What are the problems in the analysis of financial statements?

1, the influence of accounting treatment methods and analysis methods on the comparability of statements. Different accounting treatment methods will produce different data. The long-term investment of enterprises confirmed by cost method and equity method is also different. From the analysis method of financial statements, different calculation methods of some indicators will also bring different degrees of influence to the comparison between different enterprises.

2. The impact of inflation. In the period of inflation, the relevant data will be affected by price changes, which can not truly reflect the financial situation and operating results of enterprises, resulting in misunderstandings of report users. Depreciation expense is extracted according to the original price of fixed assets, and profit is calculated after deducting this depreciation expense. Because the depreciation expense is set low, enterprises will not be able to replace the assets with rising prices.

3. The data in the financial statements are the result of the past economic activities of the enterprise. Using these data to predict the future trend of enterprises is only of reference value and not absolutely reasonable and reliable. In addition, when report users receive various reports, it may be many days after the report preparation date.

4. Restrictions on reporting data and information. Because of the report itself, the data it provides is limited. For report users, a lot of needed information may not be found in reports or notes.

5. Reliability of reporting data. Sometimes, in order to show the good financial situation and operating results of enterprises, enterprises will use other means to whitewash financial statements in accounting methods. At this time, the analysis of financial statements is easy to go astray.

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Significance of financial statement analysis

Financial statements can fully reflect the financial position, operating results and cash flow of enterprises. Reveal the future rewards and risks of the enterprise; It can check the budget completion of enterprises, evaluate the performance of managers, and help to establish and improve a reasonable incentive mechanism. Only by comparing the enterprise's financial indicators with relevant data can we explain the position of the enterprise's financial situation, so we should analyze the financial statements.

Financial statement analysis obtains information that meets the analysis purpose of report users, understands the characteristics of enterprise activities, evaluates its performance and finds its problems.

Baidu Encyclopedia-Financial Statement Analysis