Publicly listed companies to disclose the financial indicators are many, many investors through the information correctly in the financial present and future, without any tools other than the proper use of financial ratios is more important. Although many people think that China's current stock market was still "news market", many people's investment philosophy is still to capture information, especially the policy side of the news, largely exclude technical analysis and financial analysis, even claimed that the fundamental do not look at financial statements. There is no doubt a good grasp of a general trend of the stock market is essential, in the current characteristics of China's stock market strong administrative cases, the message of the importance of the short term no one to replace. Nevertheless, the quality of listed companies varies widely, that there are some, such as "Tsinghua Tong Fang," "Dongdaepai" and other blue chip stocks, but there is also some of the proceeds successive landslide, but still desperate to avoid being delisted waste stock. If an investor is committed to the long-term investments, learn the proper use of financial ratios are very important. Because the long term, long-term gains for investors, whether from the spread, or profit-sharing dividends, ultimately depends on the performance of the invested companies rose. Therefore, financial indicators for listed companies through the business situation is still important.
For listed companies, the most important financial indicators are earnings per share, net assets per share and return on equity. The three indicators used to judge the earnings of listed companies, securities markets has been of great concern to all parties involved. Security agencies regularly publish information in accordance with the three indicators of high and low ranking list of listed companies, and its importance. But the author suggests that the three indicators used to do some adjustments, especially in the choice of investment targets, in order to find a real investment value of listed companies. The following adjustments on why and how to adjust one by one.
First, adjustment reason: listed companies are manipulating the profit motive and behavior earnings per share of net assets and return on equity is a true reflection of the profitability of listed companies, the key is whether the existence of listed companies profit manipulation. To answer this question, we must study in which listed companies in China's accounting environment and economic environment in order to control the profit of listed companies demonstrate whether the motive.
(A), the issue of price-earnings ratio is limited to increase the issue price and control the profit of China's current and future period of time, the amount of new shares issued are "scarce resources." In this case, the listed company to take advantage of this opportunity to raise more money, only to maximize the issue price. Price-earnings ratio by issuing new shares issue price restrictions, generally no more than 15 times. Although there is no express provision, the issue of price-earnings ratio of 15 times higher than if the stock market generally difficult to obtain regulatory approval. In the issue of price-earnings ratio for the constant case, to raise the issue price per share in earnings per share only to make a fuss of this variable. Issued before 1996 earnings ratio calculation formula is: "Release earnings ratio = earnings per share issue price / annual forecast issue of new shares and earnings per share", then issue new shares before 1996, many companies will profit forecast overestimated, in which a small number of corporate earnings forecasts number much lower than the number actually completed. In response to these circumstances, the securities regulatory authorities on the issue of price-earnings ratio calculation formula was amended, revised formula is: "the issue price per share issuance price-earnings ratio = / issue of new shares before the three-year average earnings per share." So after the company issued new shares to make a fuss over the historical data. Some companies can not profit directly from stripping the assets of as much as possible in order to lower costs and operating income for the ratio to profitability. For medium and large enterprises, due to restrictions on the amount of new shares issued, only to strip assets from the existing assets into shares as a part of the sponsor shares the profitability of this part of the asset can only be based on historical data and the simulated computing the profits do not pay income tax, but the basis for the formulation of the issue price, the result of natural imagine.
(B), in order to obtain eligibility and allotment control the profit the majority of listed companies listed on the purpose can easily issue stock to the public to raise funds in China, Ltd. has tens of thousands, but only a few hundred Listed companies with shareholders to subscribe for new shares to the old way of raising capital. So many people think that if they lose the placement of shares eligible to be lost meaning of the listing.
However, China Securities Regulatory Commission for the Rights Offering has strict eligibility requirements: listed companies in the placements of the first three years, the annual return on equity to 10%, and three years without any illegal records. And return on equity of 10% or more, investors tend to believe that the listed company has development potential. So on the Rights Issue in the government's administrative intervention, a listed company on the allotment of funds its own development needs, and investors judge the value of a simple form of pressure on listed companies. In these three factors, the net return on equity of 10% of listed companies has become the primary goal of profit manipulation.
So we see a very interesting phenomenon: return on equity of 10% ~ 11% in the range of many listed companies, while return on equity of 9% to 10% in the range of almost no (energy, transport, infrastructure class return on equity of listed companies as long as three years can be allowed to keep more than 9% of allotment, which is an exception).
(C), in order to avoid three consecutive losses of the company stock was delisted and control the profit according to the "Stock Issuance and Trading Regulations" provides that a listed company if the losses for three consecutive years, its shares will be suspended in the Stock Exchange. Described before, the company achieved the amount and distribution market is very difficult for the company to be listed then delisted, not only for shareholders, is a great loss, and the company's listing status means the loss of a valuable scarce resources wasted. Listed companies often think that stock is being delisted the company's most severe punishment, and I would rather play some tricks on the accounting treatment to be certified public accountants reservations, is not willing to appear for three consecutive years of losses was sentenced to "death."
