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Analysis Method of the financial condition of listed companies

Author: ZuoXinJu From: www.yourpaper.net Posted: 2010-02-17 19:09:58 Read:
Abstract: The listed company's financial position is reflected through regular financial reporting. This stage, China's listed companies regularly report includes three tables (balance sheet, income statement, cash flow statement) and the notes thereto. Analysis of corporate financial statements from the calculation of sorting out various financial indicators, or certain technical processing and then these indicators.
Keywords: financial condition; analysis; multivariate analysis

analytical methods of the current financial condition of listed companies

1.1 Introduction
Care and analysis of the financial situation of enterprises actors (individuals or groups) can be divided into two categories: one is external analysis (eg, investors, creditors, securities analysts), they are individuals or groups enterprise. At present, they are generally less on the financial position of the enterprise carried out a comprehensive analysis, just focus on one aspect of the expedition: or profitability or solvency. The analytical methods used are mostly horizontal comparison of similar enterprises of the indicators is part sorted out all indicators calculated from the corporate financial statements; another type of enterprise managers (managers, financial officers) they are generally the enterprise as a single system, making the analysis of various financial indicators based on comprehensive analysis of the enterprise's overall operation, using the historical data more generally current financial indicators compare with the previous, less comparison with other enterprises. The reason for this difference is mainly the following two aspects:
External analysis by internal managers have different purposes in the analysis of the financial condition of the enterprise, the need to fully examine the financial indicators, the required information is not limited to the financial statements.
Exposed to external analysis by internal managers on corporate financial information. In general, the enterprise external analysis of access to financial information on enterprise, mainly corporate periodically announced financial statements, that is, they can only use the data for analysis of the financial statements; For internal managers. In addition to the financial statements at any time can access the financial and non-financial data, a comprehensive analysis of the financial condition of the enterprise to create the conditions for internal managers. For internal managers, the historical data is easier to obtain, and to facilitate their enterprise trend analysis.
1.2 Evaluation
We usually outside the enterprise analysis for the analysis of a particular aspect of the financial position of the enterprise known as the focus of analysis, a comprehensive analysis of the internal managers a comprehensive analysis of the financial condition of the enterprise. I believe that these two analytical methods has its shortcomings: on for enterprise external analysis, just the face of the financial statements from sorting out their concern indicators, such as creditors only examine the current ratio or quick ratio. This selected with certain subjective tendency, often different people will choose the same analysis purposes different financial indicators, which is more difficult to make an accurate evaluation of the financial position of the enterprise. Moreover, the financial position of the enterprise contact with each other, the interaction of financial indicators as a whole to reflect, if only by looking at some of the indicators to evaluate the financial condition of the enterprise, often cover up some of the substantive issues; internal enterprise managers, a comprehensive analysis of the company's financial indicators, mainly using two methods, namely DuPont financial analysis and Theo financial analysis. DuPont financial analysis only used four indicators, most of the financial indicators can not enter formulas participation in the analysis, so the loss of a large amount of information (for listed companies, the financial indicators few as a dozen, many dozens). DuPont analysis of the substance of the total index decomposition mainly on assets net margin by which factors. Therefore, I believe that in a sense, can not be counted as a comprehensive analysis. More in Wal financial analysis, artificial subjective factors (reflected in the selection of indicators and given the right to), but also more difficult to ensure the accurate evaluation of the financial position of the enterprise. Wall theoretical basis of the analysis is incomplete and some people this cast doubt on the accuracy of the analytical methods. Although the internal facilitate trend analysis of the financial condition of the enterprise, but if you do not compare with other companies, it would not "Know thyself", do not know the gap or advantage compared with other enterprises in the same industry, such comparisons also instead of one or several financial indicators analysis, but rather a comprehensive comparison of the financial position of the companies.

