Literature review of emergency financial statements

Financial analysis is also the analysis of financial statements. By analyzing the accounting data provided by the financial statements of enterprises, we can evaluate the value of enterprises, predict the development prospects of enterprises, and make reasonable decisions. Financial statements comprehensively, systematically and comprehensively record the track of enterprise brokerage business, and relevant stakeholders pay more and more attention to its analysis. Firstly, this paper summarizes the relevant theories of financial statements, analyzes the subject, object and purpose of financial statements from the definition and content, and summarizes the financial reports of listed companies after analyzing the principles and steps of financial statements. Key words: listed companies, financial reports, comprehensive analysis, DuPont system Foreword: With the deepening of China's reform and opening up, more and more companies and enterprises have embarked on the road of listing, and financial statements have been paid more and more attention. The financial statements of listed companies provide users with different data and related information reflecting the company's operation and financial situation, but different users have different emphases when reading the statements. With the continuous progress of society and the rapid development of economy, listed companies are getting closer to people's lives. Through the analysis of balance sheet, income statement and cash flow statement, investors, tax authorities, politics and law, and even enterprise managers can make important decisions. In this case, the separation of ownership and management rights has become an inevitable trend of enterprise development, and listed companies are the representatives of the separation of these two rights. Shareholders, creditors and other relevant external stakeholders of listed companies want to know about the company's operating conditions, so it is necessary to analyze the information disclosed by the company, which requires the analysis of financial statements and financial statements. Financial statements are static and dynamic information about the financial situation of enterprises expressed in the form of accounting statements by the accounting information system of enterprises through accounting financial information and financial reports. Among the numerous listing information, financial statements have always been the focus of attention of relevant stakeholders. Financial analysis refers to the analysis and evaluation of the past and present operating results, financial status and changes of an enterprise based on financial statements and other materials, with the purpose of understanding the past, evaluating the present and predicting the future, and helping interest groups to improve their decision-making. The published financial statements are designed according to the general requirements of all users. Therefore, report users should choose the information they need, rearrange it, and study the relationship between them to make it meet the specific decision-making requirements. Provide relevant financial information to report users to provide basis for their decision-making. Financial statements comprehensively and generally reflect the financial status, operating results and cash flow of enterprises through a series of data. For the users of the report, these data are primitive and preliminary, and cannot directly serve for decision-making. Based on the definition and content of financial statements, this paper explains and expounds the relevant knowledge such as accounting and finance, as well as the works and theories of relevant scholars in recent ten years. Text: I. Definition of financial statements and related contents (I. Definition of financial statements) In February 1898, the Committee of the New York State Banking Association of the United States proposed a motion to require all borrowers to submit their signed balance sheets to measure the credit and solvency of enterprises. From 1923, James Bliss of the United States published the book "Financial and Operating Ratio under Management". Gilman published his representative work Analysis of Financial Statements in 192 1. He pointed out that the role of ratio analysis cannot be overestimated, because the relationship between financial ratio and balance sheet seems difficult to be clear. Financial statements, also known as external accounting statements, are accounting statements provided by accounting entities to reflect the financial status and operation of accounting entities, including balance sheets, profit and loss statements, cash flow statements or statements of changes in financial status, schedules and notes. Financial statements are the main part of financial reports, excluding directors' reports, management analysis and financial statements, which are included in financial reports or annual reports. External statements refer to financial statements. The symmetry of internal statements refers to the accounting statements compiled in accordance with accounting standards and disclosed to external users such as owners, creditors, the government and other interested parties, and the public. (II) Definition of financial statement analysis Financial statement analysis, also known as financial analysis, is a management work that comprehensively compares and evaluates the financial status, operating results and cash flow of an enterprise by collecting and sorting out relevant data in the financial accounting report of the enterprise and combining with other relevant supplementary materials, so as to provide management decision-making and control basis for users of financial accounting reports. (III) Composition of financial statements 1. The balance sheet mainly includes assets and liabilities and owners' equity. Assets include current assets, long-term investments, fixed assets, intangible assets and other assets. Liabilities include current liabilities and long-term liabilities, and owners' public welfare includes paid-in capital, capital reserve, surplus reserve and undistributed profits. Of course, current assets, current liabilities, fixed assets, etc. It has to be divided into many subheadings, so I won't go into details here. Here is an equation: assets = liabilities+owners' equity. 