Abstract: Financial situation is the key factor to determine the development prospect of an enterprise, and financial management is the focus of enterprise management. Since China's new accounting standards were implemented in listed companies in 2007, the analysis and preparation of consolidated financial statements have become more and more important in enterprise financial management. This paper briefly discusses the importance of consolidated financial statements of group companies, analyzes the processes and methods of consolidated financial statements, and studies the analysis methods of consolidated financial statements.
Keywords: group company; Merger; Financial statements; Analytical methods;
The consolidated financial statements of group companies refer to the accounting statements compiled by the parent company to reflect the financial situation of the whole group in an enterprise group composed of several subsidiaries. Compared with the preparation of financial statements of subsidiaries, the analysis of financial statements of group companies involves a wider range, so the business decision of group companies needs to consolidate financial statements. Therefore, it is of positive significance for the author to discuss and analyze the analysis methods of consolidated financial statements of group companies based on his own experience.
First, the importance of consolidated financial statements to the group company
A group company refers to an enterprise legal person consortium composed of two or more subsidiaries with capital as the link. Group companies are mostly composed of parent companies, subsidiaries and shareholding companies. Among them, the parent company refers to the holding company registered as an enterprise legal person according to law. For example, Wuyi Tourism Group Co., Ltd. consists of 7 wholly-owned subsidiaries, 2 holding subsidiaries, 5 shareholding subsidiaries, 9 secondary subsidiaries, 2 unincorporated units, 6 custody companies and 4 custody institutions. The group company has the characteristics of large scale of operation and many jurisdictional units. Financial statement is the carrier to record the financial status, operating results and cash flow of an enterprise in a certain period. Generally speaking, the consolidated financial statements of group companies include group financing, investment, daily operation, fund scheduling, financial control, distribution information and so on. The consolidated financial statements include not only the consolidated balance sheet but also the consolidated income statement. In addition, the consolidated statement of changes in owner's equity and notes, and the consolidated cash flow statement also belong to the category of consolidated statements. In essence, the purpose of consolidated financial statements of group companies is to provide financial information for shareholders of equity companies and provide reference for controlling shareholders, creditors and other economic decisions. To be exact, the consolidated financial statements of group companies guarantee the right to know of group shareholders and creditors, and increase the transparency of internal financial management, which can provide reference for the management and investment decision-making of leading institutions. In short, this not only increases the internal stability, but also improves the enterprise's ability to resist risks. By consolidating financial statements, we can avoid intra-group transactions to the greatest extent and prevent subsidiaries from whitewashing accounting information.
Two, a brief analysis of the process and methods of consolidated financial statements
1. Workflow of consolidated financial statements
The process of consolidated financial statements of group companies is roughly as follows. Consolidated statements are completed by adjusting the sum of consolidated statements and offset entries according to accounting policies. Among them, adapting to accounting policies is the first step to consolidate financial statements. Before preparing consolidated statements, the accounting personnel of the group company shall ensure that the accounting periods of the parent company and its subsidiaries are consistent. If the accounting policies of the parent company are inconsistent with those of the subsidiary company, the subsidiary company is required to make adjustments according to the accounting policies of the parent company. If the adjustment cannot be made for some reason, what the subsidiary should do is to prepare or design financial statements from the standpoint of the group company without violating the accounting principles of the parent company. If the accounting period of the parent company is obviously different from that of the subsidiary company, the subsidiary company shall adjust the accounting period of the enterprise based on the accounting period of the parent company. If it cannot be adjusted, it is also necessary to prepare its own financial statements according to the accounting period principle of the parent company. In the preparation of financial statements, manuscript sorting is the basic work, and the workload of manuscript sorting is not large. The accountant of the group company will add up the total funds of the parent company and the subsidiary company, and then the total amount can be obtained. Adjustment entries and offset entries are extremely important links in the work of consolidated financial statements. There is an error in this link, and some items in the financial statements will also be affected. In this link, adjusting the depreciation of fixed assets is the key. It should be noted that when it comes to the adjustment and offset of depreciation of fixed assets, it should be adjusted and offset through subjects such as depreciation reserve of fixed assets, rather than accumulated depreciation. The sum of consolidated statements is not a simple summary of the total amount of projects of the parent company and subsidiaries, but requires a high degree of comprehensiveness and correlation of data. Accounting personnel should list the detailed amount of assets and liabilities of each item item by item, and combine the equity items, income and expenses to get the final consolidated amount. The accounting of the group company needs to prepare and generate consolidated statements according to the consolidated amount in the manuscript, and ensure the formality and standardization of the statements. Then upload it to the board of directors, and the financial statements of the group company will be over.
2. Ways and means to consolidate the financial statements of group companies
At present, in the market, if an enterprise wants to buy shares of other enterprises, there are only two ways to achieve its goal. The first way is to buy the other party's shares with cash, bills, bonds or other assets of the enterprise. Another way is to exchange shares with each other with the shares held by the enterprise and merge the shares of both parties. These two methods are,
These two methods are called purchase method and equity combination method, and they are also the most commonly used methods in company merger. Among them, the purchase method focuses on the purchase activities with the help of cash, stocks and bonds, and the purchase cost of enterprises is the cash, stocks and bonds used by enterprises in the purchase behavior. An obvious feature of the purchase method is that the enterprise assets purchased by the company belong to the buyer, and the value of the assets of the purchased enterprise has to be re-determined because of the new valuation basis. In addition, the goodwill formed in the purchase will also be reconfirmed, and the consolidated income of the company may be reduced by increasing the value-added amortization. As the name implies, the equity joint venture method refers to the merger and acquisition of interests of two or more companies, and this method often adopts the stock voting system. Different from the acquisition method, there is no new valuation basis for stock right collection, the asset value has not been re-determined, and the book value of the assets and liabilities of the purchased enterprise is still used in the preparation of the consolidated financial statements of the company. In addition, the goodwill in the purchase process will not affect the consolidated income of the enterprise.