Introduction of new multivariate analysis method

For lack of an external analysis and internal managers of enterprises above analysis of the financial situation of enterprises, I believe that, for the external analysis should be comprehensive, a comprehensive analysis of the financial position of the enterprise; internal managers should use more scientific and comprehensive analysis method, and to enhance the contrast with other similar enterprises. That is, regardless of the external analysis or internal managers should strengthen the analysis of the financial situation of enterprises, and looking for a more scientific approach.
Comprehensive analysis method in comprehensive, from the point of view of the ability to understand things people often used to reflect the different sides of the financial indicators, the use of a simple system to be integrated to draw a general conclusion (or composite score ), such as Wal analysis of enterprise income scores to reflect the consolidated financial position of the enterprise. On the method, that is, to find a function P = f (X1, X2, ..., Xn), P is the composite score, X1, X2, ... Xn substituting this relation, derived P values ??to illustrate the financial position of the enterprise . In theory, such a function exists, but due to the complexity of the relationship between financial indicators, we find it unlikely. However, we can determine certain X1, X2, ...... Xn which indicators are the main important is how much. And then by a certain method Composite Composite score (q) is obtained as the true score P approximation, in order to meet the need to solve the problem.
To this end, we introduce a multivariate analysis method, a comprehensive analysis of the financial condition of the enterprise.
Multivariate analysis, also known as multivariate statistical analysis, based on multiple objects at the same time to inspect many data analysis methods. Due to the application of computers and the popularity of the past twenty years has developed very quickly. System has now developed into one contains several methods, the application of more and more mature methods principal component analysis, factor analysis, cluster analysis, discriminant analysis method. Their main role is integrated, many of the indicators reflect things different sides of its synthesis to a few "factor", and then calculate the composite score, for us a comprehensive understanding of the things being studied, and to identify the impact of the development status of things and trends decisive factor to achieve a deeper understanding things.
I believe that listed companies should gradually introduce these methods in financial analysis. These methods are not only able to overcome the shortcomings of the current analysis method, multivariate analysis methods can play their own advantages, an accurate evaluation results available to businesses within external decision makers. From the perspective of the development of the U.S. stock market, in the 1950s, introduced in the analysis of these methods, the stock market theory has been greatly enriched and development. China's current economic development point of view, the development of the stock market has more than a decade, the operation of listed companies also tend to improve. The number of listed companies and securities firms also began to establish quantitative analysis team (on the scale and form of view, we think that also can not be called a sector) analysis of some of the research enterprise development and securities pricing problem. But not more use of multivariate analysis methods. Judging from the current situation of China's listed companies financial analysis is also possible to introduce a multivariate analysis method. First, the three tables listed companies publicly disclose their data to meet the needs of the model. Second, high-quality financial officers of listed companies, to be able to grasp and and accurate use these methods. Again, the listed company's state-of-the-art equipment, and to facilitate the introduction and development of a variety of analytical software. 2006-2008 3-year financial statements of a listed company (automotive industry), we calculate the finishing appeared eight financial indicators: current ratio (X1), quick ratio (X2), the shareholders' equity ratio (X3), sales profit (X4), asset margin (X5), net assets income rate (X6), accounts receivable turnover ratio (X7), inventory turnover rate (X8). The data are as follows:

If you focus on analytical methods can be seen: the current ratio (X1), quick ratio (X2), the shareholders' equity ratio (X3) declining year by year to reduce the liquidity of the assets of the enterprise, their pay has fallen, should attract investors and attention of creditors; sales profit (X4), return on assets (X5), net assets income rate (X6), inventory turnover rate (X8) than in previous years is not too much change, This shows that the financial position of the enterprise in the year by year improved, giving the investor decision-making difficult. If the use of multivariate analysis, principal component analysis, the consolidated financial position of the Company calculated score (or principal component score by mathematical operations, current software more calculated very convenient) and to the sort order of 2006 best and the worst in 2008, while the center in 2007, prompted by declining financial situation of enterprises, mainly from two reasons: One is the impact of imperfect market competition environment; Secondly these three years coincided with the company conducted a large-scale investment.
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