I. Income - Sustainability
Although the share transfer system does not require the profitability of the listed company. But "can continue to operate" is the main thing it often asks about the company. Measuring the ability of a company to continue to operate is usually based on its profitability.
If a company continues to lose money, its ability to continue to operate will be greatly doubted (although Internet companies like Amazon are more similar, it has suffered losses for nearly a decade, but still stubbornly alive).
Take the application of the listing of the new three boards in the Natural Park of Pig Enterprises. Due to the surplus of pigs in the past few years, and the high price of food, the industry is generally losing money. The company has always submitted a listing application for the stock transfer system, and the stock transfer system has issued a letter of inquiry for its sustainable management.
The content of the inquiry letter translated into Mandarin is like this: Nature Park, you lost money in 2013, and you have been losing money in recent years. When will you continue to lose money until you fail? ..... .
Now, pork prices are skyrocketing, food prices are falling, and Natural Garden profits are starting to improve. However, as a finance, you have to know: if the price of pigs is once again in a downturn and the price of food rises, the company is likely to return to the quagmire of losses.
Sustainability is a problem that is of great concern to the share transfer system. In each of the feedback letters seen, almost all companies are required to supplement the company's ability to continue to operate.
Second, cost and expense - the key to business analysis
Costs and expenses are a headache for many professional financial staff.
The financial personnel of software companies often argue over these two subjects. When the company wants to apply for listing, this issue often becomes the focus of the regulator.
Although companies do not need to account for these indicators themselves, it is necessary to understand how they will affect the company's operations.
Take wages as an example. Suppose you are working on a new production line in June, and the new production line is in use in July. Now the accountant has to consider how much of your salary should match the cost of the product (because you spend so much time on the initial product) and how much of your salary should be used as the development cost (because you are also the original product) Development has done work) and other estimates.
According to the relevant regulations, if the wages match the product cost, then the gross profit of the company will drop more. Gross profit is an important indicator for evaluating product capabilities; if wages match development costs, it will be included in operating expenses and will not affect gross profit at all.
If an accountant believes that your work is not directly related to the manufactured product, it is not included in the cost of production. As a result, there will be double deviations and the consequences will be serious.
1. The cost of the product will be low and the gross profit will be high. This can affect important decisions like product pricing and hiring. Product pricing is too low, which may lead to hiring more people to produce such a seemingly profitable product;
2. Development costs will be artificially high. When the company's executives analyze these costs in the future, they may think that the product development costs are high, and they decide not to risk producing the product. If this happens, the company may carry out little product development, which will endanger the future development of the company. .
Third, accounts receivable - whether the sales revenue is truly realized
In layman's terms, accounts receivable are the money the customer owes to the company. In this sense, the sales revenue on the income statement is only a promise of customer payment.
Therefore, the corporate sales revenue you see on the income statement is not really lying on the company's bank account. If the sales revenue is all accounts receivable, then the company needs to make money by other means to pay the employees' wages and other expenses.
In other words, if the company can't find the money, even if it has a profit, it will be paid by the employees and the supplier to recover the money. This has happened, and a profitable company is not far from the door!
Therefore, the share transfer system is also very concerned about the accounts receivable of the listed companies.
In December 2015, the share transfer system issued the â€œNotice on Doing a Good Job in the Disclosure of 2015 Annual Reports of Listed Companies, Two Network Companies and Delisting Companiesâ€. The notice pointed out that it is necessary to focus on accounts receivable, inventory, and fixed assets. , intangible assets and impairment losses on various investments.
Why should we pay attention to the impairment losses arising from accounts receivable? The loss of impairment is said to be owing money.
The stock turned to this concern, in addition to considering the sustainable management of the company, but also taking into account the company's profit fluctuations. How to understand, let's take an example.
This year, your income is 200,000, which is very good. You have to pay your wife. But you have a problem, the situation is like this. Brother Zhang San owes you 100,000 yuan, but his income this year is not good enough to pay for your money. You can't be sure that he is really bad at income or lie to you, but to be cautious, you can only report 100,000 with your wife, which means that 100,000 bad debts are accrued. Considering that you only earned 80,000 in the previous year, your wife still praised you.
Then in the second year, your company's operating efficiency is very bad, the boss said that this year can only send 80,000. You made a mistake. At this time, Zhang San came to you and said that he earned money this year, and can pay you 50,000, so that you have 130,000 this year, and said to his wife, she boasted that you can make money.
Fourth, other receivables---the problem that the new three board company was punished
Other receivables are often dubbed "garbage bins".
At present, many companies on the New Third Board have received self-regulatory decisions and administrative penalties from the Securities Regulatory Bureau. Many problems are from this trash can.