2. Main business income-main business cost-operating expenses-sales tax and surcharge = sales profit in the income statement; Sales profit+other business profit-management expenses-financial expenses = operating profit; Operating profit+investment income+non-operating income-non-operating expenditure = total profit; Total profit-income tax = net profit 3. The cash flow statement is one of the three basic financial statements, also known as the statement of changes in accounting position, which expresses the changes of an organization's cash (including cash equivalents) within a certain period (usually monthly or quarterly). Second, the basic analysis method of financial statement ratio analysis is to compare the relevant data of several important items in the same financial statement and find out the method of ratio, which is used to analyze and evaluate the company's business activities and the company's current and historical situation. It is the most basic tool of financial analysis. Due to the different purposes of financial analysis, various analysts, including creditors, management authorities, government agencies, etc., have different emphases. As a stock investor, it is mainly to master and use four types of ratios, namely, four financial ratios reflecting the company's profitability ratio, solvency ratio, growth capacity ratio and turnover capacity ratio. (1) The ratio analysis of financial statements mainly includes four aspects: content analysis 1. The commonly used indicators for profitability analysis are: return on net assets = net profit/average return on net assets = net profit/average profit rate of total assets operating income = total profit/net operating income. The bigger the above three indicators, the stronger the profitability. 2. Analysis of solvency Current ratio = current assets/current liabilities, which should be greater than 1. Otherwise, there is a problem with the short-term solvency of the enterprise, and the optimal value is greater than 2. Quick ratio = quick assets/current liabilities, in which quick assets = current assets-inventory-prepaid expenses, which is better than 1. Asset-liability ratio = total liabilities/total assets, which can be compared with the industry average. 3. Turnover capacity analysis Turnover capacity ratio, also known as activity capacity ratio, is an index to analyze the company's operating effect. Its numerator is usually sales revenue or sales cost, and its denominator consists of an asset account. (1), accounts receivable turnover rate. Its calculation formula is accounts receivable turnover rate = sales revenue (accounts receivable at the beginning+accounts receivable at the end) = average accounts receivable of sales revenue. Because accounts receivable refers to the sales income without cash, this ratio can be used to measure whether the amount of accounts receivable of the company is reasonable and whether the collection efficiency is high or low. This ratio is the annual turnover rate of accounts receivable. If you divide the number of days in a year, that is, 365 days, by the turnover rate of accounts receivable, you can get how many days it takes for accounts receivable to turn around once a week, that is, the time it takes for accounts receivable to turn into cash. The algorithm is: the average time to realize accounts receivable = the number of days in a year. The higher the turnover rate of accounts receivable, the shorter the number of days required for weekly turnover, indicating that the faster the company collects accounts, the less old accounts and priceless accounts are contained in accounts receivable. On the other hand, if the turnover rate is too small and the number of days required for a weekly turnover is too long, it shows that the company's accounts receivable are realized too slowly and the accounts receivable management efficiency is low. (2) Inventory turnover rate. Its calculation formula is: inventory turnover rate = cost of sales (beginning inventory+ending inventory) = average cost of sales. The purpose of inventory is to sell and realize profits, so the company must maintain a reasonable ratio between inventory and sales. Inventory turnover rate is an index to measure the sales ability of a company and whether the inventory is too much or short. The higher the ratio, the faster the inventory turnover rate, the stronger the company's ability to control inventory, the greater the profit margin and the smaller the amount of working capital invested in inventory. On the contrary, it shows that excessive inventory not only makes the capital overstock and affects the liquidity of assets, but also increases the storage cost, product loss and scrapping. (3) Turnover rate of fixed assets, the calculation formula is: Turnover rate of fixed assets = average sales income of fixed assets. This ratio represents the turnover times of fixed assets throughout the year and is used to measure the utilization efficiency of the company's fixed assets. The higher the ratio, the faster the turnover rate of fixed assets and the less idle fixed assets; The opposite is not the case. (4), capital turnover rate, also known as net turnover rate. Its calculation formula is: capital turnover rate = average amount of shareholders' equity in sales revenue. Using this ratio, we can analyze whether the funds invested by shareholders are fully utilized relative to the sales turnover rate. The higher the ratio, the faster the capital turnover and the higher the utilization efficiency. However, if the ratio is too high, it shows that the company relies too much on debt management, that is, its own capital is small. The lower the capital turnover rate, the worse the company's capital utilization efficiency. (5) Asset turnover rate, the calculation formula is as follows: Asset turnover rate = total assets of sales revenue This ratio is an indicator to measure whether the company's total assets are fully utilized. Total assets turnover rate means the efficiency of total assets utilization. Total assets turnover rate = operating income/average total assets. Similarly, the turnover rate of current assets, fixed assets and net assets can also be calculated. Inventory turnover rate = cost of goods sold/average balance turnover rate of inventory accounts receivable = net credit sales/average balance of accounts receivable, in which net credit sales are often replaced by main business income. The greater the turnover index, the faster the asset turnover, the higher the utilization efficiency and the stronger the operational capacity. 