Profits are divided into accounting profits and taxable profits according to the accounting system and tax law. Accounting profit, also known as profit, comes from the income statement; Taxable profit is the adjusted profit based on accounting profit according to the requirements of tax law. The profit discussed in this paper is accounting profit. Profit index is one of the important indexes for enterprises to evaluate economic benefits and comprehensive evaluation. It reflects the position of the enterprise in the same industry and its future and prospect. However, in the process of business operation, the profits in the accounting statements can't truly reflect the real business results of the enterprise. In order to objectively and correctly evaluate the profitability and comprehensive strength of enterprises through profit indicators, it is necessary to analyze the authenticity, stability and quality of profits.

First, analyze the authenticity of profits.

1. Asset project analysis. Assets are the material basis of profits, and the authenticity of profits is reflected in the balance sheet. Inflated or inflated profits will be accompanied by false assets and amortization rate that do not meet accounting standards. Mainly include: (1) Accounts receivable, prepayments and other receivables are huge and aging, so provision for bad debts is not made or withdrawn, so as to reduce management costs. (2) The inventory is stored for a long time, occupying more funds, reducing the inventory depreciation reserve and reducing the management cost. (3) If the construction in progress has been completed and the final accounts have not been settled, the interest on fixed assets investment loans can continue to be capitalized and included in the cost of construction in progress according to the accounting system, so as to reduce the current financial expenses and depreciation expenses. (4) Some expenses incurred by the enterprise should be included in the current expenses but transferred to long-term deferred expenses. (5) The property losses and fixed assets to be processed are not accounted for on the accounting statement date, so as to reduce the non-operating expenses. (6) Amortized assets include: fixed assets, intangible assets, prepaid expenses and accrued expenses, which should be compared with the average balance of the above items at the beginning and end of the year according to the accounting system formulated by the enterprise and the amortization items of fixed assets, intangible assets and other assets disclosed in the notes to the cash flow statement. If the calculated amortization rate of various assets is much lower than or higher than the amortization rate stipulated in accounting standards, it shows that the profit of the enterprise is untrue.

2. Debt project analysis. Liabilities are mainly reflected in: (1) delayed tax payment, unrecognized income in the current period, and temporary accounts receivable or other payables. (2) If the employees' salary is not accrued according to the actual number of employees in the enterprise, and the production cost and manufacturing cost are increased, both of them will reduce the current profit. (3) The estimated liabilities are unscientific and unreasonable.

3. Analysis of changes in accounting methods. (1) The enterprise subjectively changes the depreciation method, depreciation period and estimated net salvage value rate of fixed assets, and at the same time does not use retrospective method to adjust the profit and loss of previous years, and increases or decreases the depreciation expense of the current period, which makes the accounting profit of the current period untrue and does not affect taxable profit and cash flow. (2) If the enterprise accounts for the long-term equity investment using the cost method and the equity method, the enterprise can account for the investment income according to the equity share of the invested enterprise, which on the one hand inflated the current profits, on the other hand, these increased profits do not need to pay income tax (because the tax law is taxed according to whether the invested enterprise receives the dividends of the invested enterprise). (3) In the case of rising prices, enterprises changed the accounting method of issuing inventories, and the weighted average method became the first-in-first-out method, which inflated the current profits.

4. Analysis of related party transactions. The profit generated by related party transactions of enterprises is not the profit created from the market, but calculated in advance, which is highly artificial. The profits generated by related party transactions focus on the amount, terms, conditions and pricing policies of related party transactions. For example, many ST listed companies successfully "turned losses" in the third year through related party transactions.

5. Analysis of other projects. (1) Any deferred and prepaid management expenses and financial expenses. (2) Confirm the income of the current period, and write back in red at the beginning of the next period to create false income. (3) Pay attention to whether the accounting statements are standardized. Omission violates the principle of complete disclosure. If there are omissions and irregularities, the authenticity of accounting statements will be problematic. In addition, we should also pay attention to the opinions of audit reports and the credibility of certified public accountants.

Second, the profit stability analysis

1. Firstly, the life cycle of enterprise products is analyzed. By comparing the sales growth string and profit rate of successive periods, and the net cash flow of operating activities in the cash flow statement, if the sales growth rate and profit rate remain unchanged, the cash flow generated by operating activities is positive and has little change, indicating that the product is in a mature stage and the profit in this period is stable.

