Practice of financial statement analysis (sixth lecture)

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Consolidated report and parent company report

Features of consolidated statements:

The enterprise represented by 1. consolidated report does not exist.

2. Based on the statements of subsidiaries, there is no verifiable right or wrong in preparation, only logical right or wrong.

Total resources do not represent the disposable resources of any enterprise.

4. There is no decision-making basis for individual enterprises in the group.

5. Conventional ratio analysis is of little significance (such as turnover rate and other data).

Functions of consolidated reports:

1. Help shareholders of the parent company understand the distribution of group resources controlled by the parent company.

2. It is helpful to judge the degree of internal related party transactions.

3. Compare the differences in re-management efficiency between the parent company and the group subsidiaries included in the merger scope.

Case: Compared with the parent company, the subsidiary has more inventory, less income, less cost, lower inventory turnover rate but higher gross profit margin. The problem is that management efficiency varies greatly. Subsidiaries carry over less inventory and cost, and increase income falsely.

The characteristics of a good financial situation-balance

Consistency between capital structure and development strategy and strategic objectives (innovation: more intangible assets; Scale expansion: more inventory and fixed assets)

Balance between profit structure and asset structure (investment assets bring investment income and operating assets bring operating profit. Asset ratio and profit ratio are very important)

Balance between cash structure and profit structure (for a stable manufacturing enterprise, the operating profit multiplied by 1.2- 1.5 should be close to the net operating cash flow).

Analysis of non-financial factors:

1. human resource structure and policy: people (core managers, founders, senior executives-management philosophy, work experience, resources? ), talent (business backbone (middle level)-education, job-hopping rate), manpower (ordinary employees)

The basis of enterprise expansion:

1. Capital base: Is the credit line signed with the bank authorized?

2. Technical basis: acquiring technology (new technology is risky) or developing new products with the original technology (whether the new products will infringe the brand image of the original products). For example, they are all air conditioners: Midea is good at management and marketing (also making rice cookers); Gree is good at technology and cost control (basically selling air conditioners)

3. Management basis: whether the middle level can be expanded. It is especially important for chain companies. How big is the management boundary?

4. Market base: Is the new product direction and market capacity sufficient?

Industry and Enterprise Development Prospect: New Energy

Corporate and national policies: Lack of government subsidies may lead to insufficient cash inflows. (Real estate industry) Some enterprises have influence and voice in the formulation of national policies.

Other factors: adaptability and public relations ability.

Financial fraud has certain motives and timing characteristics.

1. Before and after financing

2. Performance evaluation and incentives

3. Before and after major reorganization and merger (face change after equity financing and convertible bonds)

From the perspective of value investment, six types of enterprises should be properly avoided:

1.3 Non-prominent enterprises: operating assets, investment assets and performance are not prominent, and non-performing assets are prominent, so they do not do business properly.

2. The enterprises with serious "three products" problems are mainly banks.

Three products: personality (whether the manager is trustworthy or not: cashing in profits), products (competitiveness and market) and collateral (market value and valuation).

3. Enterprises with serious infighting (frequent shareholder changes, many abstentions, and accounting firms have reservations)

4. Enterprises with lost core competitiveness (less stocks and more profits)

5. Enterprises with abnormal performance

6. Overvalued enterprises (more than 40-50 times should not be PE valued. 10-20 times PS (profit/income) is possible, and it is also possible to estimate with flow and permeability).

Business, income, profit

Balance sheet items: inflated assets and undervalued liabilities.

Monetary funds, accounts receivable

Unrealized inventory adjustment profit

Overestimate fixed assets

Use long-term equity investment

Income statement item: adjustment of income and cost.

Income item fraud:

1. Fictitious transaction, revenue recognition

2. Early recognition of income

3. Overestimate income

4. Concealing sales revenue

5. Others

Cost project fraud:

1. Fictitious transaction, cost confirmation

2. Share the expenses at will

3. Change the principle of cost recognition.

How to identify financial fraud

1. How did this company fake-how did it inflate its income and profits?

2. Profitability and growth are incredibly good-this is the starting point of the problem.

3. The mismatch between operating cash flow and net profit-the starting point of fraud (cash flow is the touchstone to test profit)

4. Balance Sheet-Changes in Various Subjects-Starting Point for Finding Problems

5. Ultra-high accounts receivable (advance payment) and inventory

Business models that need vigilance:

Large related party transactions

If the proportion of overseas business is high (poor verifiability), be extra vigilant.

