I bought an apple for 100 yuan and sold it for 120 yuan. ROE= (120-100)/100=20%
Specifically includes:
Net profit margin: per Money earned from selling an apple
Asset turnover rate: The speed at which apples are sold has a competitive advantage.
Equity multiplier: Borrowing money to do business, increasing the equity index = increasing leverage. For example, borrowing money is used to expand production scale
Downstream companies/distributors make IOUs and pay for the goods first.
There is no simple definition of good or bad. Analyze from the following:
The growth rate of accounts receivable: Generally, 3 years +, when it is much smaller than the income growth rate, the income quality is better.
Cash flow situation:
Provision for bad debts/bad debt provisions/accounts receivable: Compare the levels of peers.
Accounts payable: Compared with accounts receivable, accounts payable evaluates the degree of dependence on upstream companies.
If Accounts Payable < Accounts Receivable, indicate dependence on upstream suppliers < control of downstream distributors. The position of such an enterprise in the industrial chain is terrible.
When a company operating normally has revenue growth, accounts receivable are also growing, but the growth rate of revenue is usually much greater than the growth rate of accounts receivable. This can ensure that the company's business scale becomes larger and the profits from the products can also be recovered smoothly. Less credit, guaranteed profits
Negative impacts of high accounts receivable:
1. Due to the inconsistency between the company’s logistics and capital flow, although it has been confirmed in the income statement The operating income and profits are recorded, but the payment is not recovered in the cash flow statement, and the company needs to pay taxes in advance. These occupy a large amount of working capital and may affect the company's capital turnover. High accounts receivable will not only greatly occupy the company's cash flow, but also side-effect the company's cash flow.
Because the cash flow statement matches the bank (cash) journal, and bank journals are extremely difficult and risky to falsify, the cash flow statement is the closest to the "real" table in a financial report. When reading the cash flow statement, combined with the related items of the income statement and balance sheet, you can well judge the authenticity of the income statement items
The cash inflow generated from operating activities minus the cash outflow generated from operating activities, It is called the net cash flow from operating activities.
The T-shaped account method means drawing a T with cash inflows recorded on the left and cash outflows recorded on the right. For example, if you spent 10 yuan on breakfast, put it on the right side; or if you received a salary of 5,000 yuan today, put it on the left side. Finally, a summary of all cash inflows and outflows during the reporting period becomes the cash flow statement.
Corresponding to the company:
Sales of goods, provision of services, etc. and cash inflows related to operations are called cash inflows from operating activities; purchases of goods, services, etc. related to operations Cash outflow is called cash outflow from operating activities
Example: According to the 2016 annual report data, among the A-share listed companies, the largest amount of cash inflow related to operating activities is Sinopec, which is 21,637 billion, but the operating income that year was only 1,930.9 billion yuan. What do these two numbers mean?
The first number shows that in 2016, Sinopec received 2.1637 billion yuan in payments due to its production and operations, including payments for selling oil, fertilizers and equipment; while the second number shows that it achieved Sales revenue of 1930.9 billion yuan. Why is there such a big difference between the two? Why is the money received higher than the income? This is because the money received was from previous years. This may be related to Sinopec’s internal debt settlement management system, which recovered more debts from previous years, thus making this year’s cash inflow greater than revenue
Note : Revenues, which may include accounts receivable, may be overstated. Cash flow: may include accounts receivable income from previous years, but does not represent this year's.
In order to increase profits, enterprises use unconventional means to sell on credit, which will lead to a serious mismatch between income and cash received from selling goods and providing services. This type of income is relatively risky.
Let us continue to return to Sinopec’s 2016 cash flow statement. The cash used to purchase goods and receive services was 1.5479 billion yuan. This data needs to be compared with the operating costs in the income statement. Sinopec The operating costs for the year were 1,492.2 billion yuan. The reason why the cash paid for purchasing goods and receiving services is greater than the operating cost is usually because the company paid the purchase money in previous years.
In addition to conventional financing channels such as ordinary bank loans, borrowings, and trusts, listed companies can The financing methods carried out mainly include additional issuance, rights issue and convertible bonds. In addition, due to the particularity of listed companies, equity pledge loans can also be carried out.
When it comes to financing, we have to mention LeTV. The cash inflow generated by financing activities in the past five years has grown almost linearly
Cash flow related to financing activities Qingdao Haier’s financing The means are relatively simple, basically bank loans. It rarely attracts investment and has not issued bonds. Therefore, it can be judged that Haier is not too short of money and investors can rest assured about its ability to continue operating.
