The analysis of financial statements plays a vital role in understanding the financial situation, operating performance and cash flow of enterprises, evaluating their solvency, profitability and operating ability, and helping to make economic decisions. However, due to various factors, financial statement analysis and its analysis methods. There are some restrictions. Correctly understand the limitations of financial statement analysis, reduce the impact of limitations, and foster strengths and avoid weaknesses in decision-making. It is a realistic problem that can't be ignored. The following is my financial statement data analysis paper, I hope it will be helpful to you.
I. Overview of financial statement analysis
The analysis of enterprise financial statements refers to taking financial statements and other materials as the basis and starting point. Using special methods, we systematically analyze and evaluate the past and present operating results, financial status and changes of enterprises, with the purpose of understanding the past operating performance of enterprises, measuring the current financial status of enterprises and predicting the future development trend of enterprises, and helping enterprise interest groups to improve their decision-making. The most basic function of financial analysis is to process, sort out, compare and analyze a large number of financial statement data, and turn them into useful information for specific decisions. The key point is to explain and evaluate whether the financial situation of the enterprise is sound and whether the operating results are excellent, so as to reduce the uncertainty of decision-making.
Second, the financial statements themselves have limitations.
1. The information resources reflected in the financial statements are incomplete.
The financial statements do not disclose all the information of the company. The financial statements of an enterprise only include economic sources that can be used and can be measured in money. In reality, enterprises have a lot of economic resources, either because of objective conditions or because of accounting practice, which are not reflected in the statements. For example, a large number of off-balance sheet assets of some enterprises cannot be reflected in the statements. Therefore, the report only reflects a part of the economic resources of the enterprise.
2. Inadaptability of financial statements to future decision-making value.
Because accounting statements are compiled according to the historical cost principle, many data do not represent their current cost or realized value. During the period of inflation, some data will be affected by price changes. Because the monetary value is assumed to be constant, simply adding the monetary data at different times can not truly reflect the financial situation and operating results of the enterprise, and sometimes it is difficult to have substantial reference value for the economic decision-making of the report users.
3. Financial statements lack data reflecting long-term information.
Because financial statements are reported by annual installments, only short-term information is reported, and information reflecting long-term potential cannot be provided.
4. The data in financial statements are influenced by accounting estimates.
Some data in accounting statements are not very accurate, and some project data are estimated and measured by accountants according to experience and actual situation. For example, the proportion of bad debt reserve, the net residual value rate of fixed assets and so on.
5. The data in financial statements are influenced by the choice of accounting policies of management.
The multiple choices of accounting policies and accounting treatment methods make the similar report data of different enterprises lack comparability. According to "Accounting Standards for Business Enterprises", there are different options for enterprise inventory valuation method and fixed assets depreciation method. Even if the actual operations of the two enterprises are exactly the same, the financial analysis conclusions of the two enterprises may be different.
Third, the impact of objective factors on the analysis of financial statements
1. The influence of the reliability of financial statements on the analysis of financial statements.
Many times, for various purposes, enterprises need to show good financial status and operating results to the outside world. Once the actual business situation is difficult to achieve the goal, enterprises will take the initiative to choose accounting methods that are conducive to improving profits, or take other means to whitewash accounting statements. For example, in order to improve the profit level, some enterprises often overestimate the cost of products in process and underestimate the cost of finished products in stock at the end of the period. Due to human manipulation, the report information obtained by information users is far from the actual situation of enterprises, thus misleading information users and making financial statement analysis meaningless.
2. The influence of the professional quality level of financial statement analysts on financial statement analysis.
The analysis and evaluation of enterprise financial statements are usually done by report analysts. However, different financial analysts have different understanding of financial statements, their ability to interpret and judge financial statements, and their mastery of financial analysis theories and methods, and their understanding of financial analysis and calculation indicators often has different results. If the analyst does not fully understand the calculation process of each index and the relationship between each index, it is difficult to fully grasp the economic meaning explained by each index just by looking at the calculation results.
Fourthly, there are limitations in the analysis methods of financial statements.
Limitations of 1. ratio analysis.
The calculation of ratio index is generally based on the financial statements of historical cost and historical data, which greatly reduces the correlation between the information provided by ratio index and decision-making. Weakened its ability to provide effective services for enterprise decision-making. Moreover, the ratio analysis is aimed at a single index, and the comprehensive degree is low. In some cases, a satisfactory conclusion cannot be reached.
2. Limitations of trend analysis.
Trend analysis is to provide analysts with information about the changing trend of enterprise financial situation relative to various indicators in different periods of the enterprise, and provide basis for financial prediction and decision-making. However, the data based on trend analysis, mainly financial statements, have certain limitations; In addition, due to the influence of inflation or various accidental factors and the change of accounting conversion methods. Therefore, the financial statements in different periods may not be comparable.
3. Limitations of comparative analysis.
Comparative analysis refers to the comparative analysis of economic indicators. Methods to determine the differences and trends between indicators. However, due to the differences in price levels and business relationships between enterprises in different regions, the index levels of different enterprises are inevitably different, which makes them lack comparability.
Verb (abbreviation of verb) Limitations of commonly used financial statement analysis indicators
1. current ratio.