Financial fraud in the hardest hit industries (agriculture, construction enterprises, leasing enterprises, computer software industry, high-tech enterprises: R&D expenses and investment are unclear) manufacturing fraud is the easiest to find.

Reduction of major shareholders, high supervision of directors and abnormal auditor change.

Financial fraud: by inflating income and profits, raising the stock price, reducing the holdings of major shareholders, transferring misappropriated funds, or maintaining the listing status.

According to the different purposes and starting points, it can be divided into:

1. inflated income and profits

Basic routines: inflated income and profits-advance IPO or financing-use IPO funds to continue inflated profits to push up the stock price-major shareholders reduce their share allotment (cash out)-related party transactions misappropriate the funds of listed companies.

2. Maintain the status of listed companies: by hiding costs or inflating income and profits, we can counter the downward trend of profits of industry companies, maintain profits and maintain the listed status (those companies with large fluctuations in profits).

3. Smooth profit: adjust profit by confirming income and cost in advance or later.

First, how does the company falsify-how to falsely increase income and profits?

Inflated income:

1. Forge or falsely increase sales by using related party transactions, forging customers, contracts, invoices, bank receipts, export customs declarations, etc.

2. Inflated sales revenue and directly recorded accounts receivable.

3. The inflated income will be converted into advance payment, advance project payment, and further converted into inventory, construction in progress and fixed assets.

(circle money, arbitrage, misappropriation of funds of listed companies)

Virtual cost reduction:

1. Hide costs and make less bad debts.

2. Transfer expenses, that is, the current cost is listed as deferred expenses or capitalized, and the construction in progress is not transferred to fixed assets.

Secondly, profitability and growth are incredibly good-this is the starting point of the problem.

Excellent financial indicators beyond the industry level: ultra-high gross profit margin, net interest rate and ROE.

1. Sustained high growth

2. The performance is not affected by the industry cycle (compared with the industry average)

Third, the mismatch between operating cash flow and net profit-the starting point of fraud (cash flow is the touchstone to test profits)

The only basis for judging the authenticity of income and profit: whether there is real cash flow support.

Most financial fraud can be seen from cash flow (comparing net profit, operating cash flow, average collection period, etc.). )

Cash flow is sometimes falsified, which needs to be combined with company research, supplier and customer surveys, and field visits.

1. At the end of the accounting period, external loans were used to offset accounts receivable, and repayments were made at the beginning of the accounting period, thus inflating cash flow and cash.

2. Use funds repeatedly circulated outside the body to offset accounts receivable.

3. If there is no problem with operating cash flow, there may be a problem with cash flow from financing (such as bank loans).

Fourth, the balance sheet-changes in various subjects-the starting point for finding problems

Real profits can bring cash flow.

False profits do not produce real cash flow, and the reasons for compilation explain why there is no cash inflow, and the items of operating costs (accounts receivable, prepayments, inventory) on the balance sheet change, and even the fixed assets are inflated.

Logical common sense: high profit means a strong position in upstream and downstream, which corresponds to low receivables, low prepayments and high payables. If you deviate from these, it may be fraud.

Case: how HN faked:

1. False story: using related party transactions to fabricate nonexistent transactions and record sales revenue in accounts receivable.

2. Related party transactions: The parent company is the only customer of the listed company, and the income contributed by 20 13.25438+04h is 100% and 98.7%.

3. Lack of funds: multi-channel financing, huge bank credit, private lending, P2P, and a large number of short-term high-interest loans.

4. The major shareholder manipulates the stock price: it rises five times a year, with a market value of 40 billion US dollars, and the capital bought through Shanghai-Hong Kong Stock Connect is as high as 3 billion Hong Kong dollars.

5. Technician: The product cost is still high, the battery conversion rate is relatively low, and the related products have not yet reached the mass production scale.

Case 2: Yin's financial fraud discovery process

The famous article Yin Trap in Caijing magazine

With its equipment capacity, even if it runs overnight, it can't produce the claimed quantity.

The export price of products is almost outrageous, and the profit rate is as high as 40%.

Some products can't be extracted by supercritical carbon dioxide extraction equipment at all.

The export tax rebate and value-added tax data in the annual report are inconsistent with the provisions of the tax law.

The German Chengxin Company with a total contract value of 6 billion yuan is only a small company with a registered capital of 654.38 million marks.

The extraction technology has high temperature, high pressure and high power consumption, but the water and electricity cost of 1999 is only 200,000, and it was only 700,000 in 2000.

