Literature Review of Financial Statement Analysis ? Abstract: The financial analysis is financial statement analysis, corporate financial statements by providing an analysis of accounting data to assess the enterprise value, to predict the future development of enterprises, which make a reasonable decision. Financial statements, a comprehensive, systematic and comprehensive record of the business brokerage business trajectory occurred, the relevant interests of the people become increasingly concerned about its analysis. Firstly, the financial statements of a literature review, from the definition and content of financial statements, analyzing financial statements of the subject, object and purpose of the analysis of the financial statements of the principles and steps, on the reviewed financial reports of listed companies . Keywords: listed companies, financial reporting, comprehensive analysis, Du Pont system Introduction: With the deepening of China's reform and opening up more and more companies go to the public markets, and financial statements have been more and more people are concerned. The financial statements of listed companies to provide users a variety of statements reflecting the company's operation and financial position of the various diff erent data and related information, but for different users of financial statements to read statements have different emphases. Social advancement and the rapid development of the economy today, listed companies closer to people's lives, through the right balance sheet, income statement and cash flow analysis, Ke Yi to help many investors, tax authorities, Law, Shen Zhi enterprise managers to make important decisions. In this case, separation of ownership and management has become an inevitable trend of development of enterprises, while the right two separate listed companies is the representative. Listed company's shareholders, creditors and other related requirements of external stakeholders to understand the company's operating condition, we should by analyst firm disclosed the information, which makes the financial statements and financial statement analysis is a necessity. Financial statements are accounting information system, through accounting and financial information and other means of financial statements expressed in the form of financial reports on the financial situation, is the business results of the static and dynamic information. Among the listed information disclosed in financial statements has been the focus of stakeholders. Financial analysis refers to the financial statements and other information as the basis and starting point, using special methods of analysis and evaluation of past and present business operating results, financial situation and its changes, the purpose is to understand the past, the evaluation is to predict the future, to help the interests of Relations Group to improve the decision-making. Foreign issued financial statements is based on the general requirements of all users of the design, so, report the user to select from the information they need to rearrange and to study their mutual relations, so as to meet specific policy requirements. Users to report relevant financial information to provide the basis for their decisions. But the financial statements are a series of data to a comprehensive and generally reflect the financial position, operating results and cash flows. Users of the report, these data are raw, preliminary, still can not directly for decision-making. This review to the financial statements of the definition, content-based, through a number of accounting, finance and other related categories of knowledge and scholars in recent years of related work, theory to explain and elaborate. Body: First, the definition of the financial statements and related content (A), the definition of the financial statements New York State Bankers Association in February 1898 the Commission put forward a motion asking that all borrowers must submit signed by their balance sheet to measure the company's credit and solvency, in 1923 the United States, White Ellis (James Bliss) published "The management of financial and operating ratios," in which he proposed and established standards of the industry average ratio of horizontal to facilitate people's financial comparison business. 1921 Gilman (Gilman) published a famous work "outstanding financial analysis," he pointed out that the ratio analysis can not overestimate the role, because the financial ratios and the relationship between the balance sheet seems difficult to clear. Financial statements, also known as external accounting statements reflect the accounting entity to provide both financial and operational accounting entity accounting statements, including balance sheet, income statement, cash flow or financial situation changes in tables, schedules and notes. Financial statements are the main part of the financial report, the report does not include the directors, management, analysis and financial situation, etc. in the financial report or annual report information. Foreign reports i.e. financial statements. Symmetric internal report, based on accounting standards to regulate the establishment, to the owners, creditors, governments and other interested parties and the public and other external users of financial statements disclosed. (B), the definition of Financial Statement Analysis Financial Statement Analysis, also known as financial analysis, is through the collection, collation corporate financial accounting report of the relevant data, and other relevant Buchongxinxi ½áºÏ, right enterprise's financial situation, business results and cash flows Qingkuangjinxing comprehensive comparison and evaluation, Wei Finance management accounting reports provide users a basis for decision-making and control of management. (C), the composition of the financial statements 1, the balance sheet Including: assets and liabilities, equity 3. Which assets include: current assets, long-term investment, fixed assets, intangible assets and other assets. Liabilities include current liabilities and long-term liabilities, owner of the public, including paid -in capital, capital surplus, earned surplus and undistributed profits. Of course, current assets, current liabilities, fixed assets should be divided into so many of its subheadings not repeat them here. Here is the equation is assets = liabilities + owner's equity. 