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Cash flow analysis of listed companies

The Ministry of Finance issued the Cash flow has become a compilation of Listed Companies is one of the main table. Statement of Cash Flows for the majority of investment decisions of investors is a very useful report, but to really play the role of cash flow statement, cash flow also need to have deep understanding and mastery of certain skills. A cash flow statement of the role of (a) to help investors, creditors and other information users assess the company has created the ability of future net cash flows. The company's investors, creditors, investment and credit motives, eventually fell on the pursuit of access to cash flow. In order to make the right investment decisions and credit decisions, they must be based on assessment of the financial report provides information on the source of cash income, time and uncertainties, including dividends or interest received, proceeds of securities sold, the loan principal repayment and so on. Chinese papers League finishing. (B) to help investors, creditors assess the company's ability to repay debt, the ability to pay dividends, and external financing needs. Debts are paid, the need to use cash resources; paying dividends to shareholders also need to pay cash. The more net cash flow, degree of external financing needs of the lower. (C) to help users of financial statements of net cash balance of payments and related reasons for the differences. Financial statements are recognized on the profit or loss to follow the principle of accrual rather than cash basis of accounting principles. This inevitably leads to the difference between net income and cash payments. This requires use of cash flow analysis of the causes of differences, in order to facilitate the right decisions. (D) to help users assess the current statements of cash and non-cash investing and financial activities of the company's financial condition. Not only to disclose the cash flow statement and cash payments related to operating activities, investing activities and financing activities, but also the disclosure of non-cash investing and financing activities, namely through the cash flow statement, can reveal changes in financial position of all of the company. Second, cash flow analysis of the main points of (a) should be combined with specific business enterprise, investment, cash flow from financing activities to analyze the number of its changes; not just from the cash and cash equivalents (hereinafter collectively referred to as Mainly by the operating cash flow, investment, financing three types of activities. Cash flow from operating activities Net is generally positive. As accrual accounting is based, enterprises net profit and cash flow are often inconsistent. For marketable, good business management, business activity can generate substantial incremental cash; and for the sale of a large scale, but the cash outflow from operating activities over cash flow business, mostly because the huge amount of accounts receivable. Investing activities Net cash flow is generally negative. Such as offering money into the project plan, we should produce large amounts of cash outflows. At the same time to combine the cash flow before and after the evaluation of corporate investment income. The rewards of past investments or enter a stable investment return period, net cash flow from investing activities may also be positive. On fund-raising, if the enterprises to direct financing and indirect financing combined two means, financing activities generated net cash flow is generally positive. But companies may be due to other reasons,[link widoczny dla zalogowanych], repayment of loans, financing activities generated net cash flow may be negative. Therefore, the net increase of listed companies in the evaluation of cash flow, an increase is difficult to say definitely good, certainly not reduced, in conjunction with the specific circumstances of each listed company to analyze. (B) should be combined balance sheet, income statement to analyze the cash flow. Balance sheet and income statement is a static report, it can only reflect a particular point in time enterprises in the financial position and operating results, cash flow is a dynamic statement that reflects a certain period of corporate cash flow position. Single report of any information provided is not complete, so the report should be combined analysis of three current cash balance information, to determine the liquidity of listed companies, financial flexibility, profitability, liquidity and risk. Three indicators of cash flow analysis and cash flow statement In depth knowledge of specific business listed companies on the basis of specific indicators can help to analyze the cash flow from multiple angles listed company's financial evaluation conditions conducive to get valuable information for decision making. In the application of these indicators should be combined with other aspects of the situation, so as not to draw a one-sided conclusions. (A) the profitability indicators of the quality of analysis: Net operating cash flow / net income. This indicator reflects the net cash flow from operating activities, the degree of difference with the current net profit, ie net profit realized in the current period, how many cash guaranteed. This index of listed companies to manipulate profits for the prevention plays an important role. Corporate manipulation of book profits, generally there is no corresponding cash flows. This indicator is too low, there is the possibility of loss of virtual real profit, should be further analysis of accounting policies, accounting estimates and the impact of accounting errors and changes in receivables and inventory liquidity. (B) the growth potential of indicators: the cash reinvestment ratio = (net cash flow from operating activities - cash dividends) / (fixed assets + investment + other assets + working capital). This indicator can assess the potential growth of listed companies. The higher the index, said businesses can reinvest the cash in more of the assets. In general, the target of 8% to 10%, is considered ideal. It should be noted that, to analyze the potential growth of listed companies, but also in combination with other circumstances into account, the index shows only the cash flow business growth level of protection. (C) analysis of indicators of liquidity: cash / liquid assets. The indicators to measure the quality of current assets. The higher the index, indicating the current assets of listed companies, the stronger liquidity. However, this indicator is not as high as possible, too high may indicate that the cash has not been fully exploited. (D) the solvency analysis of indicators: cash / current liabilities. This indicator reflects the cash available to current liabilities of the level of protection, the higher the index, indicating the ability of enterprises to pay current liabilities of the stronger. However, the index is too high, companies may not make good use of cash resources. On the other hand, the index is too low, but also means that companies may be paying the crisis. (E) ability to pay dividends of indicators: cash flow per share = Net cash flow from operating activities / weighted average number of shares in circulation. This indicator reflects the average cash flow per share received. This indicator implies the beginning of listed companies to maintain cash flow situation, have the ability to cash dividends to shareholders the maximum amount. Net income per share is not representative of the company's ability to pay dividends. From this point, it seems more realistic cash flow per share, more direct. It should be noted that net cash flow from operating activities and net income can not fully substitute to evaluate the enterprise's profitability, cash flow per share, net income per share are not a substitute for the role. of: Wu Hua Yan