4. Analysis of growth ability The growth ability ratio can be used to measure the company's ability to expand its business. The above solvency ratio can also be used to measure the company's ability to expand its operations in a certain sense. Because safety is the basis of profit and growth, it is possible to expand operations only if the company's solvency ratio is reasonable and its financial structure is sound. Otherwise, if the solvency is weak, it is hard to imagine that the company has the spare capacity to expand its operations. As for the leverage ratio and the ratio of fixed assets to long-term liabilities, it is an external growth ratio indicator of the company. On the one hand, the company's high debt operating ratio also shows its high credibility, creditors are willing to invest in it, and the company can obtain more funds by borrowing to expand its operations. If the ratio of fixed assets to long-term liabilities is high, it also shows that it still has the spare capacity to borrow more long-term debts to expand. Total assets growth rate = asset growth this year/total assets ratio at the beginning of the year mainly reflects the company's internal expansion ability: (1) and profit retention rate. The calculation formula is: profit retention rate = after-tax profit-dividend after-tax profit. This ratio shows how much of the company's after-tax profit (profit) is used to pay dividends, and how much is used to retain earnings and expand operations. The higher the proportion, the more the company pays attention to the stamina of development, and the future development of the company will not be affected by excessive dividends; The lower the proportion, it means that the company's operation is not smooth, and it has to make up for its losses with more profits, or it has too much dividends and limited development potential. (2), reinvestment rate, also known as internal growth rate. Its calculation formula is as follows: reinvestment rate = after-tax profit, shareholders' equity × shareholders' profit-dividend payment, and shareholders' profit = return on capital × shareholders' profit retention rate. This ratio shows that the company reinvests its surplus income to support its growth ability. The shareholder's profit retention rate in the formula is the ratio of the difference between shareholder's profit MINUS dividend payment and shareholder's profit. Shareholder's profit refers to the product of earnings per share and the number of ordinary shares issued, which is actually the net income of ordinary shares. Third, DuPont analysis DuPont analysis shows that the return on net assets is affected by three types of factors: operational efficiency, measured by profit margin; Efficiency of asset use, measured by asset turnover rate; Financial leverage, measured by equity multiplier. (I) Net interest rate of assets The net interest rate of assets is the most important indicator affecting the net interest rate of equity, which is very comprehensive. The net interest rate of assets depends on the net interest rate of sales and the turnover rate of total assets. Total assets turnover rate reflects the total assets turnover rate. To analyze the asset turnover rate, it is necessary to analyze the factors that affect the asset turnover rate, so as to find out the main problems that affect the company's asset turnover rate. The net profit rate of sales reflects the income level of sales revenue. Expanding sales revenue and reducing costs is the fundamental way to improve the profit rate of enterprises, and expanding sales is also the necessary condition and way to improve the asset turnover rate. (II) Equity Multiplier The equity multiplier indicates the degree of debt of the enterprise and reflects the degree to which the enterprise uses financial leverage to conduct business activities. The higher the asset-liability ratio, the greater the equity multiplier, indicating that the company has a high degree of debt, and the company will have more leverage benefits, but the risk is also high; On the other hand, if the asset-liability ratio is low, the equity multiplier is small, which means that the company has less leverage interests and lower corresponding risks. The advantages of state analysis system in financial analysis are concise, systematic and operable. However, with the development of the times, DuPont's analysis system gradually exposed its defects, that is, the income quality of the core index "net interest rate" declined. On the basis of retaining the advantages of the original system, this paper puts forward some suggestions on developing the original indicators such as economic added value, and explains the indicators from the outside to the inside through layer-by-layer decomposition, combined with balance sheet, income statement and cash flow statement. Financial Analysis Framework (1) Financial analysis is an important aspect of corporate governance. If accounting work is to collect basic data, then financial analysis is to further process (interpret) these data. The purpose of interpretation is to explain the company's current operating conditions with figures, affirm the company's experience, reveal problems and lessons, and provide support for relevant personnel's decision-making. (2), the main means of financial management: system construction: he solved a management principle and starting point; Internal audit: he solved whether the system construction is reasonable-how effective the implementation is; How efficient the implementation is; Compliance; Budget management: real-time control, process control; Financial analysis: including qualitative and quantitative analysis, comprehensively reflect various problems that may exist in system construction and budget management. Conclusion: The financial statements of listed companies provide different data and related information for various users, but different users have different emphases when compiling monthly statements. Generally speaking, shareholders are concerned about the profitability of the company, but promoters or state shareholders are more concerned about the solvency of the company, while ordinary shareholders or potential shareholders are more concerned about the development prospects of the company. This review summarizes the indicators and methods of financial statement analysis by analyzing the relevant theories of financial statements, and understands that the purpose of financial analysis is the ultimate goal of financial analysis, and the ultimate goal of financial analysis is to provide reliable basis for users of financial statements to make relevant decisions. The purpose of financial analysis is restricted by the subject of financial analysis, and the purpose of financial analysis is different for different subjects of financial analysis. Through one or more methods and multiple ratio analysis, the financial statements are comprehensively analyzed, and the advantages and disadvantages of this method are analyzed, so as to find ways to make up for these shortcomings and improve the availability of financial reports. Although the company's financial statement provides a lot of first-hand information for analysis, it is a historical static document, which can only roughly reflect a company's financial situation and operating results in a period of time. This general reflection is far from enough as the basis for investors to make investment decisions. It must compare the report with the data in other reports or other important data in the unified report, otherwise it is of little significance.