Current ratio is the ratio of current assets divided by current liabilities. The higher the ratio, the higher the degree of current assets exceeding current liabilities, that is, the higher the security of short-term liabilities of enterprises. But this effectiveness is very limited. First of all. A considerable part of current assets are insolvent, such as weak liquidity of inventory. Secondly, there are still some items in current assets that cannot be realized, such as prepayments and prepaid expenses. Although it is regarded as a current asset in nature, it does not actually have the ability to realize payment. In addition, the limitation of the financial ratio index's own structure determines the limitation of its effectiveness. For example, high turnover rate itself means low asset utilization rate, idle assets, low income and lax management; At the same time, it also shows the conservatism of enterprise management concept. Did not make full use of the current short-term financing capacity of enterprises.
2. Quick ratio.
Quick ratio is the ratio of quick assets divided by current liabilities, which is an auxiliary indicator of current ratio. An important factor affecting the credibility of quick ratio is the liquidity of accounts receivable. When quick assets contain a lot of bad accounts receivable. It is inevitable that enterprises cannot accurately judge their short-term solvency. Many enterprises seize this weakness to whitewash statements and mislead information users.
3. Earnings per share.
Earnings per share = net profit this year/total number of ordinary shares at the end of the year, which indicates the profit of ordinary shares this year and is an important ratio index to measure the profitability of the company. When calculating this ratio, the numerator is the net profit of this year, the denominator is the total number of ordinary shares at the end of the year, one is the period indicator and the other is the time point indicator, so the calculation caliber of numerator and denominator is not exactly the same. At the same time, when calculating earnings per share, the number of common shares is a concept of "shares". The shares of different companies are not equal in economy and contain different net assets and market prices. That is to say, the amount of investment in return for earnings per share is different, which limits the horizontal comparison between different companies.
4. Net assets per share.
Net assets per share = net assets at the end of the period/the number of ordinary shares at the end of the period, indicating the shareholders' equity or book equity represented by each ordinary share outstanding. In investment analysis, this indicator can only be used in a limited way, because it is measured by historical cost, which can neither reflect the realized value of net assets nor reflect the output capacity of net assets.
5. Return on net assets.
The rate of return on net assets is the rate of return on investment, and the net income obtained by an enterprise in a certain period should be compared with the net assets used by the enterprise for operation in that period. However, the net assets of an enterprise used for operation in a certain period of time are constantly changing. In order to improve the accuracy of the calculation results, it seems more reasonable to use the average of net assets at the beginning and end of the period as the denominator, compared with the current net profit of the numerator. On the other hand, the "net assets at the end of the period" project has eliminated the cash dividend amount distributed to shareholders, which leads to the difference in the calculation caliber of "return on net assets" of companies with different dividend policies.
6. Cash flow ratio indicators.
What can really be used to repay debts is cash flow, and the comparison between cash flow and debt can better reflect the ability of enterprises to repay debts. But the proportion is too high, probably because the enterprise has too much cash. The reason why it has not been well used in business. What needs more attention is that. The indicator to measure the company's solvency here is "net operating cash flow". However, any cash source of the company, whether it is cash flow from business activities, investment activities or financing activities, can be used to repay the debts of the enterprise. Therefore ... if the cash flow of operating activities used by molecules is changed to the sum of three net cash flows. It would be better to calculate the cash flow ratio.
Suggestions on improving the limitations of financial statement analysis by intransitive verbs
1 Strengthen the use of notes to financial statements.
Notes to financial statements are supplementary explanations and detailed explanations of the contents and items that cannot or are difficult to fully express in the financial statements themselves. In enterprise financial analysis. We should make full use of the information in the financial statements and notes to the statements, and contact other relevant information. Serious and in-depth analysis and research can improve the understanding of the overall situation of the enterprise and evaluate the financial situation and operating performance of the enterprise more accurately.
2. Improve the comprehensive ability and quality of financial statement analysts.
No matter which financial statement analysis method is adopted. The analyst's judgment is particularly important for drawing correct analysis conclusions. At ordinary times, it is necessary to strengthen the training of financial statement analysts, improve their comprehensive quality, improve their ability to interpret and judge report indicators, and make them have knowledge of accounting, finance, marketing, strategic management and enterprise management at the same time. Mastering modern analytical methods and tools, establishing correct analytical concepts in practice, gradually cultivating and improving one's ability to judge analyzed problems, and collecting and mastering comprehensive data will greatly provide true and reliable basis for enterprise management and decision-making.
3. Combination of quantitative analysis and qualitative analysis.
Modern enterprises face a complex and changeable external environment, which is sometimes difficult to quantify, but it will have an important impact on the financial statements and operating results of enterprises. Therefore, while doing quantitative analysis, we need to make qualitative judgments. On the basis of qualitative judgment, further quantitative analysis and judgment are carried out to give full play to people's rich experience and accurate calculation of quantity and optimize report analysis.
4. Combination of dynamic analysis and static analysis.
The production, management, business and financial activities of an enterprise are a dynamic development process. Therefore, we should pay attention to dynamic analysis, and analyze the possible results of the current situation on the basis of understanding the past situation, which is helpful to correctly predict the future of the enterprise.
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