What Is a Financial Accounting Analysis?

Financial accounting analysis is to improve the company's financial decision-making, planning and control capabilities, to help corporate managers better understand and use the report information, using accounting statements, internal accounting statements and other data to analyze the company's past financial status and An evaluation of business results and future development trends.

Financial accounting analysis

The general purpose of financial accounting analysis can be summarized as evaluating past operating performance, measuring current financial conditions, and predicting future development trends.

The specific steps and procedures of financial accounting analysis are individually designed by analysts based on the purpose of analysis, general analysis methods, and specific analysis objects. A basic procedure of financial accounting analysis is proposed in accordance with practical practices for users' reference.

1. General organizational procedures for analysis

(1) Provided by the general ledger accountant and collected reports and other data, and organized professional accounting to accurately calculate the financial ratios and related analysis forms on schedule.

(2) After preliminary analysis by General Ledger Accountant, further analysis is performed on various doubts or problems, and if necessary, inquiries or investigations are made with relevant departments and personnel to resolve doubts and form a preliminary financial accounting analysis report.

(3) After the person in charge of the accounting institution (the person in charge of accounting) reviews the first draft of the financial accounting analysis report based on the financial accounting analysis data, the main draft is finalized to form a financial accounting analysis report. Special financial analysis can be finalized by the general ledger accountant or other professional accountant with the consent of the person in charge of the accounting institution (accounting officer).

2. Specific analysis procedures

(1) Determine the purpose of analysis, such as comprehensive financial analysis or special analysis of a project.

(2) According to the purpose of analysis. Select the specific analysis method. Monthly routine analysis, generally through comparative analysis or combined with financial ratio analysis; special financial analysis, generally through financial ratio analysis and comparative percentage analysis; comprehensive financial analysis, generally using structural percentage or comparative percentage or DuPont The analysis method first conducts an overall analysis, and then uses a specific analysis method such as a factor analysis method for a specific project or problem.

(3) Collect relevant financial information and materials.

(4) Prepare analysis form. The analysis tables generally include financial ratio analysis tables, comparative percentage analysis tables, comparative accounting statements, and fixed percentage analysis tables.

(5) Perform analysis and evaluation.

(6) Submit financial accounting analysis report.

1. Comparative analysis

Comparative analysis is the comparison of two or more related comparable data to reveal differences and contradictions. Comparison is the most basic method of analysis. Without comparison, analysis cannot begin. By comparing the actual completion indicators of the enterprise with the planned indicators, or the same period indicators, or other similar enterprise indicators, or domestic and foreign advanced indicators, or standard indicators, or ideal indicators, the changes and percentages of changes between indicators are revealed for analysis The reason for the difference is provided.

Calculation method:

Differences in changes = actual completion-planned indicators

The planned indicators here can be replaced by indicators for the same period, or other similar enterprises, advanced domestic and foreign indicators, standard indicators, or ideal indicators.

General analysis conclusions of variation differences:

General analytical conclusions compared to planned indicators. The positive difference is the percentage of the plan that is over-completed and over-completed; the negative difference is the percentage of the plan that is not completed and less than the plan; no difference or small difference is equal to or substantially equal to the planned indicators.

The indicators are the same or almost the same during the same period. General analysis conclusions compared with similar enterprise indicators. Positive differences are higher than or better than similar enterprises, and percentages higher than or better than similar enterprises; negative differences are lower than similar enterprises, and percentages lower than similar enterprises; no difference or smaller difference is equal to indicators of similar enterprises Or basically the same? General analysis conclusions compared with advanced indicators at home and abroad. A positive difference is at the leading position at home and abroad; a negative difference is that there is still a gap with the advanced indicators at home and abroad, and the magnitude of the difference; no difference or a small difference is the same or basically the same as the advanced indicators at home and abroad. General analytical conclusions compared to standard or ideal financial indicators. A positive difference is higher or better than a standard or ideal indicator; a negative difference is that there is a gap between the standard or ideal indicator and the magnitude of the difference; no difference or small difference is equal to or substantially the same as the standard or ideal indicator.

2. Structural percentage analysis (also known as comparative percentage analysis)

By converting the report into structural percentages or proportions, and then comparing the percentages or proportions of report items in different years one by one, this reveals the degree of influence of a particular project on the overall and the direction of change (increase or decrease), and determines the total Sort of specific important items or elements that change:

Calculation method:

The part here refers to the report items that should be analyzed; the total here refers to the total with the report items that should be analyzed. The overall balance sheet is the total assets, the overall profit statement is the main business income, and the overall profit distribution statement. Is the distributable profit, the total of the cash flow statement is the total cash flow or total cash outflow, and the overall production cost table is the total production cost or the total unit production cost:

General analysis:

The larger the structural percentage or proportion, the greater the impact of this part on the overall, but the smaller the impact; comparing the changes in the structural percentage or proportion of each period, the higher or lower the impact of this part on the overall.