The above analysis shows that the existence of listed companies controlled by the profit motive, a listed company in the annual audit report was issued qualified audit report frequent incidents, even worse degree, such as "Joan the public source", "Red Industry" event, These have proven to the financial statements issued by listed companies when in use some more necessary adjustments.
Second, the adjustment of net assets
Adjustment of net assets should be adjusted items listed companies actually easy to control the profit through the Department. Adjusted net assets per share net asset can, return on net assets of the two financial indicators related to sexual decision-making greatly increased. How the net assets adjusted? Reference to December 17, 1997 China Securities Regulatory Commission promulgated the "public offering disclosure of corporate information content and format guidelines II
" can be carried out on the net assets of the adjustment of the following four items. That is: more than three years accounts receivable, prepaid expenses, net loss of property pending the four projects and deferred assets. The following analysis of each project one by one, revealing it could be used to control the profit of the Department.
(A), more than three years of accounts receivable
Receivables include accounts receivable, notes receivable, prepayments and other receivables four projects, but notes receivable are generally short-term credit instruments, it was against the normally less than a year, so "three years above receivables "generally includes" more than three years accounts receivable, prepayments and other receivables "with three items.
From the perspective of international practice, in the developed market economy, of a company, there is more than three years of accounts receivable is an extremely abnormal phenomena, and even if there are already 100% provision for "bad debts", directly to the potential loss of all access to current profits and losses, so the book there is no negative impact on equity. In China, because of a large number of "triangular debts", as well as human use of related transactions through "accounts receivable" project to control the profit and so on. Therefore, "accounts receivable" in the share of total assets remained high, many companies even exist in large quantities for more than three years aging of accounts receivable. Furthermore, because of China's financial system over the past under the provision for bad debt ratio is too low, resulting in the financial statements of listed companies is widespread asset false, "hidden losses unpaid debts" phenomenon highlights. The nature of the asset is future economic benefits of economic resources, that is, assets can be alone or with corporate human resources and other assets combined, directly or indirectly, the net inflow of cash for the future to contribute. Clearly, more than three years of accounts receivable in the next period of time is difficult for enterprises to contribute to the net inflow of cash. To do business out of an asset to the user easily cause misunderstanding.
Prepaid and the nature of accounts receivable is the same, all businesses provide each other with a credit. Once the business side to accept the deterioration advances, lack of funds to support the normal operation, then the payment side of this cargo should be nowhere in sight. In some cases, payment in advance between related parties is a form of financial intermediation. Therefore, the advance payment as adjusted net assets of a project is a more robust approach.
Other accounts receivable refers to an enterprise project of the original purchase and sale activities of non-receivable claims, such as an enterprise of all kinds of compensation, guarantee deposits, reserve funds, and should receive all advances and other employees. But in reality, other receivables are not so simple. Such as: B in the annual audit report was issued by the reservations, the opinion said: "1995, 2 Furnace shutdown due to equipment failure costs incurred 8,194,625.06 yuan, historical legacy of engineering equipment overhaul expenses 6,282,661.75 yuan, to be included sharing costs and other receivables, excluding current profit or loss. "If the two charges recognized during the period, will make pre-tax profits thus reducing 14,477,286.81 yuan. Thus, other receivables recognized in the cost of this played a role in delayed, lost its original meaning.
(B), pending a net loss of property. Property pending a net loss of inventory property generally refers to the process of identifying a variety of materials, merchandise, overage and damage of fixed assets. Zhexiecaichan losses except Shaoliangkeyou fault responsible for the compensation, or by outside compensation Baoxiangongsi its Kou Chu Hou salvage value, the difference between the 渚?as "Pending Property Net Loss" of its Yiban treated as: through "operating expenses" or "administrative expenses "project into the profit and loss account, reduce the current pre-tax profit. Therefore, "the property pending a net loss of" economic substance into the income statement should be recorded as a reduction of this loss of profits or expense items, the enterprise can not bring future economic benefits. Moreover, the number of listed companies on the balance sheet shows the huge unpaid debts, "pending a net loss of property", or even unpaid debts for several years. This phenomenon obviously does not meet the revenue recognition principles of sound, is not conducive to investors to correctly evaluate the financial position and profitability.
(C), prepaid expenses and deferred assets. Prepaid expenses and deferred assets are not in fact a major difference, they are the current companies have expenses, but under the "accrual" to determine costs and benefits of the "matching principle" by the current and future periods, respectively the burden of the cost, in short is "waiting for amortization of costs", but "deferred expenses" within one year amortization period. The "deferred assets" are amortized over one year, so it could be called the "long-term prepaid expenses." From the strict sense, prepaid expenses and deferred assets do not meet the definition of assets, should be for them very difficult to estimate whether the expected future benefits or service potential, but they seems to be the future of economic interests with the linked and in accounting practice, many people have used and describe the costs that have occurred as an asset. Therefore, the cost is the asset point of view, combined income to determine when the "matching principle" requires, so that these projects can be deferred in order to "balance sheet" approach into the balance sheet.
