1000 Business Lessons Every Businessman Must Know

Chapter 58 Financial Statements: A Company's Medical Examination Form (2)
The income statement generally has two parts: the header and the front.Among them, the head of the table indicates the name of the report, the preparation unit, the date of preparation, the report number, the name of the currency, the unit of measurement, etc.; the main table is the main body of the income statement, reflecting the various items and calculation processes that form the operating results.

476. Performance of Income Statement
Profit is not only the comprehensive performance of business performance, but also the decision-making basis for profit distribution.Therefore, the income statement plays an important role for business leaders, which is mainly reflected in the following aspects:
1. Understand and analyze the business results and profitability of the enterprise

Through the income statement, business managers can understand the income realization of the enterprise during a certain accounting period, that is, how much income from the main business is realized, how much other business income, investment income, and non-operating income are realized; they can understand the income of the enterprise during a certain accounting period. Expense consumption, that is, how much is the main business cost, main business tax and surcharges, operating expenses, management expenses, financial expenses, and non-operating expenses; you can understand the results of the company's production and operation activities, that is, the realization of net profit The situation is used to judge the capital preservation and appreciation situation.

2. Provide a basis for business decision-making

By comparing and analyzing the various components in the income statement and comparing them with previous periods, we can understand the rising and falling trends and range of income, expenses and profits of the company, analyze the reasons, and find out the problems in the business operation .At the same time, it can also analyze the formation structure of corporate profits, analyze the structure of profits, and provide a basis for corporate business decisions, such as investment decisions and financing decisions.

3. Predict the future profitability and development trend of the enterprise
The income statement relatively completely provides the company's operating profit, net investment income (net loss) and other related profit and loss information in a certain period of time. It is the main source of information for the company's financial analysis, such as capital return,

Many data in cost profit margin and sales profit margin are related to the income statement.By analyzing the changes in operating profits, investment income, and non-operating income and expenses in the early and late stages of the enterprise, the future profit trend of the enterprise can be predicted.The analysis of the increase and decrease of the total profit of the enterprise can judge the trend of profit change and predict the future profitability of the enterprise.

At the same time, according to the profit items in the income statement and the net cash flow in the cash flow statement, we can understand the authenticity of the company's profit and cash collection, and evaluate the quality of the company's current profit.

[-]. Cash flow statement——perspective of enterprise "blood" circulation
477. Cash in cash flow statement

The cash flow statement is prepared on the basis of cash, where cash refers to cash in a broad sense, including cash on hand, deposits that can be used for payment at any time, and cash equivalents.

Cash on hand refers to the cash limit held by the enterprise that can be used for payment at any time, which is consistent with the content included in the "cash" subject in the enterprise's accounting.

Bank deposits refer to the deposits in the enterprise that can be used for payment by financial enterprises at any time, which is basically the same as the content included in the subject of "bank deposits" in enterprise accounting. Payments made on deposits, such as time deposits that cannot be withdrawn at any time, do not count as cash in the statement of cash flows.

In addition to cash and bank deposits, other monetary funds are also part of the source of cash.Other monetary funds refer to the specific-purpose funds deposited by enterprises in financial enterprises, such as bank draft deposits, cashier's check deposits, letter of credit deposits, and credit card deposits.It should be noted here that cash must refer to funds that can be used for payment at any time, and funds subject to certain restrictions cannot be managed as cash in the cash flow statement.

478. Cash flow and its classification
Cash flow refers to the amount of cash inflows and outflows from a business during a certain period of time.The difference between the cash inflow and the cash outflow is called the net cash increase, also known as the net cash flow.The net cash flow reflects the company's ability to pay and repay debts.Therefore, it constitutes the central content of the enterprise's cash flow statement, and only matters that affect the net cash flow are included in the cash flow statement.The economic activities of enterprises can be divided into three types according to the changes between cash items and non-cash items:

1. Increases and decreases among cash items
The increase or decrease among cash items refers to the increase or decrease among various cash items such as cash on hand, bank deposits, other monetary funds, and short-term investments.Such changes have no impact on the net cash flow, so it is generally not necessary to specifically reflect this type of economic activity in the cash flow statement, but the results of the change are listed in the supplementary information of the cash flow statement.

2. Increases and decreases among non-cash items

Increases and decreases among non-cash items refer to changes among items other than cash items.Such changes have no impact on the net cash flow, and such economic activities may not be reflected in the cash flow statement.However, if the cash flow statement does not reflect such economic activities, it will weaken the role of the cash flow statement.In order to improve the usefulness of the information provided by the cash flow statement, the major investment and financing activities that affect the financial status of the enterprise or may affect the cash flow of the enterprise in the future are listed in the supplement of the cash flow statement. in the data.

3. Increase or decrease between cash items and non-cash items

Such changes have an impact on the net cash flow, so the cash flow statement mainly reflects this type of economic activity and its impact on cash flow.According to the nature of business operations, the cash flow generated by such economic activities of the enterprise can be divided into cash flow generated by operating activities, cash flow generated by investment activities and cash flow generated by financing activities.

The boss should be good at deriving information about business management from different cash flow classifications.Make decisions related to business management.

479. Contents of cash flow statement
The cash referred to in the cash flow statement includes cash and cash equivalents, where cash refers to the cash on hand of the enterprise and bank deposits and other monetary funds that can be used for payment at any time; cash equivalents refer to short-term, highly liquid and easily convertible cash investment.Fixed deposits and long-term investments that cannot be paid at any time cannot be regarded as cash.The structure of the cash flow statement includes basic statements and supplementary information.