2, the income statement Main Business Revenue - Operating Costs - Operating costs - sales tax and additional profits = sales; sales profit + other operating profits - management costs - financial costs = operating profit; Operating profit + investment income + non-operating income - operating expenses = total profits; gross profit - income tax = net profit 3, the financial statements of the cash flow statement is one of three basic reports, also known as accounts of changes in conditions, expressed in a fixed period (usually monthly or quarterly), the one institution in cash (including cash equivalent) in the case of changes. Second, the basic financial statements, ratio analysis Ratio analysis method is based on the financial statements for the same period a number of important items on the comparability of the relevant data, find Bilv, to analyze and evaluate companies in the Jing Ying Huodongyiji company He Lishizhuangkuang the way is the most basic of Gongju financial Fenxi . Because of the different objectives of financial analysis, which included a variety of creditors, management, government agencies have taken the focus is different. As stock investors, mainly to master and apply the four ratios that reflect the company's profitability ratios, solvency ratios, growth capacity ratio, liquidity ratio of the four categories of financial ratios. (A), ratio analysis of financial statements mainly include four aspects of 1, profitability analysis Commonly used indicators are: ROE = net profit / average net assets The total return on assets = net profit / average total assets Operating profit margin = gross profit / net ope rating income The larger of these three indicators, the stronger profitability. 2, solvency analysis Current Ratio = current assets / current liabilities, the index should be greater than 1, otherwise the corporate short-term liquidity problems, the best value of 2 or more. Quick ratio = liquid assets / current liabilities, of which liquid assets = current assets - Inventories - Prepaid expenses, the indicator is better than one. Asset -liability ratio = Total liabilities / total assets, compared with industry averages. 3, liquidity analysis ????????Liquidity ratio is the ratio of known activity effect of company The index, which molecular typically sales or cost of sales, the denominator exists, one Assets subject composition. (1), accounts receivable turnover. The formula for the accounts receivable turnover ratio = sales revenue (the end of the beginning accounts receivable + accounts receivable) = sales revenue on average accounts receivable accounts receivable is not obtained because of cash sales, so, This ratio can detect the amount is reasonable and the company's accounts receivable collection inefficiency. The annual turnover ratio is the number of accounts receivable. If the number of days a year that is 365 days divided by the receivables turnover ratio, we find the accounts receivable transferred once a week, how many days needed, that the average accounts receivable into cash required. The algorithm: average time = accounts receivable realization a year the number of days accounts receivable turnover accounts receivable turnover ratio in the higher number of days a week switch to the shorter time required, that the faster the company billing should be accounts receivable included in the old account and the account of the smaller priceless. On the contrary, turnover rate is too small, once the required number of days a week is too long to switch, then that company is too slow realization of accounts receivable and accounts receivable management inefficiency. (2), inventory turnover. The formula is as follows: Inventory Turnover = Cost of sales (opening stock + closing stock) = average cost of sales of goods intended to stock inventory sales and profits, and thus between the company's inventory and sales, must maintain a reasonable rate. Inventory turnover is the ability to measure the strength of the company sales and inventory excess or shortage of whether the indicators. The higher the ratio, indicating faster inventory turnover, the company's ability to control inventory more strong, the greater profit margins, working capital investment in the smaller amount of inventory. On the contrary, it indicates that too much inventory, not only funding the backlog affecting the liquidity of the assets, but also increased storage costs and product loss, out of date. (3), fixed asset turnover, its formula is: Fixed asset turnover = sales income of the average cost In the annual turnover rate that Gudingzichan times to detect the use of fixed assets, the efficiency of the company. The higher the ratio, indicating that the faster turnover of fixed assets, fixed assets, less idle; vice versa. (4), capital turnover ratio, also known as net turnover. The formula is as follows: capital turnover = sales revenue on average equity ratio of the amount of use that can be analyzed relative to sales turnover, the funds invested by shareholders if fully utilized. The higher the ratio, indicating that the faster turnover of capital, using the higher the efficiency. However, if the ratio is too high, said the c ompany too dependent on leverage, that is, less equity capital. Lower capital turnover rate, it indicates that the worse the company's capital utilization efficiency. (5), asset turnover, which is calculated as follows: Asset Turnover = sales revenue total assets ratio is a measure of the company's total assets are fully utilized indicators. Total assets turnover rate of speed, efficiency means that the level of total assets. Total assets turnover = sales revenue / average total assets, similar to the flow can be calculated asset turnover, fixed asset turnover, the net asset turnover and so on. Inventory Turnover = Cost of goods sold / average inventory balance Accounts receivable turnover ratio = Net credit sales / average accounts receivable balances, which credit the main business income instead of net used. Higher turnover rate index shows that the faster turnover of assets, higher efficiency, stronger operational capabilities. 