& gt forgery process:

CFO requires EPS to be 0.8 yuan/share.

Calculate the required output, sales volume and how many raw materials to buy.

Fictitious marketing unit, as well as forged invoices, bills of exchange, bank receipts, customs declarations, warehouse receipts, team production records and product outbound orders.

Case 3: The Pseudo-Typical of "Perfection"-Dahlman

& gt incident: listing from 1996, cheating for 8 years, circling money three times, borrowing a lot of money from the bank and going abroad.

Before 2003, various financial data showed a balanced growth: 1997-2003, the total sales revenue of Dahlman was1800 million yuan, and the total net profit was 4120 thousand yuan. Total assets increased five times to 2.2 billion yuan, and net assets increased four times to1200 million yuan.

In 2003, it suffered losses for the first time, and its main income dropped from 365.438+0.6 million yuan in 2002 to 265.438+0.4 million yuan, with a loss of 654.38+0.4 billion yuan; At the same time, the company's major violations of guarantees surfaced, involving RMB 345 million and USD 65.438+0.335 million; There is also a major pledge, involving RMB 56.5438+0.8 million.

√ On May 10, 2004, Dahlman was specially treated by the Shanghai Stock Exchange and changed to "ST Dahlman". At the same time, the CSRC filed an investigation into the company's alleged false statements.

According to the third quarterly report of 2004, as of June 30, 2004, the company's total assets dropped sharply to 654.380+03 billion yuan, and its net assets were-346 million yuan. In just half a year, the loss was as high as 654.380+04 billion yuan, which not only offset most of the achievements since listing, but also was on the verge of delisting and bankruptcy.

√ On March 25th, 2005, Dahlman terminated its listing.

& gt forgery process:

Listed from 1996, he cheated for 8 years, circled money three times, borrowed a lot of money from the bank and provided external guarantee.

Clear purpose, careful planning and accurate implementation

& gt forgery means everything:

Fictitious income, cost and profit-related transactions, loan accounts and shell companies

Virtual construction in progress

Failure to disclose external guarantees and major lawsuits

Forged a complete set of documents including bank statements, inventory in and out, etc.

Pay true value-added tax and income tax on false income and profits.

Pay cash dividends to shareholders

& gt there are traces of perfection:

Gross profit margin is much higher than peers; The large cash flow generated by operating activities is positive, and the large cash flow generated by investment activities is positive.

Is negative; The relatives of the actual controller emigrate; The asset turnover rate has fallen sharply.

Verb (abbreviation for verb) Ultra-high accounts receivable (advance payment) and inventory

Identify financial signs of financial reporting fraud;

1. Exception occurred in each period before and after the main project amount.

2. The main financial indicators reflected in the statements are seriously unreasonable (turnover rate is 20 times).

3. The accounting profit reflected in the statement and the cash flow reflected in the cash flow statement are unbalanced.

4. The financial indicators related to the refinancing qualification in the statement just meet the relevant regulations (ROE, debt ratio below, etc.). ).

5. Non-operating profit and loss account for a large proportion of total profit (non-operating profit and loss: non-operating income, fair value change profit and loss, investment income).

6. The amount of non-performing assets is large and the quality of assets is low.

7. The gap between accounting profit and taxable income is too large (accounting and tax law)

8. In the fourth quarter, if the event is abnormal in the later period, frequent adjustments will be made (fraud before correction).

Other signs:

1. The main business changes frequently.

2. Abnormal "special purpose entity" (related party transaction)

Main financial characteristics of mixed water performance:

1. The operating indicators are obviously superior to the normal level of the industry/competitors (gross profit margin, return on net assets and asset turnover rate).

2. There is a big deviation between cash flow from operating activities and net profit (cash flow/profit from operating activities, average collection period and inventory turnover days).

3. The accounting policies are obviously radical (revenue recognition policy, capitalization policy (financial expenses and R&D costs depend on capitalization) and depreciation policy).

4. Related party transactions

The main financial characteristics of capital loss:

1. The cash flow generated by investment activities continuously consumes the cash flow generated by operating activities.

Direction of cash flow from investment activities (perennial outflow, no profit)

Progress and amount of construction in progress

2. Unconventional financial accounts are abnormal.

receivable other

Accounts payable-others

3. Book cash does not match the debt level.

Monetary funds are high, but there are many short-term loans.

Too much interest-bearing debt

4. Non-physical assets are too large (not easy to verify)