财务报表外文文献翻译
财务报表分析中英文对照外文翻译文献
中英文对照外文翻译文献(文档含英文原文和中文翻译)原文：ANALYSIS OF FINANCIAL STATEMENTSWe need to use financial ratios in analyzing financial statements.—— The analysis of comparative financial statements cannot be made really effective unless it takes the form of a study of relationships between items in the statements. It is of little value, for example, to know that, on a given date, the Smith Company has a cash balance of $1oooo. But suppose we know that this balance is only -IV per cent of all current liabilities whereas a year ago cash was 25 per cent of all current liabilities. Since the bankers for the company usually require a cash balance against bank lines, used or unused, of 20 per cent, we can see at once that the firm's cash condition is exhibiting a questionable tendency.We may make comparisons between items in the comparative financial statements as follows:1. Between items in the comparative balance sheeta) Between items in the balance sheet for one date, e.g., cash may be compared with current liabilitiesb) Between an item in the balance sheet for one date and the same item in the balance sheet for another date, e.g., cash today may be compared with cash a year agoc) Of ratios, or mathematical proportions, between two items in the balance sheet for one date and a like ratio in the balance sheet for another date, e.g., the ratio of cash to current liabilities today may be compared with a like ratio a year ago and the trend of cash condition noted2. Between items in the comparative statement of income and expensea) Between items in the statement for a given periodb) Between one item in this period's statement and the same item in last period's statementc) Of ratios between items in this period's statement and similar ratios in last period's statement3. Between items in the comparative balance sheet and items in the comparative statement of income and expensea) Between items in these statements for a given period, e.g., net profit for this year may be calculated as a percentage of net worth for this yearb) Of ratios between items in the two statements for a period of years, e.g., the ratio of net profit to net worth this year may-be compared with like ratios for last year, and for the years preceding thatOur comparative analysis will gain in significance if we take the foregoing comparisons or ratios and; in turn, compare them with:I. Such data as are absent from the comparative statements but are of importance in judging a concern's financial history and condition, for example, the stage of the business cycle2. Similar ratios derived from analysis of the comparative statements of competing concerns or of concerns in similar lines of business What financialratios are used in analyzing financial statements.- Comparative analysis of comparative financial statements may be expressed by mathematical ratios between the items compared, for example, a concern's cash position may be tested by dividing the item of cash by the total of current liability items and using the quotient to express the result of the test. Each ratio may be expressed in two ways, for example, the ratio of sales to fixed assets may be expressed as the ratio of fixed assets to sales. We shall express each ratio in such a way that increases from period to period will be favorable and decreases unfavorable to financial condition.We shall use the following financial ratios in analyzing comparative financial statements:I. Working-capital ratios1. The ratio of current assets to current liabilities2. The ratio of cash to total current liabilities3. The ratio of cash, salable securities, notes and accounts receivable to total current liabilities4. The ratio of sales to receivables, i.e., the turnover of receivables5. The ratio of cost of goods sold to merchandise inventory, i.e., the turnover of inventory6. The ratio of accounts receivable to notes receivable7. The ratio of receivables to inventory8. The ratio of net working capital to inventory9. The ratio of notes payable to accounts payableIO. The ratio of inventory to accounts payableII. Fixed and intangible capital ratios1. The ratio of sales to fixed assets, i.e., the turnover of fixed capital2. The ratio of sales to intangible assets, i.e., the turnover of intangibles3. The ratio of annual depreciation and obsolescence charges to the assetsagainst which depreciation is written off4. The ratio of net worth to fixed assetsIII. Capitalization ratios1. The ratio of net worth to debt.2. The ratio of capital stock to total capitalization .3. The ratio of fixed assets to funded debtIV. Income and expense ratios1. The ratio of net operating profit to sales2. The ratio of net operating profit to total capital3. The ratio of sales to operating costs and expenses4. The ratio of net profit to sales5. The ratio of net profit to net worth6. The ratio of sales to financial expenses7. The ratio of borrowed capital to capital costs8. The ratio of income on investments to investments9. The ratio of non-operating income to net operating profit10. The ratio of net operating profit to non-operating expense11. The ratio of net profit to capital stock12. The ratio of net profit reinvested to total net profit available for dividends on common stock13. The ratio of profit available for interest to interest expensesThis classification of financial ratios is permanent not exhaustive. -Other ratios may be used for purposes later indicated. Furthermore, some of the ratios reflect the efficiency with which a business has used its capital while others reflect efficiency in financing capital needs. The ratios of sales to receivables, inventory, fixed and intangible capital; the ratios of net operating profit to total capital and to sales; and the ratios of sales to operating costs and expenses reflect efficiency in the use of capital.' Most of the other ratios reflect financial efficiency.B. Technique of Financial Statement AnalysisAre the statements adequate in general?