3 Fixed base percentage analysis (also known as trend analysis)

By selecting a base period, the index of each amount in the base period statement is set to 00, and the numbers in other annual financial statements are also expressed by the index. From this, a fixed percentage report is obtained to reveal the change trends of each item .

Calculation method:

Index of each item in the base period = 100

General analysis conclusions:

The index during the examination period is higher than the base period index, it is a growth trend, lower than the base period index, it is a downward trend, and basically flat or stable.

4 Financial ratio analysis

The financial ratio analysis method is to correctly calculate and analyze the financial ratios between the items in the financial statements, reveal the relationship of relevant financial indicators, analyze and evaluate the business and financial status of the company's asset realization, debt repayment, asset management, profitability and other aspects.

5. Factor analysis

The factor analysis method refers to a method of revealing the degree of influence of each factor on the change of the economic indicator when several interrelated factors jointly affect an economic indicator. The factor analysis method is further divided into: the difference analysis method, such as the cause analysis of the increase in the net value of fixed assets, which is broken down into two parts: the original value increase and the depreciation increase; the index decomposition method, such as the asset profit rate, can be decomposed into asset turnover rate and sales profit Product of rate; serial substitution method, which sequentially replaces the standard value with the analysis value, and measures the impact of various factors on financial indicators, such as factor analysis that affects cost reduction; fixed-base substitution method: replaces the standard value with the analysis value, and measures each factor's impact on finance Impact of indicators, such as variance analysis of standard costs.

6. DuPont analysis

The enterprise should conduct comprehensive analysis, that is, the individual results obtained from the interconnected and complementary analysis methods and procedures, and use a comprehensive system to judge, balance, analyze, and draw general conclusions. There are a variety of comprehensive analysis methods, including DuPont analysis, financial ratio comprehensive index evaluation, leverage analysis, coordinate chart analysis, radar chart analysis, etc. Due to space limitations, only DuPont analysis is introduced. The DuPont analysis method is a method of comprehensively analyzing and evaluating the financial status of an enterprise by establishing a model using the internal relationships between the major financial ratios. This method was first designed and used by DuPont of the United States, so it is called DuPont analysis. A model drawn from various financial ratio relationships is called a DuPont model. The most significant feature of the DuPont model is that it uses an intuitive model to organically combine the ratios of several evaluations of the company's operating results and financial status according to its internal connections to form a complete index system, which is finally reflected in the net equity interest rate. The role of the DuPont analysis system is to explain the reasons and trends of the indicator changes, and to indicate the direction for taking measures.

7. Common analysis methods for cost analysis

Cost analysis is the analysis of cost completion based on cost plans, costing data, and other relevant information after costs have occurred. It generally includes analysis of the completion of all product cost plans, analysis of completion of comparable product cost reduction plans, and analysis of unit cost of major products. The tasks of cost analysis are: to correctly analyze the completion of cost plans, to objectively evaluate the performance of cost-responsible units; to reveal the reasons for cost differences, and to improve the cost management level of enterprises; to find ways and methods to further reduce costs, and improve economic benefits of enterprises. Common methods of cost analysis:

(1) Use the comparative analysis method to determine the changes and percentages of changes in the actual completion indicators and planned indicators, or indicators during the same period, to provide a basis for analyzing the reasons for the differences.

(2) Use the comparative percentage analysis method to determine that each cost item, such as direct materials, direct wages, and manufacturing costs, accounts for the total production cost (or total unit production cost, or the number of employees, or sales, or direct labor time, or equipment operation). Time, or output), so as to reveal the degree of impact of each cost item on the total production cost, etc., and savings and overruns within a certain period.

(3) Use the factor analysis method to conduct a more detailed analysis of the impact of each factor that causes changes in direct materials, direct wages, and manufacturing cost items.

(4) Use the product cost technical and economic analysis method to find a series of technical and economic indicators that have a direct or indirect dependence on costs in the production process, and analyze the impact of changes in various technical and economic indicators on costs more specifically.

1. The indicators used for comparison should be consistent and comparable. Extraordinary or occasional special matters shall be eliminated; if changes are made in accounting policies and accounting methods, adjustments shall be made in advance.

2. The calculation of the analysis index must obey the purpose of the analysis and select the applicable calculation formula accordingly.

3 Various analytical methods should be combined to avoid the limitations of each analytical method.

4 All kinds of report materials should be integrated, comprehensively reviewed, and then carried out specific analysis to avoid deviations in analysis conclusions.

5. For projects with large changes or major problems, in-depth and detailed analysis should be performed to avoid analysis of loopholes.

1 Dou Xisheng. The new accounting basic work specifications and practices. Xinhua Press, 2008.07.

2 Ming Dexin, Liu Guocheng. Basic accounting practice of enterprises. Democracy and Construction Press, January 2004. ^[1]