How Non-financial Managers Read Financial Statements Quickly

For non-financial managers, reading financial statements is a headache, but it is always inevitable to deal with financial statements in practical work. Therefore, it is necessary to study how to make non-financial senior managers read financial statements quickly. This paper provides seven entry points for non-financial managers to read financial statements quickly. First, it should be clear that the users of this report are different, and their evaluation angles are also different. If you are a creditor, you are concerned about the solvency of the enterprise; If you are an investor, you are concerned about the future development ability of the enterprise; If you are an operator, you care about all aspects of the enterprise; Therefore, we must know the purpose of our analysis very clearly. Second, determine the key items of report analysis. After defining the purpose of report analysis, we can determine the key projects of this analysis. For example, if we want to know the inventory sales of an enterprise, we must associate which items are related to the inventory of the enterprise, which we can determine by divergent thinking; Inventory-monetary fund inventory-accounts receivable; The above is related to the balance sheet; Inventory-operating income; Inventory-operating costs; The above is related to the income statement; Inventory-cash flow received from selling goods; Cash flow paid for purchasing goods; This is related to the cash flow statement; Third, focus on analyzing the relationship between projects. The conclusion of one report may be one-sided, and the comprehensive conclusion of three reports is definitely more reliable than that of one report. Therefore, after determining the key items of report analysis, don't forget to carry out contact analysis on the data of each item. For example, the inventory in the balance sheet decreases, the monetary fund increases, the net inflow of operating cash in the cash flow statement increases, and the operational income in the income statement increases, which basically leads to the conclusion that the sales of enterprises are in good condition. Therefore, in the analysis of statements, it is necessary to clarify the purpose, determine the analysis focus, and pay attention to the relationship between indicators; Next, take three reports as examples to talk about how to read quickly. Fourth, the reading of the balance sheet What is the main information that the balance sheet gives us? Right side of balance sheet: capital structure-financial risk; The left side of the balance sheet: asset structure-operational risk; On the right side of the balance sheet is the source of enterprise funds. By comparing the amount of liabilities and owners' equity items, as well as the comparison between the end of the period and the beginning of the period, we can basically judge the financial risk level and its changing trend of the enterprise; On the left side of the balance sheet is the distribution of enterprise assets. By comparing the amount of current assets and long-term assets, as well as the comparison between the end of the period and the beginning of the period, we can basically judge the level of business risk and its changing trend; So after getting the balance sheet, look at the source of funds, look at the distribution of assets, and make a comparative analysis before and after. It can be concluded that the financial risk and operational risk of the enterprise and the capital structure of the assets are reasonable. 5. What is the main information from reading the income statement? The analysis of internal structure in the same period can judge the source and composition of enterprise profits; The comparative analysis of before and after the project can judge the reasons for the change of enterprise profits and its development trend; Therefore, it is necessary to analyze the structure of income statement 1 and judge the profit quality of the company; Second, it is necessary to make a comparative analysis of each period before and after, so as to grasp the reasons for the changes in the company's profitability and development ability. 6. What is the main information from reading the cash flow statement? Net cash flow from operating activities; Net cash flow from investment activities; Net cash flow generated by financing activities; Net increase in cash and cash equivalents; Among them, the cash flow generated by business activities is the most basic and fundamental; In addition, we should also grasp the relationship between cash flow from operating activities, cash flow from investment activities and cash flow from financing activities. If funds flow in from business activities, funds will flow out from investment; If there is enough capital inflow in business activities, you can pay dividends and pay off debts, and there will be capital outflow in fund-raising activities; On the other hand, if business activities are depressed, the cash flow of business activities will shrink or even be negative; What if the funds are not enough? Fund-raising, so fund-raising activities will have money flowing in; If not, then buy iron and dispose of idle assets. At this time, there will be capital inflows from investment activities; In fact, we can read the cash flow statement in a simpler way. Instead of paying attention to the amount, you should pay attention to whether the net cash flow from operation, investment and financing is inflow or outflow, positive or negative. Combined with the analysis of development stage and external environment, we can get the basic situation of cash flow of enterprises. Seven. Comprehensive analysis of course, the previous only draws some basic judgments from reading a single report, which may be one-sided or even wrong. So, read all the reports quickly. You should make comprehensive analysis and judgment. At this time, you have to verify the relationship between the three statements. For example, the current assets and liabilities in the balance sheet are often related to the operating cash flow in the cash flow statement; Long-term assets are related to the investment cash flow in the cash flow statement; Long-term liabilities and owners' equity items are often related to the cash flow of financing activities; The income items in the income statement are often related to current assets; Expense items are often related to inventory and fixed assets; Through the relationship between projects, we can grasp the basic situation of enterprise's financial situation, cash flow and operating results, and even find out some false financial statements. Relevant courses in EDP Center of Shanghai University of Finance and Economics recommend financial courses for non-financial managers. Reading and analysis of financial statements in financial training camp for non-financial managers; reading and analysis of corporate financial statements and credit analysis.