In short, both the deferred project resources with the future economic benefits, but also the difficult to determine their expenditures with future economic benefits or losses, but to not consume the future economic benefits of the new appearance, and the amount is generally higher, and therefore matching principle can only be in accordance with the amortization period of its benefit. However, in some listed companies in the accounting treatment of prepaid expenses and amortization of deferred assets were very irregular, for listed companies to defer costs of the facilities identified. Such as: N in the annual audit report was issued by the reservations, the opinion said: "your company in the prepaid expenses, deferred assets and amortized using the two subjects is not sufficiently standardized, does not comply with the accounting system of the affected the operating results. "According to search: companies are issuing reservations to the fiscal year audit report, the profit amounted to 3.4682 million yuan, only 15% of the previous year, while the year-end balance of prepaid expenses, up to 23,568,740.85 yuan, up year-end balance of deferred assets 47,207,083.83 yuan, for a total year-end balance of total current assets of more than 15%. It seems that if the N company prepaid expenses and deferred assets and amortized using the two subjects specification point, then maybe there will be N loss in the year.
Cited above are only some examples of firms issued by the reservations, but that does not mean that an unqualified opinion was issued by a listed company on the no problem. Because they were issued by the reservations, only a small number of issues are exposed. So, if for sound investment, will be more than the net asset adjustments to be regarded as a few projects on the protection of investors. If a really good performance because the company, the number of projects accounted for the proportion of net assets will not be too large, the impact of natural existence is school but some companies profit manipulation to adjust the results are significantly different.
Third, the adjustment of the net
Profits of listed companies exist in the manipulation case, adjusted net income increased to some extent, net income per share, return on net assets of two financial indicators that the decision-making relevance. Some courses have introduced more than is used to postpone the confirmation fee, the following terms of net income from the income adjustment.
First, the author proposed to use the main business income instead of net income to recalculate, as earnings per share and net assets yield rate of the reference project. Main business income means the operating business license state of main business of the revenue. Sometimes, if the business license on the sideline marked bigger volume of business and revenue for the frequent occurrence, but also can be grouped into the main business income.
Generally speaking, a performance of striking or good business growth is often because their main business has succeeded due. An enterprise may be able to find extra funds to carry out a new growth point or polygonal business. But preferably also around its main operations, namely the development of a number of similar or similar with the main business sectors that these industries in the technical requirements, process requirements, personnel requirements and the main approximation. Alternatively, new business development to support the further development of the main industry. Such as: the acquisition of an electronic device TV companies factories; food companies buy a plant base. 39 Management Group is a successful example of polygonal, although its operating range of products are many, but still concentrated in medicine, biochemistry. The Giant Group, this is a high-tech companies, but be extremely careful about real estate, its failure is not accidental. Therefore, we interpret a financial statement, if part of an enterprise's profits come from many non-operating profits, such as: land lease rental and other operating income, or from the capital market speculation and so on. The long-term development of enterprises is not very clear correlation is difficult to identify their profits from such long-term investment value.
As for the business under the equity method or cost method of "investment income", will have to deal with specific circumstances. If this part of the investment income from an investment holding subsidiary's main business revenue, main business is also carried out can be incorporated into calculations, but investors often profits from Yu related party, which has been a listed company information disclosure in a black hole . Therefore, if the listed company's investment income in the larger share of total profit, then this should be worthy the attention of investors.
The significance of the main business of listed companies through the current situation shows the actual operation. Some researchers believe that China's stock market has actually appeared in five kinds of types of blue chip stocks, in addition to the traditional blue chip stocks outside the old, there are high-tech blue chip stocks (such as Dongfang Electronics, Tsinghua Tong Fang, ZTE, etc.); recombinant blue chip stocks (such as: country Kerry Holdings, Founder, etc.); access to resources with the dominant blue chip stocks (such as: Rare High-Tech, East E-Jiao, etc.) and newly listed blue chip stocks (such as: Zhongguancun, Tsinghua violet) is not difficult to find, these blue chip stocks have one thing in common between is the main industry are very clear, its main products and some can even be said to be known. As we all know, the stock market in 1998 is a "reorganization of assets", with many companies had assets restructuring, but according to "China Securities News", a survey shows that 98 years was the reorganization of enterprises, the performance was not the same, satisfactory performance of the reorganization is often experienced after the change of major shareholder, has greatly improved governance structure, some through the complete replacement, replacement of the scope of business, stripping off some bad assets as the main industry to adapt to the way to strengthen greatly increased. ......銆?Thus, the main business to a large extent determine the survival of an enterprise is the "Success Xiao He, Xiao He also defeated."
In addition, the listed real estate company or real estate owned subsidiary of listed company should pay attention to their income to determine ways to prevent early recognition of income to happen. Real estate development cycle often requires several years, recognized revenue in accordance with accounting theory, the real estate business in the pre-sale housing or after the contract signed by the progress to confirm sales and corresponding to the cost justified However, some enterprises have to determine the amount of the sales contract revenue for the year, which was issued qualified audit report.
After these adjustments, earnings per share, net assets per share, return on net assets of these three indicators, although it will sound as the adjustment of these in some respects reduce its relevance, it does not require all the listed companies are not required parties release adjusted data. But investors replace their used to evaluate the profitability of enterprises, their reliability will greatly improve the more compatible with some of our current stock market situation.
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