How to understand the stock financial statements is a very complicated problem, involving a lot of content. Below, I would like to share with you the ways to understand the financial statements of listed companies, hoping to help you!
The financial statements of listed companies are a complete reporting system, which comprehensively reflects the company's financial status, operating results and cash flow. Including balance sheet, income statement, cash flow statement and related notes.
The balance sheet is an accounting statement showing the company's financial situation, which is compiled for shareholders and regulatory authorities, showing which assets the company holds at a certain point in time and the financing methods of these assets.
The items that should be focused on are: monetary funds (indicating the cash flow owned by the company, which is related to the life and death of the enterprise), accounts received in advance (the actual profit that the company can realize in the future), accounts receivable and inventory.
We should also pay attention to indicators reflecting short-term solvency, such as current ratio and quick ratio, and indicators reflecting long-term solvency, such as debt ratio.
The income statement provides information about the company's income, expenses, profits and losses. It can be used to analyze the company's past operating conditions and judge how to operate in the future.
Using the financial data in this table to calculate the financial ratio of the company's operating ability is a crucial link, in which profitability, operating profit margin, gross profit margin and return on net assets are more noteworthy indicators.
Cash flow statement refers to the company's cash receipts and payments in a specific period, which is the basis for evaluating the company's solvency and business development. Among them, we should focus on the financing structure, the proportion of self-owned funds and operating cash flow of enterprises.
Notes to financial statements and related schedules include information such as the nature of the company, accounting policies and methods of preparing financial statements, as well as relevant information that may affect the company's future financial status and performance.
Return on net assets (net profit/average net assets) is the most critical index to measure the profitability and quality of enterprises. It can eliminate the influence of company size and directly reflect the return to shareholders, which is more real than other indicators.
Price-earnings ratio (share price/earnings per share) is one of the most basic and important indicators to estimate the value of common stock.
This indicator has different standards in different countries and industries. It is generally believed that it is normal to keep the ratio between 20 and 30. Too small means that the stock price is low, the risk is small and it is worth buying.
If it is too large, it means that the stock price is high and risky, so be cautious when buying. However, the profit growth of enterprises is not static and cannot be generalized absolutely.
The cash flow statement mainly includes three cash flows:
1. Operating cash flow, which reflects the daily business activities of the enterprise, belongs to the enterprise? Autologous hematopoiesis? Function;
Ii. investment cash flow, which reflects the buying and selling of fixed assets and securities and the merger and acquisition of other enterprises, belongs to enterprises? Blood transfusion? Function of;
Three, financing cash flow reflects the enterprise through the issuance of stocks and bonds to raise funds, which belongs to? Receive a blood transfusion? The function of.
Among them, operating cash flow is the most noteworthy part of the cash flow statement.
In addition, the ratio analysis method is of little significance in isolation. Vertical comparison with the company in different periods and horizontal comparison with other companies in the same industry are the correct methods to analyze financial statements.
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