Company Financial Analysis

Author: Woos
Publisher:
Publish Date: 2004-05-01
Features: This book aims to provide a financial analysis method for evaluating company performance based on information provided by the company. Financial analysis is not only a science but also an art. By dividing any two numbers from the annual report, we can calculate a ratio. However, the key skill lies in selecting which two numbers to use, where to find them, and how to evaluate the results. Before attempting to conduct a company analysis, it is essential to have a good understanding of financial terms and financial reporting. Therefore, this book explains the content and purpose of the main financial statements in the annual report. Financial analysis is not only a science but also an art. It is built upon a complex accounting data system but is not limited to mere numbers. Instead, it is a skillful combination of induction, analysis, and reasoning. For many company operators and investors who are not professionally trained, mastering this art is not an easy task. The main purpose of this book is to explain the company's financial statements—such as the balance sheet, income statement, and cash flow statement—in a clear and accessible manner, introducing their basic concepts, preparation methods, and key points to note when reading them. The book emphasizes three important principles that financial analysis should follow: Never evaluate a company based solely on one year's data. It is usually better to look at three years of data, preferably five years. Do not evaluate a company in isolation. It is typically necessary to compare it with other companies of similar size, industry, and country. When making comparisons, it is essential to ensure that the company's circumstances are comparable. In other words, the data foundation used for analysis should be consistent. For company executives and external investors, this book will help them understand the company's financial statements, appropriately assess the company's operational performance, and make sound business and investment decisions. For accountants and auditors, the book explains the preparation norms of companies' financial statements and provides warning indicators for fraudulent activities that may occur during the preparation process. These contents are equally valuable for reference and inspiration.