Three, the group company consolidated financial statements analysis method
1. Analyze its operational capability.
The operational ability of an enterprise is the embodiment of its comprehensive ability. The operating ability of a group company can be reflected by accounts receivable turnover, current assets turnover, inventory turnover, cash ratio, fixed assets turnover and total assets turnover. Why should we analyze the operation ability of the group company? There are two functions: first, to make a correct evaluation of the efficiency of enterprise assets operation and provide relevant information for creditors' decision-making, supervision and rights protection. Secondly, find the problems existing in the company's operation in time, make improvements in time, and formulate business strategies according to relevant data and indicators to prepare for future development and improve the company's management level. When a group company consolidates its financial statements, there are many items involved, including inventory involved in the turnover index, accounts receivable, accounts payable, income and cost. These are all indispensable components of offset accounts in consolidated statements. In order to investigate and understand whether the interest payment ability of enterprises is stable, it is usually necessary to calculate the interest guarantee multiple of 5 years or more. Conservatively speaking, most companies will take the value of the minimum interest guarantee multiple at the end of five years as the reference standard when determining the basic interest solvency index. When calculating the basic indicators of interest solvency, we should pay attention to: analyze the solvency of enterprises with the income statement; The elements of interest guarantee only include regular income; Attention should be paid to the influence of special items such as fire loss, suspension of business and changes in accounting policies on solvency; Interest expense shall include capitalized interest expense and interest expense reflected as current expense.
2. Profitability analysis of group companies
As the name implies, profitability is the ability of group companies to make profits. Profitability is also called capital or capital appreciation ability. Profitability can reflect the operating conditions of the group company and the ability of the person in charge. On the whole, the profitability of enterprises will be reflected by the profit rate of enterprise costs and expenses. Of course, we can also estimate the operating ability of enterprises through return on total assets and ROE. Group companies need to pay attention to the following three points when analyzing the profitability indicators of consolidated statements: First, understand the segment performance through segment reports. Segment report, in short, is a company's financial report compiled by business segment or region. The items reported by the segment mainly include operating income (net interest income, net fee and commission income, other income), sales expenses, operating profit, total assets and liabilities, etc. With the help of segment report, the group company can calculate the index area of profitability by industry and region, reduce the interference of different indexes and interest factors among subsidiaries, and understand the real profitability of the group company. Then, distinguish between non-recurring gains and losses. Although from the perspective of correlation, non-recurring gains and losses are not directly related to the normal operation of the company. But it will also affect the profitability of the company. Enterprise accounting should pay attention to non-recurring gains and losses, verify and clarify the authenticity, accuracy and completeness of non-operating gains and losses in the notes to financial reports, and exclude those non-recurring gains and losses that cannot reflect the current operating results and profitability of enterprises when calculating profitability indicators. Thirdly, introduce more objective cash flow indicators and analyze the profitability of enterprises in combination with cash flow.
3. Analysis of development capacity and solvency
Development ability is also called growth ability, and enterprise development ability refers to the development potential accumulated and formed by enterprises through production and operation. The development ability of an enterprise directly determines its development speed and scale. There are many indicators reflecting the development ability of enterprises. The growth rate of enterprise sales revenue and total assets is the reflection of enterprise development ability. Similarly, the growth rate of operating profit and net income can also reflect the development ability of enterprises. In the consolidated financial statements of group companies, when analyzing the development ability of enterprises, we should pay close attention to the internal relations of various indicators, especially the return on assets and net profit rate. If the income growth rate of an enterprise is high and the profit growth rate shows a downward trend, we can see that the management quality of the enterprise is not high, so there are many problems hidden in the development of the enterprise. In addition, the development capabilities of different industries and regions should be compared horizontally within the group company. On this basis, combined with national policies, industry market conditions, development environment and other factors, objectively evaluate the company's future development ability, and provide useful reference for investment decision-making. Solvency is the ability of an enterprise to pay cash to repay debts, which is mainly reflected by indicators such as asset-liability ratio and cash ratio. To analyze the solvency of an enterprise with consolidated financial statements, the group company must first make it clear that as an independent legal person, the group is only responsible for its own debts without cross-guarantee. This also requires accountants to highlight the analysis of individual statements when analyzing the company's solvency. According to the single statement, they should comprehensively analyze the financing mode and fund control of the group company, grasp the actual situation of the company in lending and operation, and reduce the operating risk of the group company.
To sum up, the analysis of consolidated financial statements of group companies has certain complexity. Financial departments and accountants should seriously study the analysis methods of the company's consolidated financial statements, attach importance to the details of the analysis of the consolidated financial statements, strive to fully reflect the company's operating conditions through the analysis of the consolidated financial statements, and do their best to contribute to the company's development and operation.
refer to
[1]. Zou Jing. On the analysis method of consolidated financial statements of group companies. Accounting study, 20 17 (12).
[2] Hu Shulan. Research on the analysis method of consolidated financial statements of group companies. Finance and Economics (Academic Edition) 20 16 (06).
[3] Zhu Xiaohuan. On the analytical methods of consolidated financial statements. China collective economy, 20 15 (19).
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