How to read financial statements, how to quickly understand financial statements

Here's how to quickly understand financial statements:1. Look at the income statement first. From the income statement, we can see the operating ability of an enterprise, and trace whether the performance of a certain business or department affects the profitability of the company.

The first category of the income statement is operating income, the second category is operating costs, the third category is operating expenses, and the fourth category is non-operating income and expenditure. Compare and read with the budget table, and subdivide the accounts for easy analysis.

2. Look at the balance sheet again. From the balance sheet to see through the essence of the enterprise, pay attention to the hidden mysteries in the statements, take into account the safety and profitability, check whether the main asset accounts are true, especially the deposit and loan status.

3. Finally, look at the cash flow statement. The cash flow statement looks at cash flow from operating activities and free cash flow. The increase or decrease of cash caused by business activities, the inflow and outflow of cash caused by investment and wealth management activities, pay attention to the trend of cash flow profits, and keep the cash inflow greater than the outflow.

The way to understand the financial statements is: 1. The composition of the financial statements: A complete set of financial statements includes a balance sheet, an income statement, a cash flow statement, a statement of changes in owners' equity (or a statement of changes in shareholders' equity) and notes to the financial statements.

1. The balance sheet of assets and sales reflects the current status of assets, liabilities and capital of the enterprise. Long-term solvency, short-term solvency and profit distribution ability, etc. 2. Income statement (or profit and loss statement) It reflects the amount and structure of the current period of the enterprise's income, expenses and gains and losses that should be recorded in the current profit.

3. The cash flow statement reflects the ins and outs of the cash flow of the enterprise, which is divided into three parts: operating activities, investment activities and financing activities. 4. The statement of changes in owners' equity: It reflects the increase and decrease of the total amount of owners' equity (shareholders' equity) of the enterprise in the current period, and also includes structural changes, especially the gains and losses directly credited to the owners' equity. 5. The notes to the financial statements generally include the following items:

The basic information of the enterprise, the basis for the preparation of financial statements, the statement of compliance with the company's accounting standards, important accounting policies and accounting estimates, explanations of changes in accounting policies and accounting estimates and correction of errors, and explanations of important statement items. 2. The main contents of the analysis of financial statements include: 1

Net asset value. The net asset value is the company's own capital (capital + start-up profit + internal retained profit + profit for the settlement period). It is an important basis for examining the company's business safety and development prospects.

2.Total assets (liabilities + net assets). It shows the scale of the company's operations.

3.Equity ratio (100% of total assets of own capital). It reflects the company's business style and ability to resist risks.

4.Net assets per share, i.e. book value per share (net asset value number issued). It reflects the true value of **.

5.The company's total profit and return on capital (current profit, total capital), etc.

To understand financial statements, you need to master the following steps:

Familiarize yourself with the structure of financial statements: Financial statements usually include parts such as balance sheet, income statement, cash flow statement, and statement of changes in shareholders' equity, and you need to understand the role and content of each part.

Analyze the balance sheet: The balance sheet provides an idea of a company's assets, liabilities, and owners' equity. It is important to note that the data on the balance sheet is static, reflecting the instantaneous state of the financial situation.

You can understand the company's financial status and risks by analyzing indicators such as the company's current assets, non-current assets, current liabilities, non-current liabilities and shareholders' equity.

Analyze the income statement: The income statement can understand the company's operating income, costs, expenses, and net profit, etc. It should be noted that the data in the income statement is dynamic and reflects the company's operation during a certain period.

You can understand the company's profitability and development trend by analyzing the company's operating income, gross profit margin, net profit margin and other indicators.

Analyze the cash flow statement: The cash flow statement can provide an idea of the cash inflow and outflow of the company. It should be noted that the data in the cash flow statement reflects the company's cash flow, which can understand the company's cash reserves and cash flow from operating activities.

By analyzing the company's operating activities, investment activities, financing activities and other indicators, the company's cash flow and capital operation can be improved.

Analysis of the Statement of Changes in Shareholders' Equity: The Statement of Changes in Shareholders' Equity provides insight into the company's share capital and retained earnings. It is important to note that the statement of changes in shareholders' equity can provide an idea of the changes in the company's share capital and retained earnings.

You can understand the company's shareholders' equity and share capital structure by analyzing the company's equity changes, retained earnings changes and other indicators.

To sum up, to understand financial statements, one needs to have an in-depth understanding of financial indicators and financial reporting structure. By analyzing the various indicators in the financial report, it can help investors and researchers better evaluate the value and development prospects of the company.

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The main ways to understand financial statements: balance sheet: understand the financial structure of a business, income statement:

Analyze the company's operating ability, cash flow statement: evaluate the company's sustainable competitiveness, owner's equity: understand the economic interests of the business owner.

There are also three elements: the purpose of studying financial statements (analysis of profitability, analysis of operating efficiency, etc.), the overall view of financial statements (not partial generalization), and the combination of industry characteristics (flexible and changeable).

The financial statements are prepared in accordance with accounting standards and reflect the financial status and operation of the accounting entity to the owners, creditors, other relevant parties and the public.

Financial statements include a balance sheet, income statement, cash flow statement or statement of changes in financial position, schedules and notes. Financial statements are the main part of the financial report and do not include information included in the financial report or annual report, such as directors' reports, management analysis and financial fact sheets.

The easiest way is to first know the structure of the accounting statements, the balance sheet is the capital structure, the income statement is the flow account, and the cash flow statement is the content related to cash.

The balance sheet is divided into two parts, the left is the assets and their distribution status, such as, how much cash, how much inventory, how many debts, how many fixed assets, etc.; On the right are Liabilities and Owners' Equity. Assets = Liabilities + Owners' Equity, so the table must be the total on the left equal to the total on the right.

The income statement is calculated layer by layer**, and the formula is easy to understand:

Operating profit = operating income - operating costs - business taxes and surcharges - selling expenses - management expenses - financial expenses - asset impairment losses Investment income.

Total profit = operating profit + non-operating income - net profit from non-operating expenses = total profit - income tax expense.

Utilize the accounting statements to observe:

The financial structure and the reasonableness of the debt management.

Balance Sheet Owns or controls resources and financial strength, and observes the company's solvency and financing ability.

Foresee future financials.

Operational performance. Income statement Leverage existing resources, improve profitability, and future profitability.

Paying debts and paying investors profits in cash.

The reason for the difference between the profit earned and the operating cash.

Cash Flow Statement Financing, investment impact and non-impact cash receipts and expenditures will form cash flow capacity in the future.

Estimate business risk.

Financial statements are required, and the results of the analysis are subject to debate.