statement of profit distribution

balance sheet

There are four cash flow statements.

1, balance sheet analysis

The balance sheet is the basis and source of the company's profits, which embodies the company's business model. The essence of securities analysis is to judge the future by history, so the factors that change less are more important. The balance sheet reflects the company's business model, resource possession and capital use. , relatively few changes, easy to judge. This balance sheet analysis is suitable for companies with excellent business model, stable industrial structure and stable growth, but not for companies with rapid growth and great changes.

Balance sheet-the basis of all forms

In a sense, the company's balance sheet is fundamental. Both the cash flow statement and the income statement are in-depth explanations of the balance sheet. In Graham's time, accounting standards did not require a cash flow statement. Later, with the further development of accounting standards, cash flow statement became essential. Therefore, in Graham's securities analysis, the balance sheet is the most discussed and analyzed.

2. Cash flow statement-changes in balance sheet

The cash flow statement is an explanation of the changes in the balance sheet. The change of cash is finally reflected in the cash and equivalent items in the balance sheet. The source of cash change is net profit. Net profit is transformed into the final cash change through three important cash changes: operation, investment and financing.

First of all, net profit is finally converted into operating cash flow through changes in working capital, adjustments to non-cash items such as amortization and depreciation, and other items (financial expenditure or income, investment income, etc.). ).

Secondly, the cash flow of investment expenditure and income. Among them, buying and selling assets has an impact on asset items in the balance sheet.

Finally, the cash flow of financing. Among them, borrowing and debt repayment will affect the borrowing items on the balance sheet. Dividends and additional issuance will affect the shareholders' equity items in the balance sheet.

3, income statement-the source of net profit

The income statement is the source of net profit. Net profit directly affects the changes of shareholders' equity in the balance sheet.

These three forms are the essence and summary of a company's financial situation. It is also a simplified model of the company's power system.

Income statement analysis:

Profit is only wealth on paper, and cash flow is real money. Profitability is more important than current profit. But in reality, people's behavior is just the opposite, paying attention to profits, ignoring cash, paying attention to the current period and ignoring the long term. This is also one of the reasons why value investors can get opportunities.

Analyze the financial report and answer a question: "Does the enterprise have money to spend?" . Judging from the financial report, if it has no money to spend, no amount of profit is useless. If you don't increase profits in vain, at most, I believe that there may be money to spend in the future; If it inflated profits, it would be even worse, because it would cost you tax to punch a swollen face and fill a fat man, and there may be no money to spend in the future. If you have money to spend, and it mainly comes from profits, it is a good enterprise.

A high-quality growth enterprise must continuously realize income growth, profit growth and cash flow growth in long-term business activities, which is the task of enterprise management. Of course, in the specific operation process, the management can dynamically adjust the relative priorities of income, profit and cash flow according to the actual situation of the enterprise.