What are the main limitations of financial analysis?

I. Analysis of financial indicators of solvency

Solvency analysis includes short-term solvency analysis and long-term solvency analysis. Short-term solvency is the degree of guarantee for an enterprise to repay its current liabilities in full and on time, and its main indicators are current ratio, quick ratio and interest guarantee multiple. The higher these ratios, the stronger the short-term solvency of enterprises, but these ratios also have certain limitations in evaluating short-term solvency.

Second, the analysis of financial indicators of operational capacity

1, accounts receivable turnover index

Accounts receivable turnover rate is an index reflecting accounts receivable turnover rate. In practice, it has the following limitations: first, it does not consider the recovery time of accounts receivable, and cannot accurately reflect the process and balance of recovering accounts in that year.

Second, when sales are seasonal, especially when the amount of credit sales changes greatly year by year, this indicator can not continuously reflect the recovery of accounts receivable across years; Third, the turnover rate information of accounts receivable cannot be provided in time. This indicator reflects the turnover in a certain period, and can only be calculated according to the annual sales and the average occupation of accounts receivable at the end of the period.

2. Inventory turnover index

Inventory turnover rate is an index that reflects the strength of enterprise's sales ability, whether there is excess inventory and whether assets have strong liquidity, and it is also a comprehensive index to measure the efficiency of inventory operation in all aspects of enterprise production and operation.

In practice, the inventory valuation method has a great influence on the inventory turnover rate. Therefore, when analyzing the inventory turnover rate of enterprises in different periods or different enterprises, we should pay attention to whether the inventory valuation methods are consistent.

In addition, in order to improve the rate of return on assets, the management of an enterprise may want to reduce the inventory level and turnover period, which is sometimes affected by human factors, and this index cannot accurately reflect the operational efficiency of inventory assets. At the same time, some related costs caused by too high or too low inventory level can not be ignored in the analysis, such as customer reputation loss, sales opportunities and production delay caused by low inventory level.

Third, the financial indicators of profitability analysis

1, sales profit rate indicator

The main analysis index in profitability analysis is the sales profit rate index. Sales profit rate is the ratio of the total profit of an enterprise to the net income of product sales in a certain period, which reflects the profitability of an enterprise in a certain period. Although the sales profit rate can reveal the profit level in a specific period, it is difficult to reflect the stability and durability of profits, which is affected by the financing decision of enterprises.

2. Index of capital preservation and appreciation rate

The rate of capital preservation and appreciation is an index to assess the ability of operators to preserve and increase the capital invested by investors. The capital preservation and appreciation rate has the following shortcomings: First, this index is not only affected by the operating results of enterprises, but also by the profit distribution policies of enterprises, without considering the influence of price changes.

Second, numerator and denominator are data at two different time points, lacking time correlation. For example, considering the time value of money, it is necessary to convert the net assets at the beginning of the year into the value at the end of the year (or paste the value at the beginning of the year), and then compare it with the net assets at the end of the year (or at the beginning of the year).

3. The increase in paid-in capital and capital reserve caused by objective reasons such as investors' investment in capital, enterprises' acceptance of donations, capital (equity) premium and asset appreciation during the operating period does not belong to capital appreciation, and the profits distributed to investors in the current period are not included in the "undistributed profits" item at the end of the balance sheet.

Extended data:

Basic method:

There are many methods of financial analysis, including trend analysis, ratio analysis and factor analysis.

(A) trend analysis method

Trend analysis, also known as horizontal analysis, is a method to compare the same indicators in two or more consecutive financial reports to determine the direction, amount and range of increase or decrease, so as to explain the changing trend of enterprise financial situation and operating results.

(2) Ratio analysis method

Ratio analysis is an analytical method to reveal the financial situation and operating results of an enterprise by using the ratio of two related values in financial statements.

(3) Factor analysis method

Factor analysis, also known as factor substitution method and sequence substitution method, is an analysis method to determine the influence degree of several interrelated factors on the comprehensive financial indicators or economic indicators of the analysis object. The starting point of adopting this method is that when several factors affect the analysis object, assuming that all other factors have not changed, the influence of individual change of each factor is determined in turn.

Baidu Encyclopedia-Financial Analysis