How to correctly interpret the financial reports published by listed companies?

If you want to be an increasingly excellent investor, especially a stock investor, you must master some basic skills and techniques of financial analysis. Excellent financial analysis ability can't guarantee the success of our investment, but it can help us greatly improve the certainty of investment and calmly cope with market fluctuations. The content of this sharing is mainly arranged in the weekly investment diary of Warren Bin Luo.

Brief introduction of Bin Luo: Qingdao native, male, born around 1972, graduated from Fudan University or Shanghai University of Finance and Economics or Tongji University. Work in an electronic information company or research institute after graduation. Universities began to invest in stocks. At first, they, like most investors, caught shadows and were keen on short-term speculation. Moreover, the grasp and judgment of trends and hotspots also have a certain level. I have been trading stocks for about 10 years, and the overall rate of return is not satisfactory. I also hurt many fans who trusted me. In 2003, I suddenly had an epiphany: why can't I invest in stocks like investing in industry? With the gradual transformation into a deep value investor. I started writing a weekly investment diary on Sina blog in May 2006. Basically, I will record my observation of the securities market and analysis of the stocks I care about once a week, as well as my positions and profitability.

From 2006 to 20 13, when Bin Luo's influence was expanding, he had to close his blog. In the past eight years, Bin Luo has written an investment diary of about 660,000 words every week. Fortunately, someone has been sorting out Bin Luo's weekly investment diary, and we came across it. Bin Luo's investment weekly diary is designated as a required reading for every consultant of Peng Feng financial planning company. In the future, we will select some contents in the weekly diary and share our research experience with readers from time to time, so please pay attention.

Bin Luo's known public performance is as follows:

The compound annual growth rate in 10 is 66.49%, and the total return on investment in 10 is 163 times.

When Mr. Bin Luo became a full-time shareholder around 2004, his initial principal was less than 200,000, which was 163 times that of 2000. By 2065,438+03, he should have at least 30 million funds. In 2065,438+08, Mr. Bin Luo had a stock account for charity, and the market value of the account was close to 1 100 million. After becoming a billionaire, Mr Bin Luo became a citizen of the world. He travels around the world most of the year and often publishes some news in Weibo. All the landscape pictures in this article were taken by Mr. Bin Luo. Mr. Bin Luo's photography skills are not bad, mainly because the scenery is really beautiful.

Correctly interpret the main financial data of listed companies

1, earnings per share (EPS)

EPS is the most concerned indicator for investors, and EPS= net profit/total share capital. Generally, the higher the growth rate of earnings per share, the more valuable the stock is. When studying this index, we should pay attention to two points: first, EPS after deducting non-recurring gains and losses can reflect the company's operating conditions more objectively. Non-recurring gains and losses refer to one-off or incidental gains and losses other than the normal operating gains and losses of the company, such as gains and losses from asset disposal, temporary subsidy income, interest on frozen funds for new share subscription, consolidated price difference, etc. When measuring the price-earnings ratio (PE) of stocks, we should take the deducted EPS as the benchmark. For long-term investors, non-recurring gains and losses can be ignored. Second, we should look at the changes of EPS in combination with the changes of the company's share capital. Many companies will continue to send shares and split their share capital. For example, if a stock is sent high and ten shares are sent for every ten shares, the company's total share capital will double, but the company's turnover and net profit will not change in a short time, then EPS will suddenly drop by half. Therefore, when we look at the changes in EPS data, we must consider the changes in equity.

2. Return on equity

ROE= earnings per share (EPS)/ net assets per share (NTA). This is a very important indicator. The higher the return on net assets, the stronger the company's ability to make money. It is worth noting that ROE can't be viewed only for one year, because some companies can improve EPS through special projects, so it is reasonable to look at several years (3-5 years) to get the correct ROE. In addition, the most correct method is not to calculate the non-recurring gains and losses in earnings per share. Generally speaking, companies with a return on equity of 15% are highly profitable. If it is lower than 12%, the growth of the company is not too prominent. However, if the ROE is too large, be careful. For example, a company's net assets (NTA) used to be 2 yuan. After years of losses, NTA only had 0.2 yuan, and then business suddenly improved, and the company began to make money, achieving EPS of 0. 1 yuan. If the ROE is calculated according to this, it will be 50%. Such ROE is misleading.

3. Net profit rate of sales and gross profit rate of sales

Net profit rate of sales = net profit/sales revenue, which reflects the net profit per yuan of sales revenue and is used to measure the income level of sales revenue. While increasing sales revenue, enterprises must obtain more net profit accordingly, so as to keep the net sales interest rate unchanged or improve. The net profit rate of sales can be decomposed into sales gross profit rate, sales tax rate, sales cost rate and expense rate during sales. The standard value of general enterprises is 10%.

Gross sales margin = (sales revenue-sales cost)/sales revenue, which indicates how much money can be used for expenses and profit formation in each period after deducting sales cost per yuan of sales revenue. Gross sales margin is the initial basis of net sales profit rate of enterprises. Without sufficient gross sales margin, profits cannot be formed. Enterprises can analyze the gross profit margin of sales on schedule, so as to judge the occurrence and proportion of sales revenue and sales cost. The standard value of general enterprises is 15%.