-Before attempting comparative analysis of given financial statements we wish to be sure that the statements are reasonably adequate for the purpose. They should, of course, be as complete as possible. They should also be of recent date. If not, their use must be limited to the period which they cover. Conclusions concerning 1923 conditions cannot safely be based upon 1921 statements.Does the comparative balance sheet reflect a seasonable situation? If so, it is important to know financial conditions at both the high and low points of the season. We must avoid unduly favorable judgment of the business at the low point when assets are very liquid and debt is low, and unduly unfavorable judgment at the high point when assets are less liquid and debt likely to be relatively high.Does the balance sheet for any date reflect the estimated financial condition after the sale of a proposed new issue of securities? If so, in order to ascertain the actual financial condition at that date it is necessary to subtract the amount of the security issue from net worth, if the. issue is of stock, or from liabilities, if bonds are to be sold. A like amount must also be subtracted from assets or liabilities depending upon how the estimated proceeds of the issue are reflected in the statement.Are the statements audited or unaudited? It is often said that audited statements, that is, complete audits rather than statements "rubber stamped" by certified public accountants, are desirable when they can be obtained. This is true, but the statement analyst should be certain that the given auditing film's reputation is beyond reproach.Is working-capital situation favorable ?-If the comparative statements to be analyzed are reasonably adequate for the purpose, the next step is to analyze the concern's working-capital trend and position. We may begin by ascertaining the ratio of current assets to current liabilities. This ratioaffords-a test of the concern's probable ability to pay current obligations without impairing its net working capital. It is, in part, a measure of ability to borrow additional working capital or to renew short-term loans without difficulty. The larger the excess of current assets over current liabilities the smaller the risk of loss to short-term creditors and the better the credit of the business, other things being equal. A ratio of two dollars of current assets to one dollar of current liabilities is the "rule-of-thumb" ratio generally considered satisfactory, assuming all current assets are conservatively valued and all current liabilities revealed.The rule-of-thumb current ratio is not a satisfactory test ofworking-capital position and trend. A current ratio of less than two dollars for one dollar may be adequate, or a current ratio of more than two dollars for one dollar may be inadequate. It depends, for one thing, upon the liquidity of the current assets.The liquidity of current assets varies with cash position.-The larger the proportion of current assets in the form of cash the more liquid are the current assets as a whole. Generally speaking, cash should equal at least 20 per cent of total current liabilities (divide cash by total current liabilities). Bankers typically require a concern to maintain bank balances equal to 20 per cent of credit lines whether used or unused. Open-credit lines are not shown on the balance sheet, hence the total of current liabilities (instead of notes payable to banks) is used in testing cash position. Like the two-for-one current ratio, the 20 per cent cash ratio is more or less a rule-of-thumb standard.The cash balance that will be satisfactory depends upon terms of sale, terms of purchase, and upon inventory turnover. A firm selling goods for cash will find cash inflow more nearly meeting cash outflow than will a firm selling goods on credit. A business which pays cash for all purchases will need more ready money than one which buys on long terms of credit. The more rapidly the inventory is sold the more nearly will cash inflow equal cash outflow, other things equal.Needs for cash balances will be affected by the stage of the business cycle. Heavy cash balances help to sustain bank credit and pay expenses when a period of liquidation and depression depletes working capital and brings a slump in sales. The greater the effects of changes in the cycle upon a given concern the more thought the financial executive will need to give to the size of his cash balances.Differences in financial policies between different concerns will affect the size of cash balances carried. One concern may deem it good policy to carry as many open-bank lines as it can get, while another may carry only enough lines to meet reasonably certain needs for loans. The cash balance of the first firm is likely to be much larger than that of the second firm.The liquidity of current assets varies with ability to meet "acid test."