4, Growth of ???Growth capacity ratio can be used to detect the capacity of companies to expand their operations. The solvency ratio, in a sense, also be used to detect the capacity of companies to expand their operations. But because of security gains, growth basis, the company solvency ratio target is reasonable, sound financial structure to be possible to expand operations, or, if the solvency weak, it is difficult to imagine that companies have the energy to expand operation. As for the leverage ratio, fixed assets to long-term debt ratio is even more outside the compa ny's growth rate target. Companies with high leverage ratios, on the one hand also shows that the high credibility, the creditor is willing to invest in the company by borrowing more money expanding operations. And if the high ratio of fixed assets to long-term debt, also shows that there is spare capacity of its long-term debt to borrow more to expand the business. Total assets of the asset growth rate = the amount of this year / beginning total assets Reflect the company's expansion of business capacity ratios are: (1), profit retention. The formula is: Profit = Net profit retention rate - should be made after-tax profits of the dividend rate that the company's after-tax profit (profit) of the number for the payment of dividends, the number of retained earnings and expand business for. The higher the ratio, indicating that companies with more emphasis on the development of stamina, not to distribute dividends due to excessive impact the company's future development; ratio lower, then that company is not successful, had to spend more to make up for loss of profits or dividends too much development potential is limited. (2), re-investment rate, also known as internal growth rate. The formula is as follows: re-investment equity = Net profit ¡Á shareholder profit - dividends paid shareholders, return on capital earnings = earnings retention rate ¡Á the ratio of shareholders that the company used the proceeds to reinvest their earnings to support the company's ability to grow. Formula shareholder profit retention rate of profits less dividends paid the shareholders the difference between the ratio of profit to shareholders. Shareholder profit refers to earnings per share and the product of the number of ordinary shares issued, net income is actually common stock. Third, DuPont Analysis DuPont analysis shows return on equity by three factors: operational efficiency, measured with a profit margin; asset use efficiency, measured using asset turnover; financial leverage, measured using the equity multiplier. (A), net profit margin of assets Assets, net profit margin is net interest affecting rights and interests of the most important indicators, and highly integrated, but it depends on the sale of assets, net profit margin net profit margin and total asset turnover of high and low. The total asset turnover reflects the turnover rate of total assets. On the asset turnover analysis of need for the various factors affecting the asset turnover analysis, in order to determine impact of working capital assets of the company's main problem lies. Sales net interest income reflects the level of sales. Expand sales and reduce costs is to improve the fundamental way business profit margins, while expanding sales, but also a necessary condition to improve asset turnover and means. (B), equity multiplier Equity multiplier that extent of the liabilities of enterprises, reflecting the company's use of financial leverage to the extent of business activities. Rate assets and liabilities, equity multiplier on the large, indicating a high degree of corporate liabilities, the company will have more leverage interest, but the risk is high; the other hand, low balance, equity multiplier on the small, the extent of company liability low, the company will have less leverage interest, b ut the risk borne by the corresponding low. State of system strengths in financial analysis is simple, systematic and feasible. However, with the development of the times, DuPont analysis system gradually reveals its defects, is the core indicators " rights and interests of net interest" in the decline in earnings quality. Retaining the original advantages of this system, based on the development of the original indicators proposed recommendations, such as economic value added, and through down to every level, combined with the balance sheet, income statement, cash flow statement to explain the target surface to . Fourth, financial analysis framework (A), financial analysis is an important aspect of corporate governance, if accounting is to collect basic data, then the financial analysis of this data is further processed (s), interpretation is intended to explain the company is now in digital operating conditions, certain company experience, revealed the problems and lessons, to provide support for the related personnel decisions. (B), the primary means of financial management: System building: he resolved a management principles, and the starting point; Internal Audit: his solution is the system construction is reasonable - the implementation of the effectiveness; execution efficiency is; compliance; Budget management: real-time control, process control; Financial analysis: including qualitative and quantitative analysis, he comprehensively reflect the system construction, Budget management problems that may exist. Conclusion: The financial statements of listed companies to provide users a variety of statements reflecting the company's operation and financial position of the various different data and related information, but different users of financial statements for the monthly statements have different focuses, in general shareholders concerned about the profitability of the company's founding shareholders, but shareholders are more concerned or national solvency of the company, ordinary shareholders or potential shareholders are more concerned about the company's prospects. In this review, the theory by analyzing financial statements, the financial statements of the indicators and methods and summarized the understanding that the purpose of financial analysis is the ultimate goal of a financial analysis, financial analysis, the ultimate goal is to make users of financial statements a reliable basis for the relevant decision - making. The purpose of financial analysis by the financial analysis of the main constraints for the different financial analysis of the main purpose of financial analysis is different. By one or more methods, multi-rate analysis and comprehensive analysis of financial statements, analysis of the pros and cons of this approach to find ways to compensate for these shortcomings, the availability of financial reports. Although the company's financial statements provides a large number of first -hand information for analysis, but still he is a historical document, can be summarized De reflect a period of time a company's financial condition and operating results reflect this general not enough to investors as an investment decision, as all the basis, it must be statements and other statements in the data or unified restatement compared to other data, or meaningless. 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