4. Current ratio and quick ratio

The current ratio represents the comprehensive ability of an enterprise to repay its current liabilities with current assets. Current ratio = current assets/current liabilities. The lower the current ratio, the weaker the short-term solvency of the enterprise. However, if the ratio is too high, it means that the enterprise may not be good at debt management, and the operators are too conservative, which will lead to poor utilization efficiency of short-term funds. Quick ratio represents the comprehensive ability of an enterprise to repay its current liabilities with quick assets. Quick ratio is usually expressed by (current assets-inventory) ÷ current liabilities. Quick assets refer to the part that can be directly used to repay current liabilities after deducting the assets with the slowest realization rate such as inventory from current assets. Quick ratio can better represent the short-term solvency of enterprises than current ratio. Generally speaking, the current ratio is 2: 1 and the quick ratio is 1: 1.

These two indicators reflect the short-term solvency of enterprises from the perspective of static analysis. For business operators, it is very important to analyze the short-term solvency of enterprises. Because enterprises only have enough liquid assets to repay their debts, they can ensure the safety of creditors' funds and make the credit management of enterprises enter a virtuous circle. Investors of enterprises can identify the financial situation of enterprises through these indicators, and further judge the competitiveness and sustainable development ability of enterprises in the market. Of course, when using this index, we should also pay attention to the quick ratio and current ratio, which only reflect the state of the enterprise at a certain point in time. Analyzing the static indicators in isolation will help to understand the financial situation of the enterprise unilaterally and affect the correct evaluation of the short-term solvency of the enterprise. Analysis of the short-term solvency of enterprises should also be combined with other related factors, such as the ratio of non-financing cash inflows to current liabilities, interest payment multiples, etc.

5. Accounts receivable turnover rate and inventory turnover rate

Accounts receivable turnover rate = net sales revenue/average balance of accounts receivable. Generally speaking, the higher the turnover rate of accounts receivable, the shorter the average recovery period, indicating the faster the recovery of accounts receivable. Otherwise, the operating funds of the enterprise will be too sluggish in accounts receivable, which will affect the normal capital turnover.

Inventory turnover rate = cost of sales/average inventory balance, indicating the sales status and inventory capital occupation of the enterprise. In general, the higher the inventory turnover rate, the fewer the corresponding turnover days, indicating that the inventory capital turnover is fast and the corresponding profit rate is higher. The slow inventory turnover is not only related to production, but also related to procurement and sales. Therefore, it comprehensively reflects the management level of supply, production and sales of enterprises. Inventory turnover rate is related to the production and operation cycle of enterprises. The short production and operation cycle means that there is no need to reserve a large amount of inventory, so its inventory turnover rate will be relatively accelerated. Therefore, when evaluating the inventory turnover rate, we should consider the production and operation characteristics of various industries.

6. Operating cash flow and free cash flow per share

Cash flow is one of the most important indicators in all financial statements. It mainly records the cash flow of enterprises in selling goods, providing services, purchasing goods, receiving services, paying taxes and other activities, and also reflects the cash receipts and payments of the main business. Operating cash flow per share = net cash flow from operating activities/total share capital. At present, many enterprises achieve the purpose of asset appreciation, turnover increase and profit increase by sacrificing cash flow. Such enterprises may have some false prosperity in the short term, but in the end, they will definitely cause big ups and downs because of insufficient cash flow. The profit on the income statement can be changed by increasing or decreasing depreciation or temporarily not recording bad debts, but it is not so easy to modify the profit and working capital items at the same time. Before the company declared bankruptcy, it was not uncommon for the net profit to be positive for many years. However, the company's operating cash flow always began to deteriorate a few years before bankruptcy. If we pay close attention to the company's operating cash flow, we can predict the company's risks.

There are usually two possible reasons why the net cash flow of an enterprise is negative. One is the operating loss of enterprises, which leads to capital expenditure being greater than capital income, resulting in negative cash flow. Another possibility is that although the enterprise is profitable, but the money is not recovered in time, the profit only stays on the book and is not reflected in the capital recovery, but the cost incurred to obtain the profit still needs capital expenditure, so the capital expenditure is greater than the capital income, resulting in negative cash flow.

At present, it is internationally recognized as free cash flow, that is, Buffett's shareholder surplus, which is reflected in the balance of operating cash flow MINUS capital expenditure. Buffett's valuation formula is stock value = free cash flow/15%. There are two main misunderstandings about free cash flow.

One of the misconceptions: Free cash flow only represents the ability of enterprises to repay shareholders, such as the ability to pay dividends.

Myth 2: The free cash flow of expanding enterprises is naturally bad.

For the first misunderstanding, we can imagine that the most ideal state of an enterprise is to maintain a profitability, rather than weakening or losing such a profitability in the competition. Then if you want to grow, you naturally need to invest again. If free cash flow is abundant, you can use this capital to invest, which is connotative growth. If enterprises can't rely on the capital investment generated by their own operations, they have to rely on refinancing, but this will inevitably lead to the dilution of shareholder value. Generally speaking, good free cash flow means low investment and high income, which is the performance of franchising brought by brands and patents. Maotai is a typical example.

For the second misunderstanding, there is no such problem for enterprises with steady growth. Because now it reflects the benefits of previous expansion, if the benefits of expansion in previous years were not good, why can we expect the current expansion to achieve good benefits? It can only show that the ability to earn money is insufficient, and such enterprises often have extremely poor growth.

It is worth noting that some enterprises are expanding wildly, such as the so-called high-growth and reflective stocks. This involves the issues of growth and value. Growth is for greater value, not for growth. Our market is relatively dry, and the main force often uses growth to attract popularity and crazy speculation. If the result of growth is more investment in fixed assets, and the money earned is to buy more raw materials. Be careful. Once the competitiveness is not strong, the profits accumulated over the years will go up in smoke.