The opposite approach: receive large amounts of investment and issue bonds
Balance sheet: "Assets = Liabilities + Owners' Equity"
Income statement: Revenue - Expenses =Profit"
Current assets
Assets are nothing more than current assets, fixed assets and intangible assets, and the most important thing is the change in current assets. The normal situation of a company is: current If the proportion of assets is low and the proportion of non-current assets is high, if the situation is reversed and current assets account for the majority of the company's total assets, it means that the company's capital utilization rate is low, and it can be said that "the poor have money left." . Once the company does not have more fixed assets and intangible assets, it means that the company does not have strong profitability and its development prospects will not be very good. However, the current assets have increased. It can prove that the company's payment ability and liquidity have increased.
Liabilities
If the on-balance sheet debt ratio is high, it may indicate that the company lacks market awareness and the company's asset utilization rate is low. In daily production and operations, too much emphasis is placed on input while output is neglected and the ability to recover is prevented, resulting in a large amount of waste and poor profitability of the enterprise. It may even cause losses and bankruptcy of the company. However, although too low debt capital will reduce financial risks, it will not provide effective development for the company.
When it comes to the expansion of Kweichow Moutai, it will require technological transformation. Projects of all sizes cost money. Looking at the hundreds of billions of dollars in cash, the question is, if you have money, do you need financing? Simply put, "borrow". Use other people's money to do your own thing." If you can still make money after deducting expenses, it's worth it! What you play is capital and heartbeat. This is a game where risk and profit coexist.
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A store with net assets of 100,000 was bought by another company for 500,000.
Goodwill: the premium paid by the acquiring company
Acquisition. Companies cannot achieve synergy
Gross profit margin and net profit are declining year by year
Reduce holdings in acquired companies (the acquired businesses are not integrated)
Research and development capabilities
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Unique resources - Yunnan Freedom
Higher gross profit margin
In addition to conventional financing channels such as ordinary bank loans, borrowings, and trusts, listed companies can Financing methods mainly include additional issuance, allotment of shares and convertible bonds. In addition, due to the particularity of listed companies, equity pledge loans can also be carried out.
When it comes to financing, LeTV has been mentioned. Cash inflows generated from financing activities grow almost in a straight line
If investors completely avoid financial reports, it is easy for them to step on the wrong side of the investment process, buy the worst stock, and be burned! It needs to be emphasized that financial reports cannot directly reflect stock prices, but changes in stock prices can reflect financial reports. As an investor, especially a retail investor, clearing minefields through financial reports is one of the essential homework. One sentence: "It is better to make less money than to lose big money." That's what it means.
No matter what industry or enterprise, various transactions occur every day, but from an accounting perspective, an enterprise does three major things in its lifetime: operation, investment and financing.
For example, due to business needs, the company where Yue Wo works needs to establish a new subsidiary "Laimao Winery" to specialize in the sales of Moutai series of wines. The parent company first allocated 1 million in cash as start-up capital. The boss of this company will definitely carry out business operations one after another and will not put the money on the account to collect interest, otherwise he will get a box lunch.
Now let’s take a look at the economic activities of “Laimao Winery”. Renting a store, purchasing Moutai, collecting payment, etc. are the day-to-day business activities. If it develops rapidly and wants to invest in other companies, or if it wants to set up a joint venture store with Wuliangye, this is an investment activity. If during the development process, cash is insufficient and the company has to borrow from the parent company or borrow from a bank, this is a financing activity.
"Laimao Winery" has been established for one year. The parent company (also an investor) wants to know the operating status of the company and what has been done with the 1 million invested? When something goes wrong, managers need a "hands on."
One of the starting points is the "balance sheet".
If "Laimao Winery" borrows 2 million from the bank due to poor financial performance, it will be placed here. Salaries to employees will also be placed here. Debt is the so-called borrowing chickens to lay eggs. Operating with moderate debt can improve the company's operating efficiency and increase the return on investment. However, excessive debt will increase the company's financial risks. The borrowed chickens may not lay eggs, and there may also be poultry accidents. influenza.
Just like when girls are looking for a partner, they divide boys into several categories in order to estimate their potential. What types of boys are there? Those who have a house and a car but no mortgage, those who have a house and a car but a mortgage, those who have a house but no car but a mortgage, those who have no house but no car but cash, those who have no house and no car but no cash, etc. Of course, in the end, you may marry for love.