- Liquidity of current assets varies with the ratio of cash, salable securities, notes and accounts receivable (less adequate reserves for bad debts), to total current liabilities (divide the total of the first four items by total current liabilities). This is the so-called "acid test" of the liquidity of current condition. A ratio of I: I is considered satisfactory since current liabilities can readily be paid and creditors risk nothing on the uncertain values of merchandise inventory. A less than 1:1 ratio may be adequate if receivables are quickly collected and if inventory is readily and quickly sold, that is, if its turnover is rapid andif the risks of changes in price are small.The liquidity of current assets varies with liquidity of receivables. This may be ascertained by dividing annual sales by average receivables or by receivables at the close of the year unless at that date receivables do not represent the normal amount of credit extended to customers. Terms of sale must be considered in judging the turnover of receivables. For example, if sales for the year are $1,200,000 and average receivables amount to $100,000, the turnover of receivables is $1,200,000/$100,000=12. Now, if credit terms to customers are net in thirty days we can see that receivables are paid promptly.Consideration should also be given market conditions and the stage of the business cycle. Terms of credit are usually longer in farming sections than in industrial centers. Collections are good in prosperous times but slow in periods of crisis and liquidation.Trends in the liquidity of receivables will also be reflected in the ratio of accounts receivable to notes receivable, in cases where goods are typically sold on open account. A decline in this ratio may indicate a lowering of credit standards since notes receivable are usually given to close overdue open accounts. If possible, a schedule of receivables should be obtained showing those not due, due, and past due thirty, sixty, and ninety days. Such a, schedule is of value in showing the efficiency of credits and collections and in explaining the trend in turnover of receivables. The more rapid the turnover of receivables the smaller the risk of loss from bad debts; the greater the savings of interest on the capital invested in receivables, and the higher the profit on total capital, other things being equal.Author(s): C. O. Hardy and S. P. Meech译文：财务报表分析A.财务比率我们需要使用财务比率来分析财务报表，比较财务报表的分析方法不能真正有效的得出想要的结果，除非采取的是研究在报表中项目与项目之间关系的形式。
经济转型下的公司财务报表外文文献翻译
文献信息：文献标题：Financial Statements of a Company as an Information Base for Decision-Making in a Transforming Economy（转型经济中公司财务报表作为决策信息基础的研究）文献作者及出处：Osadchy E A, Akhmetshin E M, Amirova E F, et al. Financial statements of a company as an information base for decision-making in a transforming economy[J].2018(2):339-350.字数统计：英文3583单词，20616字符；中文5831汉字外文文献：Financial Statements of a Company as an Information Base for Decision-Making in a Transforming Economy Abstract In connection with the development of transforming the economy, the need for forecasting and analyzing the consequences of managerial decisions becomes more pressing. To substantiate and evaluate such decisions, a tool for prospective analysis of financial statements of companies is used. In recent years, the content and structure of a company's financial statements have undergone significant changes. With the development of economic relations, the principles of organization and methodology of accounting and reporting are also dynamically changing. The issues of reforming financial statements of a company are constantly discussed at international congresses of accountants and other professional forums.The purpose of the study is to improve the concept of preparing financial statements of a company as an information base for taking decisions in a transforming economy.As a result of the research, the economic essence of company's financial statements is substantiated from the point of view of an integrated approach; the importance of financial statements of an organization for effective management is determined; the main financial and non-financial indicators are systematized; it isproposed to introduce a mandatory requirement for disclosure of non-financial indicators in the corporate reporting system; proposals have been elaborated to improve the methods for analyzing financial statements as a tool for managing a company.Keywords: financial statements; interested users of financial statements; balance sheet; financial indicators.1.IntroductionIn modern conditions, financial statements are the most complete, objective and reliable information base, based on which one can form an opinion on the property and financial position of a company (Thalassinos and Liapis, 2014). In accordance with the legislation, the accounting financial statements are an open source of information, and its composition, content and presentation forms are unified by basic parameters, it becomes possible to develop standard methods to read and analyze it (Suryanto and Thalassinos, 2017).Reporting is used by a company's management as the basis for making managerial decisions. Its data are necessary for the analysis of organization's activities. Thanks to it, it is possible to identify the causes of deviations from the previously established parameters and uncover unused reserves of production. Statistical bodies widely use the annual reports of many companies for various developments that allow determining the direction and level of production's development. The financial accounting data, obtained in the annual report, provide information which is necessary for top managers to finance investment projects.The essence of financial statements' analysis from the position of a user is to review and evaluate the information in the reporting to obtain reliable conclusions about the past state of an organization aiming at foreseeing its functioning in the future. Evaluation of financial statements is a process by which the past and current financial position and performance of the company are assessed. Because of financial statements' analysis, the company's most important characteristics are also determined, which testify, in particular, about its success or the risk of bankruptcy (Izuymov et al.2017). For different users, in terms of the scale of its implementation, the analysis of financial statements depends on a specific goal. At the same time, the analysis and direction of work while analyzing financial statements can be different. Therefore, company's financial statements can be useful