Several methods of financial analysis

● Report of the Board of Directors: Basic information about the company's operation, financial status and investment during the reporting period was stated to investors ● Important matters: major lawsuits and guarantees that may have "hidden dangers" to the company's normal production and operation in the future, as well as related transactions, mergers and acquisitions and other major matters that may have room for profit manipulation. These extraordinary events are the main sources of information for us to uncover the "beauty" of the company ● Financial reports: including audit reports and three major accounting statements: balance sheet, income statement and cash flow statement. 2. Mining the status of financial statements from the report data. 3. Three whys about cash flow ● Why is cash flow important ● The inflow and outflow of cash are like the pulse of a company. Experts all know that adequate cash flow is the single most important factor for a company to survive. The main functions of the cash flow statement are as follows: 1) Provide the cash flow information of the company, so as to make an objective evaluation of the overall financial situation of the company. (2) Explain the reasons for the inflow and outflow of cash in a certain period, which can fully explain the company's solvency and ability to pay. (3) Analyze the company's ability to obtain cash in the future, and predict the company's future capital investment and financial situation. (4) Providing information on investment and financing activities that do not involve cash. ● Why is cash flow more important than income? Profit is the foundation of the company's survival and development, while cash is the "blood" in the company's daily operation. Modern accounting system is based on accounts receivable and payable system, and does not recognize income and expenses as the standard of cash income and expenditure, which leads to the separation of book profit and cash turnover. Moreover, based on the flexibility of the accounting system, corporate profits have considerable room for flexible operation, while cash flow is quite clear and objective, which can test the quality of corporate profits. At the same time, enterprises also need cash for their investment in asset renewal. If there is no cash accumulation to support the enterprise to complete the process of asset investment, it will seriously affect the company's subsequent development ability. Therefore, cash flow analysis is also an important part of the company's financial analysis and investment value judgment. ● Why is cash flow per share important? The cash flow statement distinguishes the company's cash income and expenditure according to the company's three main activities, namely, operation, investment and financing. Adjust the operating results of one year with the cash amount at the beginning of the year, and you can get the cash amount at the end of the year. Among the three types of cash flow of the company, the cash flow generated by operating activities is the most important. The amount of cash in business activities reflects the company's own ability to obtain cash, which is the main way for the company to obtain sustainable sources of funds. Generally speaking, the net cash flow generated by operating activities of listed companies should be positive. The greater the proportion of cash flow generated by operating activities to the total cash flow, the more stable the company's financial situation. Cash flow per share (net cash flow from operating activities/number of common shares in circulation) has become an important supplement to earnings per share indicators. In the short term, cash flow per share can also better show the company's ability to engage in capital expenditure and pay dividends than earnings per share. The company's investment activities refer to the trading activities related to the company's assets with an original term of more than 3 months, including the construction of the company's long-term assets and the investment and disposal activities that are not included in the scope of cash equivalents. The cash flow of investment activities reflects the expansion and contraction of the company's investment scale, and also reflects the relationship between investment in China and foreign investment. Under normal circumstances, the net cash outflow from investment activities in China has increased significantly, which often means that the company is facing new development opportunities and is about to enter the stage of rapid growth. Financing activities refer to activities that lead to changes in the scale and composition of the company's capital and debt, including absorbing investment, issuing stocks, borrowing and repaying funds, and distributing profits. If the net cash inflow of this project increases significantly, it means that the company needs to raise a lot of funds from outside; If the net cash outflow from financing activities increases significantly, it means that the company is shrinking. 4. Listen to the opinions of the intermediary. As far as the importance of financial statement information in annual report and the correlation between content and use are concerned, the company's external audit report is very helpful for investors to judge the quality of annual report. 5. Expose the trick of fraud ● Trick 1: Start with the whole. First, the quality of accounting information can be roughly estimated by the company's appointment of accounting firms. Frequent changes in accounting firms often indicate that there are some problems in the audit of company statements. In addition, modern accounting firms often provide various services to listed companies, including business consulting. If an accounting firm involves multiple businesses of the same company at the same time, the fairness of the audit report provided by it will inevitably be affected. Secondly, investors should pay attention to reading the audit report of certified public accountants and understand the audit opinions issued by certified public accountants on the annual accounting statements of enterprises. Third, investors should not only look at the report data, but also pay attention to the calculation process of the report data, check the cross-checking relationship between the report data, and comprehensively compare various financial indicators to test the rationality and authenticity of accounting information. In addition, investors should try to collect relevant macroeconomic information, company industry background information, information of other companies in the industry and other relevant qualitative information disclosed by the company when analyzing the annual report, and check and correct possible distortions in the company's accounting statements through comparison. ● Trick 2: Focus on analyzing the profit manipulation of the "non-recurring gains and losses" project is an important source of "moisture" in the annual report. "Non-recurring profit and loss" projects are often manipulated by management. Non-recurring gains and losses include the following items: gains and losses arising from related party transactions with obviously unfair transaction prices; Handle the equity gains and losses of subordinate departments and invested units; Asset replacement gains and losses; The policy is valid for less than 3 years, and the subsidies such as tax refund, reduction or exemption exceed the authority or there is no formal approval document; The retrospective adjustment of the previous net profit will be calculated and changed in the comparative financial statements. Non-recurring gains and losses may also include gains and losses of current assets; Capital occupation fee paid or collected; Profit and loss of entrusted investment; Non-operating income and expenditure and other items. ● Trick 3: Pay attention to whether earnings per share are diluted. When analyzing earnings per share indicators, we should pay attention to the situation that companies use the number of common shares to manipulate earnings per share. Companies sometimes use share repurchase to reduce the number of common shares issued outside, thus increasing earnings per share. If a company uses its profits to distribute stock dividends or place shares, it will increase the number of shares in circulation, which will greatly dilute earnings per share. When analyzing the information published by listed companies, investors should pay attention to distinguish whether the published earnings per share are calculated according to the original number of shares or the fully diluted share calculation rules to avoid being misled. More importantly, the earnings per share index reflects the company's operating performance during the reporting period. In the actual evaluation of the company's earnings per share, we should observe the changing trend of the company's earnings per share by comparing the earnings levels over the years, judge the normal and stable earnings level of the company, and predict the growth rate of the company's earnings per share in the future. In addition, the earnings per share of the listed company should be compared with those of other listed companies in the same industry and the average level of the same industry, so as to make a correct evaluation of the company's profitability. ● Trick 4: Several methods for detecting accounting manipulation are selective, and this flexibility leaves room for accounting manipulation. Common accounting manipulation methods are: (1) profit manipulation through suspense processing. For example, accounts receivable, especially accounts receivable for more than three years, property losses to be handled and construction in progress are all long-term losses. (2) manipulating profits through devaluation. Among the factors that affect depreciation, depreciation base and net value of fixed assets are relatively easy to determine, but it is difficult to determine the service life of fixed assets. In fact, in addition to tangible wear and tear, the depreciation of fixed assets has intangible wear and tear, and the wear and tear of different enterprises and different industries is also different. Therefore, enterprises often have sufficient reasons to change the depreciation method of fixed assets. (3) Profit manipulation by changing the accounting method of investment income. The accounting method of long-term investment income is changed from cost method to equity method, and the investment enterprise can confirm the investment income according to its share of the invested enterprise's equity. (4) manipulating profits through other methods, including improper inventory valuation, arbitrary prepaid expenses and improper calculation of external liabilities. Author: Come and see it every day? 0? 2? 0? 2