Limitations Of Financial Management Analysis

The so-called financial analysis is to collect and review information related to the financial status of enterprises as the starting point, focusing on the analysis of solvency and profitability, and making a comprehensive evaluation and prediction of the financial status, financial performance and future development trend of enterprises.

The correct and complete financial analysis data provided by the financial analysis can check the implementation of the accounting law system, promote the correct handling of financial relations in all aspects, and safeguard the legitimate rights and interests of investors, creditors and other interested parties.

The state macro economic management departments and investors can solve the effective allocation of limited resources among enterprises through the information provided by financial analysis, maintain market order, and guarantee.

Effective operation.

Since the reform and opening up, the market economy has created a favorable external environment for the improvement of China's financial analysis. Financial analysis has made great progress, but in our country, there are still many problems, which are manifested in the following aspects:

(1) enterprises

Inherent limitations

The data of financial statements are the main basis for financial analysis. Various accounting statements, schedules and annotations, such as balance sheet, profit and loss account, cash flow statement and so on, are the starting point of financial analysis.

At present, the financial statements themselves have the following limitations:

(1) financial statements are based on original cost and lack timeliness.

(2) without considering inflation and other factors and price changes, the data imply the risk of excess or depreciation of assets.

(3) the financial statement data do not take into account the change data between the beginning and the end of the year and the irregular changes in the whole year, which makes the scientific comparison between the data difficult.

(4) the balance sheet is different from the time concept reflected in the profit and loss account. Comparing the data of the two tables in the form of ratio, the degree of comparability is inconsistent.

(5) at present, China's accounting statements have not yet analyzed and evaluated human resources, and these contents are of great reference value to decision-making.

First, there are two basic methods of financial analysis: ratio analysis and comparative analysis.

Second, in terms of comparative analysis, comparability is the soul of comparative analysis. That is to say, only comparable indicators can be valuable by comparative analysis. Because of the limitations of the data, the data of different enterprises and even the same enterprise in different periods are not comparable. In this sense, the application of comparative analysis is bound to be limited.

Third, the choice of accounting policies such as accounting treatment of enterprises will affect the use of accounting methods.