Teacher Xiao Xing's "Reading a Book of Financial Reports" is easy to understand, and the teacher explains it with simple questions.
For students who have no professional foundation, this book can be used as an enlightenment book for financial analysis, and it will not be obscure at all; For students with a professional foundation, this book can help you straighten out the relationship between the three financial statements and deepen your understanding of financial ratios.
For me, there are several knowledge points in the book that impressed me deeply, which I ignored or didn't understand well when I studied financial management before. After reading this book, I suddenly understood the meaning of financial indicators.
1. To judge the profitability of an enterprise, we should not only look at efficiency, but also look at benefits.
Net profit/total assets = return on total assets = income/total assets * net profit/income.
As can be seen from the formula, efficiency * benefit = return on total assets.
Return on total assets (roa), referred to as roa, is used to evaluate the overall profitability of an enterprise using all its assets.
The return on total assets is the comprehensive investment return of shareholders and creditors.
2. Return on net assets = net profit/shareholders' equity
Reflect the ability of shareholders to obtain net income from investment.
I can't help but think of DuPont's analysis system: ROE = net profit/shareholders' equity = net profit/operating income * operating income/total assets * total assets/shareholders' equity.
= efficiency * income * financial leverage (equity multiplier)
3. When analyzing the problem, we can also analyze it from two aspects: efficiency (turnover rate) and benefit (profit rate).
4. Paying attention to cash flow means paying attention to risk. The negative operating cash flow may be due to the transfer of business and the start of investment.
5. Measurement of return on investment
Return on investment capital = net profit after tax/cost of capital
After-tax operating net profit deducts income tax, but not interest, so after-tax operating net profit includes net profit payable to shareholders and interest income payable to creditors.
Excess rate of return = return on investment capital-cost of investment capital
Sometimes there is another one who has learned a lot of financial indicators, formulas and ratio calculation, but he can't use them skillfully and always forgets them. After that, I will read "Teaching You to Read Financial Reports by Hands" by the teacher of the Tang Dynasty, and then I will write out the new things I have learned.
I hope all the accumulation and efforts will not be in vain, and I can think and analyze independently and issue a complete and meaningful analysis report in the future. ?