2. Total profit consists of main business profit, investment income and net non-operating income and expenditure. Empirical data show that the main business income accounts for all the income of the enterprise, and the main business profit accounts for more than 70% of the total profit, and the profit source is relatively stable, otherwise it will be unstable. Investment income, net non-operating income and expenditure, and government subsidy income are occasionally formed by speculative factors, rather than the strength of the company, and are often in the current period rather than the next period. Although a large amount of profits were generated in a certain accounting period, in fact, the fundamental way for the steady growth of profits was not found, and it ultimately depended on the income from the main business.

3. Pay attention to the contingencies in the notes to the accounting statements and the unadjustable matters in the events after the balance sheet date. For example, contingent liabilities formed by discounting commercial acceptance bills, contingent liabilities formed by pending lawsuits, huge debts after the balance sheet date such as bonds issued by enterprises, major asset losses caused by natural disasters, and disposal of important fixed assets may all affect the normal profits of enterprises in the next year.

4. Analyze cash maturity debt ratio and total cash debt ratio. Cash maturity debt ratio reflects the ability of enterprises to repay debts due, and total cash debt ratio reflects the ability of enterprises to bear debts. When the market interest rate is higher than the total cash-to-debt ratio, it is difficult for enterprises to borrow funds, and the debt-to-cash ratio is less than 1. At this time, the enterprise is likely to fall into financial difficulties, affecting normal operation and unstable profits.

Third, the qualitative analysis of profit.

1. The cash guarantee multiple of profitable operation is equal to the net cash flow generated by operating activities divided by the net profit. The net cash flow from operating activities is sufficient to be based on the cash flow statement, while the net profit is based on the accrual basis and comes from the income statement. This indicator can well combine the cash flow statement with the income statement, make up for the limitations of the income statement, directly reflect the quality of profits, and explain how much cash the company actually received in the net profit of 1 yuan. The cash guarantee multiple of profitable operation is greater than 1, and the profit quality is good, ranging from 0.7- 1. The profit quality is relatively high, between 0.3 and 0.7, and between 0 and 0.3, and the profit quality is poor. When it is less than 0, the profit is actually a book profit, and there are potential financial risks, and the enterprise is likely to go bankrupt.

2. According to pecking order theory, if an enterprise wants to start a new project, its financial behavior should first use retained earnings; Secondly, borrowing, after exhausting the ability to borrow, has no choice but to issue new shares for financing. If an enterprise likes to issue shares frequently to raise funds, it means that the profit quality of this enterprise is likely to be problematic. Pay attention to abnormal financial behavior. When corporate profits increase exponentially, corporate executives will realize all the shares they hold, and they are not optimistic about the future prospects, which also shows that the quality of corporate profits is poor. Accounts receivable are concentrated in one or two enterprises, which increases the financial risk of enterprises. If the other company is on the verge of bankruptcy, and then the company is in trouble, the profit at this time has no practical significance.

Fourth, case analysis and application

As we all know, the earnings per share of listed company Yinguangxia 1999 is 0.4705 yuan, 15.35%, net profit1270,000 yuan, income 0.5 1 yuan and income 13. Earnings per share is 0.827 yuan, and return on net assets is 34.56%. If we analyze these data alone, the metropolis thinks that the stock has a good development prospect, excellent performance and good income, and it is worth investing. But as long as we use the cash guarantee multiple of profitable operation to analyze, we can see its true colors. According to the calculation, the cash guarantee multiples of Yinguangsha's profitable operation for three consecutive years (1998, 1999 and 2000) were -23.3%, -4.4% and -29.72% respectively. This data shows that the profit quality of Yinguangsha is very poor, and the subsequent Yinguangsha incident just illustrates this point.

In a word, profit analysis is a very important and meticulous work. We should organically combine balance sheet, income statement, cash flow statement, schedule and statement notes, and use multiple financial indicators for comprehensive analysis. It depends not only on the data in the income statement, but also on the calculation process of profit, not only on the amount of profit, but also on the quality of profit to meet the needs of users of accounting statements.