How to treat balance sheet and income statement?

Read the total information and grasp the financial structure of the enterprise as a whole.

Reading the information of assets, liabilities and total equity in the balance sheet can help us grasp the financial structure of the enterprise as a whole.

1. Financial information disclosed by total assets

The total assets reflect the number of assets owned by an enterprise and the size of its operation.

It is easy to start a company. Big companies are called companies, and small companies are also called companies, so a general manager complained: "Our company gives me a very low annual salary. Why is the annual salary of the general manager of a peer company so high? " So I have to reach an agreement with my boss.

In fact, the CEO's salary is related to the size of the enterprise. Managing small assets of 65.438+10,000 yuan is not the same as CEO's responsibility of 65.438+10 million yuan or even 20 billion yuan. The CEO's salary and scope of work are linked to the scale. Total assets indicate the size of the enterprise.

2. Financial information disclosed according to total liabilities

Total debt refers to the total debt that an enterprise needs to repay, and its amount indicates the risk of enterprise operation. Generally speaking, small enterprises have low debts and weak financing ability. Once an enterprise becomes bigger, the risk of debt will often increase. Small enterprises often face operational risks, such as there is no market for goods; Moreover, large enterprises not only have operational risks, but also financial risks. To some extent, large enterprises are more risky and more difficult to do. The bigger the enterprise, the larger the scale of operation, the greater the degree of product marketization and the lower the gross profit margin. The lower the gross profit margin, the bigger the enterprise. Therefore, the bigger it is, the more empty it is, and the enterprise assets are not fully loaded and become overweight. So it's easy to be bigger and stronger.

3. Financial information disclosed by the total owner's equity.

The total owner's equity actually reflects the interests of shareholders in the enterprise. Owner's equity is also called net assets, that is, total assets MINUS liabilities. The degree of increase in net assets, that is, the increase in shareholders' assets, actually directly reflects the quality of operating efficiency, as well as the growth of enterprises and the rate of return of shareholders.

However, it cannot be said that the increase of total assets must be the increase of shareholders' return rate, because the increase of total assets may be the increase of liabilities. Some enterprises have greatly expanded their total assets, but not their net assets, but their liabilities. In this case, the risk of the enterprise will be greater and greater.

In order to understand and evaluate the solvency of enterprises, we should pay attention to the following aspects when analyzing the balance sheet: first, evaluate the liquidity of various assets, especially current assets, which is the basis of the solvency of enterprises; The second is the comparative analysis of current assets and current liabilities, because certain current liabilities need certain current assets to ensure timely repayment; The third is the structural analysis of the source of funds or capital structure. Different capital structures have different requirements for solvency.

In China's accounting system, the income statement is called the traditional "income statement", and its structure is also very different from the international practice. There is no doubt that the main function of the income statement is to reflect the immediate profit of the enterprise, but in depth, through the scientific analysis of the income statement, we can get the following three useful information: (1) the immediate profit level; (2) How much cash flow is generated by sales activities; (3) the size of business risks and financial risks caused by sales activities. Among them, the risk assessment techniques related to income statement mainly refer to leverage analysis, including business leverage analysis, financial leverage analysis and comprehensive leverage analysis.

The income statement should clearly provide the following three stages of business activities information: the first stage is marketing activities information, mainly including the sales and operating costs of enterprises; The second stage is financial expenses and tax information; The third stage is the after-tax net profit and its distribution information. Specific to the income statement items, the above information is mainly expressed through three items, namely sales, pre-tax profit and interest, and after-tax net profit (earnings per share).

Through the cash flow statement, we can: (1) provide cash flow information and cash outflow information during the accounting period of the enterprise, and reflect the business activities, investment activities and fund-raising activities of the enterprise on the cash basis; (2) Help people distinguish accounting income (the relationship with cash flow); (3) Providing information about income quality; (4) Enhance the comparability of financial report information; (5) Assessing the liquidity and financial adaptability of the enterprise; (6) Forecast future cash flow. The above points are obviously difficult to provide by accrual accounting. Of course, cash flow information needs to be analyzed together with balance sheet and income statement information in order to play its greatest role.

From the perspective of financial management, among the three cash flows in the cash flow statement (cash flow from operating activities, cash flow from investment activities and cash flow from financing activities), cash flow from operating activities is the most important cash flow, and only it is the fundamental factor that determines the value of an enterprise.

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