The cash flow statement mainly includes three aspects: one is the cash flow generated by operating activities, that is, the cash receipt and expenditure activities of the enterprise in the commodity and service activities; the other is the cash flow generated by investment activities, that is, The purchase and construction of long-term assets of the enterprise and the cash receipts and payments of investments not included in the scope of cash equivalents and their disposal; the third is the cash flow generated by financing activities, that is, the cash receipts and payments that lead to changes in the scale and composition of the company's capital and debt Activity.The three constitute the net increase in cash and cash equivalents, providing very useful information for corporate investors and managers.

Supplementary information also includes three aspects: one is to disclose information on all investment and financing activities that affect assets or liabilities within a certain period of time but do not form cash receipts and payments for the period; The third is to compare the ending balance of cash and cash equivalents with the opening balance to obtain the "net increase in cash and cash equivalents" to check whether it is consistent with the amount in the cash flow statement.

480. Preparation of cash flow from operating activities

The cash flow generated from operating activities is an important indicator, which can explain whether the cash flow generated by operating activities is sufficient to repay debts, pay dividends and invest abroad without using external funds raised by the enterprise.Cash flow from operating activities can usually be reflected by direct method and indirect method.

1. Direct method

It reflects the cash flow from the operating activities of the enterprise through the main categories of cash income and cash expenditure.When using the direct method to prepare the cash flow of operating activities, the operating income in the income statement is generally used as the starting point, and the increase and decrease of items related to operating activities are adjusted, and then the cash flow of operating activities is calculated.

2. Indirect method

Based on the net profit of the current period as the starting point, the cash flow of operating activities is calculated by adjusting the increase or decrease of related items such as income, expenses, and non-operating income and expenses that do not involve cash.The information provided by the direct method is helpful to evaluate the future cash flow of the enterprise, but in the supplementary information of the cash flow statement, the cash flow of operating activities should be reflected separately according to the indirect method.

The reason why the indirect method is adopted after the direct method is that the information contained in profit and cash flow is different, and the connotation reflected by profit and cash flow is different.

In today's unpredictable business environment, business leaders can't just make decisions based on the profit information reported in the income statement, but must pay attention to the difference between profit information and cash flow information.The indirect method is a method that reveals the difference between profit and cash flow, so it is necessary to disclose this information in the supplementary information of the cash flow statement, so that business leaders can recognize the difference between profit and cash flow, so as to make reasonable arrangements and Make decisions, try to improve the quality of profits, and convert profits into cash as much as possible.

481. Cash inflow items from operating activities

Cash inflow items from operating activities include "cash received from sales of goods and rendering of labor services", "tax refunds received", and "other cash received related to operating activities".

1. "Cash received from sales of goods and rendering of services"

The item "Cash received from selling goods and providing labor services" reflects the actual cash received by the enterprise from selling goods and providing labor services (including sales revenue and the amount of value-added tax that should be collected from buyers), including the cash received from selling goods and rendering labor services in the current period. Cash, as well as cash received in the current period for goods sold in the previous period and labor services provided in the previous period, and accounts received in advance in the current period, minus the cash paid when the goods sold in the current period and previous periods are returned in the current period.If you use manual compilation when filling out this item, it is very troublesome to find out the cash received from selling goods and providing labor services from the daily accounting data. Therefore, you can deduct the part of credit sales from all sales revenue to get the current cash sales, plus sales cash and cash received in advance received during the period.It should be noted that the cash received by the enterprise from sales of materials and agency sales is also reflected in this item.

The cash received by an enterprise for selling goods and providing labor services in the current period can be calculated by the following formula:

Cash received from sales of goods and provision of labor services = cash received from sales of goods and provision of labor services in the current period + accounts receivable received in the previous period in the current period + notes receivable in the previous period received in the current period + accounts receivable in advance in the current period - Cash paid due to sales returns in the current period + bad debt losses written off in the previous period recovered in the current period

2. "Refund of taxes and fees received" project

The "refund of taxes and fees received" item reflects the various taxes and fees received and returned by enterprises, including value-added tax, business tax, income tax, consumption tax, customs duties and educational surcharges received.my country has strict regulations on tax and fee refunds, and it is rare for general enterprises to receive tax and fee refunds.

3. "Other cash received related to operating activities" item

The item "Other cash received related to operating activities" reflects other cash received by the enterprise related to operating activities other than the above items, such as fine income, cash income compensated by individuals in the loss of current assets, and operating lease income. to the rent etc.Other cash related to operating activities, if the value is relatively large, should be reflected in a separate item.

482. Cash outflow items from operating activities

The cash flow items of operating activities include "cash paid for purchasing goods and receiving labor services", "cash paid to employees and for employees", "various taxes paid" and "other cash paid related to operating activities" and other items.

1. "Cash paid for goods purchased and services received"

The item "Cash paid for purchasing goods and receiving labor services" reflects the actual cash paid by the enterprise for purchasing materials, commodities, and receiving labor services, including the payment for goods and the input value-added tax paid together with the payment for goods, specifically including: The cash paid for labor services, as well as the unpaid amount for the purchase of goods and services received in the previous period and the prepayment for the current period, shall be deducted from the cash received for the return of goods purchased in the current period.

The cash paid by the enterprise for purchasing goods and accepting labor services in the current period can be calculated by the following formula:

Cash paid for purchasing goods and receiving labor services = cash paid for purchasing goods and receiving labor services in the current period + accounts payable in the previous period of payment in the current period + bills payable in the previous period of payment in the current period + accounts payable in advance in the current period - returned due to purchases in the current period cash received
2. "Cash paid to and for employees" item

(End of this chapter)