Quick reading and analysis of financial statements and business performance reports

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Through management analysis criteria, interested subjects can recognize and evaluate the situation of the business, take measures as well as decisions. So how to understand financial indicators, to analyze the fastest and most comprehensive of the business performance is the problem posed. The article mentions how to quickly read and analyze indicators on financial status reports and performance reports ...

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Current situation of financial analysis in enterprises

The main purpose of financial analysis is to provide "talking" numbers for the operation and decision-making of enterprises (DN) and managers. It can be seen that analysis is not only a highly compliant job, starting from data selection, data checking to reading comprehension, applying analytical methods and making recommendations. , solution. The analysis process ends only when the target is satisfied, but there are cases where the analysis does not bring the desired results, this will cause many disadvantages for businesses and analysts.

Quick reading and analysis of financial statements and business performance reports - Photo 1

In fact, businesses are very diverse in terms of operations, business lines, capital structure and size, but all use financial analysis tools to make investment and business decisions. Analysis is always done fully according to the regulations of each enterprise. Analysis results bring many positive measures, but the biggest limitation is that the contents of the analysis are not diverse, the data on the reports sometimes do not match the analyzed data, the sources of information are still limited. There is no thorough analysis in many sources such as information inside and outside the enterprise.

Before the above facts, businesses need to change the way of reading, analyzing financial statements and business reports to bring about the most accurate and effective results, in which it is necessary to change right from the reading and The way of analysis for two main reports is financial statement and performance report. How to quickly read and analyze indicators on reports

Quick reading and analysis of financial statements and business performance reports - Photo 2

For businesses, the recognition of the numbers on the financial statements is very important for making the right decisions. This means that the analyzed indicators are of great significance for making investment and business decisions. In order to understand the indicators, the relationship between the indicators, it is necessary to use methods and techniques in which rapid analysis and reading of indicators are indispensable skills for the analysis and other subjects such as: Accountants, auditors, banks ... especially large-scale enterprises, diversified in business lines. Faced with requirements for efficiency in the use of financial indicators, the reading and analysis are carried out in the following steps:

Step 1: Auditor's opinion

Many businesses often ignore this step, while for the analysis to be effective, the data used must be truthful, reasonable and objective. Therefore, it is necessary to consider the auditor's opinion after performing the audit. If the opinion of the auditor is to fully accept, then the new data can be used in the financial analysis to bring the best results. This step shows that the analysis will be done after the audit ends or if the enterprise does not perform the audit, the financial statements can be used after the tax authority checks.

Step 2: Reading comprehension report of financial situation

This is an important report of the company, it reflects the financial situation at a certain time. The goal is that after analyzing the indexes of assets and capital sources, readers can read and understand the fluctuations of indicators, the structure of each indicator, the risk of financial imbalance in the short term. term as well as long term. The reading is as follows:

- List major items in assets - capital sources.

- Calculate the proportion of items in total assets, capital sources.

- Comment on the large variation in items, find out the cause.

- Evaluation of financial imbalance through net working capital.

Net working capital = Short-term assets - Short-term liabilities

If net working capital progresses to zero and turns negative, the greater the financial imbalance, the greater the risk.

Example: MT Company performs the analysis and reading comprehension of the indicators on the financial statement of 2018 in detail in Table 1.