Hagrid Logistics, which was fined 300,000 yuan in the past, is like this. His secretary-general cooperated with the major shareholders to make money from the company without going through the procedures, and it was not disclosed in time.
Since the capital occupied by the major shareholders is very common, Hagrid Logistics also gave the following reasons when defending the supervision: "Everyone is doing this, why is it so light to punish others, and how severe is the penalty?"
From the current situation, Hager Logistics is the first new three board company to be fined for this problem.
In the case of regulatory tightening, the company should pay attention to whether the other large receivables have the following conditions: the related party occupies funds, disguised capital borrowing, implicit investment, expense accounting, or loss of accounting subjects.
V. Inventory--Occupation of company funds
Service-oriented companies generally do not have much inventory, but almost all manufacturing industries have a lot of inventory. So companies must understand inventory.
This is not only because external investors often ask questions about inventory, but also because it is critical to a business.
In accounting, inventory is used as an asset, but it is actually a cost. All inventories are made at the cost of cash. The greater the proportion of inventory to assets, the less cash the company will have.
The inventory of a company continues to increase substantially, which is obviously not a good phenomenon. Take the food company as an example. If the inventory continues to climb, it is likely that the sales are not smooth. Once it continues, the food will expire and the inventory will be worthless.
Therefore, like accounts receivable, this indicator is also the focus of the stock transfer system.
In March 2014, the share transfer system issued a notice announcing that â€œA Companyâ€ and â€œCompany Bâ€ had violated the rules in the 2012 annual report disclosure and gave them self-regulatory measures. After investigation by the media, Sfortek was the bad boy who adjusted the data of the beginning of the annual report.
According to the data, at the end of 2011, Sfortekâ€™s inventory was as high as 7.8 million yuan, but in the 2012 annual report, the data has become 350,000 yuan, and the company has changed its voice!
Sixth, assets - do you really understand?
Although the definition of assets is well known, real understanding is no easy task. If it is combined with the quality of the subsequent operations of the asset, understanding is even more difficult. This is because some assets seem to be assets, but they are actually liabilities.
For example, a new three-board company bought a major shareholder's car and house by issuing shares. In the financial statements, classic cars and houses will be listed on the asset side. But can the asset side generate cash inflows?
The answer is uncertain. The classic car may cost more than a month to create. Therefore, when the company disclosed this plan, the market was in turmoil.
In fact, in third- and fourth-tier cities with excess inventory, houses are also becoming debt.
Therefore, when the company boss wants to launch a similar acquisition plan, the company must be prepared to make the phone burst.
Companies should also pay attention to intangible assets, especially those whose intangible assets are in the hands of other institutions.
An enterprise that has an excellent performance in the course of its operations may also cause its intangible assets of value to be lost in an instant.
The protagonist of the Shandong vaccine case is a typical example.
From the perspective of profitability, the company is indeed a good company, but the company's two documents "pharmaceutical business license" and "drug management quality management standard certification permit" have been revoked by the regulatory agencies. This is equivalent to the death penalty for pharmaceutical companies. At present, the company's pharmaceutical business activities are also in a state of cessation.
Seven, cash flow - why is it so important?
Let's look at a simple example:
A boss opened a grocery store. One day, a customer bought 30 yuan of goods (the purchase price is 20 yuan), and the customer gave 100 yuan. But the boss couldn't find it, and went to the neighbor to change the 100 yuan change. Not long after, the neighbors said that the one hundred yuan was fake? The boss had to re-change him.
Excuse me: How much is the boss losing money for this business?
If you use the cash flow statement to measure, the boss's loss of money is easy to calculate, the answer is 190 yuan (cost of purchase 20 yuan, 70 yuan for customers, 100 yuan returned to neighbors).
This example also shows that cash is more important than profit (the boss loses 190 yuan for a profit of 10 yuan).
Therefore, companies should carefully review the cash flow statement of the service company. Because the company has no profit, no cash, and even wages are owed. If this happens, what do you mean by doing it?
Looking at cash flow, what issues should I pay attention to?
1 . Is the company cash from business activities? If so, this means that the company has created revenue.
2. Is the cash flow of the investment negative? If not, that means the company has no investment in the future.
3. What is the cash flow of fundraising activities? If it is positive, it is a good sign that the company is attracting external capital. Otherwise, in order to maintain business operations, the company may need to sell assets in exchange for cash.
In addition, the concept of â€œfree cashâ€ derived from the cash flow statement is also a financial indicator that Warren Buffett attaches great importance to.
Because of the principle of keeping cash as king, Buffett succeeded in avoiding the bursting of the famous Internet bubble in American history.
The reason why the Internet enterprise Amazon mentioned above has successfully escaped the bursting of the Internet bubble is that it attaches great importance to the cash flow of enterprises.
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