After reading "Reading a Book of Financial Reports"

The financial knowledge I learned in school before is very written, so it is difficult to combine knowledge with practice. The book "A Book to Understand Financial Statements" written by Professor Xiao Xing makes the system and logic of financial statements clear and easy to understand with vivid examples, and financial statements are the results of the last link in strict and boring financial work, which consists of three reports: balance sheet, income statement and cash flow statement. Among them, the balance sheet reflects the assets and liabilities of the enterprise at a certain point in time, the income statement reflects the operating conditions of the enterprise and the whole process of profit formation in a period of time, and the cash flow statement includes the inflow and outflow of cash during the operation, investment and financing of the enterprise. The cash flow statement describes whether the enterprise can survive from the perspective of risk, and the balance sheet and income statement explain how much money the enterprise has and how much income it has from the perspective of income.

As the information carrier of enterprise management, financial report reflects all kinds of financial information related to enterprise management decision and strategic choice. The balance sheet and income statement tell us about the company's operation, and the cash flow statement tells us about the company's risk. Which is more important, profit or cash flow? When an enterprise pursues profit maximization, it is the most important purpose, because the purpose of an enterprise is to make money, so profit is important; However, some people say that cash is king. If there is a problem with cash, the company will be finished, so cash flow is very important. The essence of the problem is that when we talk about profit maximization, we are essentially talking about the importance of enterprises pursuing profits; When we say that cash is king, we are saying that enterprises need to pay attention to risks. So when we discuss which is more important, profit or cash flow, we are actually discussing whether it is important for an enterprise to pursue profit or control risks. But as we all know, income and risk are contradictory. The pursuit of more profits by enterprises means taking more risks. From this analysis, the answer is clear. When enterprises are faced with great risks, cash flow is more important to enterprises. When the risk of business activities is within a relatively controllable range, profit becomes more important.

This book may free me from the boring exam-oriented education of memorizing various professional terms, concepts and formulas at school. The concept definitions of some accounting terms that were memorized before were really understood because of Professor Xiao Xing's explanation. It uses small questions to let me really learn how to combine financial figures with the enterprises it describes to observe and understand, and at the same time learn to actively think about the business behavior of enterprises represented behind some figures in the report. This book deserves our deep thought, and the importance of financial recognition, measurement and reporting. Only the data obtained through correct accounting are the numbers we need. However, in the face of these cold and heartless financial figures, when we have the ability to analyze these data, they will become priceless. As the saying goes, the more the economy develops, the more important accounting is. For commercial investors, it is very necessary to use financial data for financial analysis.