Category: Money Tips Date: 2007-05-03
A look at liquidity, two to see a profit, the three look at the efficiency of investment
If the cash as the daily operation of enterprises of the "blood", then the cash flow statement is like "a blood test report." The quality of daily operation of enterprises, from this report can have a preliminary judge. Because from the other financial statements, investors can only grasp the company's cash in a static situation, and it reflects the cash flow statement Company cash flow dynamics. Investors, the cash flow statement in the study, if the re-refer to other reports, that understanding of the company would be more comprehensive. A company have enough cash flow is essential, not only related to the payment of dividends, debt repayment capacity, but also related to the company's survival and development. Therefore, investors, creditors care about the net assets per share of listed companies, such as capital gain net income per share, and profitability indicators, the company's payment would be concerned about solvency. Profit is the company to obtain the fundamental source of the net inflow of cash to secure enough cash is the company's excellent operating performance to create a powerful support.
Read the statement of cash flows, we must first understand the concept of cash. The cash flow statement, cash is cash on hand, ready to cover deposits and cash equivalents. Cash can be used to pay the deposit at any time, in general is the balance sheet "money funds" of the projects. Rather, you should also exclude those who can not readily use the deposit, such as the margin special deposits. Cash equivalents refers to the balance sheet on the "short-term investment" projects the investment meets the following conditions:
1, holding a short period of 2 and mobile 3 are readily convertible to known amounts of cash 4, an insignificant risk of changes in value
In China, cash equivalents, usually refers to the maturity date from purchase to 3 months or 3 months or less can be converted to a known amount of cash bonds. For example, in the preparation of mid-1998, when the cash flow statement for the June 1, 1998 purchased August 1, 1995 issue of a period of three years, bonds, due to expire two months of purchase, thus, the items can be regarded as cash equivalents, short-term investments. Company should be disclosed in the notes to the accounting statements of cash equivalents in its confirmation of the accounting policies and ensuring that accounting period before and after to confirm cash equivalents of standards.
Cash flow mainly consists of three parts, respectively, reflecting the enterprise business activities, investment activities and financing activities generated cash flow.
Each cash flow generated by an activity they were revealed inflow and outflow of the total, so that accounting information is more clarity and usefulness. Company's cash flow generated from operating activities, including the purchase and sale of goods, offering and receiving services, operating leases, pay taxes, pay remuneration, to pay for operating expenses and other activities form the cash inflows and outflows. In the accrual basis, these inflows or outflows of cash, revenues and expenses of its ownership of the corresponding period are not necessarily the current fiscal year, but it must have been received or paid this fiscal year.
For example, recovery of loans sold in previous years, the annual sales after the payment received in advance and so on. The company's profitability is its marketing capabilities, to close the current capacity, cost control capabilities, ability to avoid the risk of a combination of synthesis. Because there is a large number of commercial credit, operating income and cash flow greater differences may exist, can truly realize gains also depends on the capacity of the company's revenue now. Understand the cash flow generated from operating activities, will help analyze the company's revenue is the ability to fully evaluate the effectiveness of their economic activity. Cash flow generated by financing activities, including the absorption of investment, issuing shares, distribution of profits, issuing bonds, bank loans, debt, etc. received and paid in cash. Among them, "to repay the interest paid in cash" project reflects the company's cash to pay all the interest on borrowings, bond interest, regardless of how the use of borrowing, interest expenses channels to include not only the interest charged to the profit and loss, but also into account interest income in the construction project. Therefore, the project profit and loss account of the financial costs than the more comprehensive of the company to pay the interest burden.
Cash flows from investing activities, mainly including the purchase and construction of disposal of fixed assets, intangible and other long-term assets, as well as access to and recovery are not included in cash equivalents within the scope of the various equity and debt investment of cash received and paid. Among them, share dividends or profits to obtain bond interest income and cash flows are based on actual receipt, instead of the rights vested or acquired right to subject the collection. This investment income recognized in the income statement differ from the standards. For example, a subsidiary of a listed company invested 5 million yuan net profit this year. The listed company has its 80% stake, according to equity method investment income should be recognized for this year four million yuan. However, the distribution subsidiary of the profit is not necessarily immediately, but not the whole part of the End (according to the provisions of extracting surplus reserves). If the subsidiary then withhold the distribution of profits paid in full, there is no corresponding cash inflows to the listed companies. Of course, the listed company would be unable to cash flow statement in the year will be the return on investment as a cash inflow from investing activities to reflect. Corporate investment activities of the cash outflow occurs, often a reflection of its efforts to expand business, you can roughly know the company's investment from the direction of a company from operating activities, financing activities, access to cash is to create conditions for future development. No outflow of cash, we can not bring about economic benefits for the company. Investment activities are generally less frequent one-off large amounts of cash flow, and thus causing large amounts of cash outflows, resulting in net cash flows from investing activities is often negative and normal, this is for the company's long-term interests, in order to be able to have a higher level of profitability and the lay the foundation of stable cash flows. Of course, also make the wrong investment decisions backfired. So special requirements of investment project could be economically viable, and cash flow.
Cash flow statement Net cash flows from operating activities Net income often varies with the income statement, because of the following two aspects:
1, affecting matters of profits is not necessarily simultaneous cash inflow and outflow.
Some revenue, increase profits but not cash flow occurs. For example, a company's current operating income of 8 billion yuan, while the current period there are more than 700 million yuan additional accounts receivable, which increase revenue and profits but does not place a matter of cash flow, is caused by the difference between the two generated One of the reasons. Some listed companies accounts receivable management weaknesses, not in a timely manner and services trade receivables payment collection and settlement work, while others rely on related party transactions of listed companies supporting its operating results, and related parties of funds have been delayed, not in place. The consequences of these circumstances will be reflected in the cash flow statement, and even the company the number of operations almost no cash inflow, but the operating cost of the total to pay, purchase goods, pay taxes, large amounts of cash outflow occurs so that the cash from operating activities net flow negative, so that the company's cash flow difficulty. Delays in accounts receivable could not be recovered, to a certain extent, has also exposed the risks of the recognition of revenue. Some costs, reduce profits but not accompanied by cash outflows. For example, the fixed assets, depreciation, amortization of intangible assets, but on an accrual basis, matching principle requires that the acquisition costs of these assets in a reasonable period to use them to benefit-sharing, do not need to pay cash.
2, due to the need for classification of cash flows.
In conclusion reflects the company's net profit operations, investment and financing activities, the financial results of the three, while the cash flow statement on the need to separately reflect the operations, investment and financing activities cash flow. For example, interest on borrowings to pay for operating activities, both to reduce the cash outflow of profits occurred, but the cash flow statement as a fund-raising activities will be cash flow shows that, not as a cash outflow from operating activities reflected. In another example, the transfer of net short-term bond investments made, both to increase profits in cash flow occurred, but the cash flow statement will be as a cash inflow from investing activities listed, not as a cash inflow from operating activities reflected.
These two points is to make the net cash flows from operating activities generated net profit of reason for the difference, in fact, cash flow is also required to disclose the contents of the notes. Income Statement lists the company's net profit achieved a certain period, but did not reveal the relationship with the cash flow, balance sheet provides the monetary funds of the company and the beginning of the end of the addition and changes, but did not reveal the reason for the change. The cash flow statement as a bridge to communicate the above two tables of accounting information, so that the external financial statements of listed companies to further improve the system, to investors and creditors to provide more comprehensive and useful information.
