includes the serial substitution method and the difference calculation method.

The serial substitution method refers to determining the influencing factors and replacing them one by one according to a certain replacement order, and calculates a method for calculating the degree of variation of each factor to the comprehensive economic index.

In the economic activities of enterprises, some comprehensive economic indicators are often influenced by many factors.

For example, in a productive enterprise, the reduction or increase of production cost is influenced by many factors, such as material and power consumption, manpower cost, and the quality of production equipment.

The change of profit is also influenced by many factors, such as product production cost, sales volume and price, sales cost and tax.

In the analysis of these comprehensive economic indicators, we can start with the influencing factors, analyze the degree of influence of various factors on the change of economic indicators, and find out the reasons for the change of indicators based on this.

It can be seen that factor analysis is an analytical method for determining the influencing factors, measuring the degree of influence and finding out the reasons for the change of indicators.

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< p > < strong > 4. ratio analysis < /strong > < /p >

< p > through the analysis of the financial ratios, we can understand the financial status and operating results of enterprises. The current financial ratios in China are divided into three categories: debt paying ability ratio, operating capacity ratio and profitability ratio.

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< p > (1) solvency: including solvency and long-term solvency.

(2) operating capacity: operational capacity is the measurement of the efficiency of enterprise asset utilization based on the turnover speed of various assets.

The quicker the turnover speed, the faster the assets of the enterprise will enter into the production, sales and other business links. The shorter the cycle of income and profits, the higher the operating efficiency will naturally be.

(3) profitability: the core of every concern, and the key to success or failure of enterprises. Only long-term profits can enterprises continue to operate.

Therefore, both investors and creditors attach great importance to the ratio reflecting the profitability of enterprises.

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