for different interested parties (Bondarenko, 2010).Preparation of financial statements is important for the successful conduct of the activities of any enterprise. It is connected not only with summarizing the results of its financial and economic activities for a certain period, but also with determining the quality of company's relations with public authorities that control the conduct of any economic activity in the state, including the activities connected with the receipt of profit (Gapsalamov et al., 2017; Bittman et al., 2017). Thus, depending on how timely the financial statements are presented by the company, there are penalties imposed on it, the frequency and severity of conducted tax audits. It is also an important fact that timely and high-quality financial statements are required to obtain a general picture of a legal entity's performance, its effectiveness, financial stability and other indicators (Korableva and Kalimullina, 2014). That is why the company's financial statements are important for its management and for external bodies.This topic should also be considered due to the fact that a careful study of balance sheets allows us to disclose both the secrets of successful and effective company performance, the reasons for failures and insolvency and identify factors that negatively affect the company's performance. Based on this information, plans can be adjusted and ways to improve the company's activities can be outlined.2.Literature reviewFinancial reporting is a unified system of data on the property and financial position of the company and the results of its activities. Financial statements are prepared based on financial accounting data in accordance with established forms for a certain reporting date. It follows from this definition that the data reflected in the financial statements essentially represent a special type of accounts that are extracted from the current accounting of the summary data on the status and performance of acompany for a certain period (Korableva et al., 2017b).The system of accounting data (indicators) that make up the financial statements should be output directly from the ledger accounts – the most important register of the accounting system. The total of accounting indicators, which the financial accounting consists of, is formed directly or indirectly from the ledger accounts. Therefore, the reporting data grouped in the accounting registers cannot reflect such economic turnover, which were not presented in the current accounts. Hence there is the relationship between financial accounting and financial statements, which means that the resulting totals are transferred to the appropriate reporting forms in the form of synthesized, final indicators of the balance sheet and reflect the value of organization's assets by its composition and placement directions.The approaches of different researchers to the definition and interpretation of the concept of financial statements are considered in the Table 1.Table 1. The concept of financial reportingThrough financial reporting, the main objective of financial accounting is fulfilled, that is to generate complete and reliable information about company's property status and to provide this information to internal and external users (Bondarenko, 2009a).Astrakhantseva et al. (2016), consider cash flow statements as the informationaffecting the analysis of the company's economic security. This allows users to quickly assess changes in the company's net assets and its financial structure including liquidity and solvency (Vasilyev, 2015; Kurbanova et al., 2018).At the same time, Dlasková and Havlícek (2013) investigate the financing of managerial decisions, which becomes one of the fundamental parts of cash management process. Financing solutions in a firm are divided into two categories based on the source of finance (external and internal). The funds provided by external sources are collected by the company through the management of the capital structure, as well as the management of loans and borrowed capital. Internal sources are the company's profits. Therefore, based on sources of funding, the objectives of information users may be different. Thus, a review of modern literature allows us to conclude that research on the effective use of information management system of the company is widely discussed in online sources and various scientific journals.rmation users of company's financial statementsBy classifying users of financial statements' information on the economic basis, it is possible to identify external and internal users of information. The number of users of reporting is constantly changing and varies depending on specific economic conditions, while the interests of users in relation to its information content are quite constant. Users of financial statements are legal entities and individuals that are conditionally divided into two main groups: internal and external users (Figure 1).Figure 1. Internal and external users of the company's financial statementsThe first group includes the following external users:–shareholders of the company, founders, investors, existing and potential owners of the organization's funds, who need to establish an increase or decrease in the share of own funds and assess the efficiency of the resources' use by the company's management;–existing and potential lenders using statements to assess the appropriateness of granting or extending a loan, determining the loan condition, strengthening loan repayment guarantees and assessing the credibility of an enterprise as a client;–legislative bodies;–suppliers and customers, establishing business relationships with the client;–securities exchanges that evaluate the information provided in the reporting when registering the relevant firms, making decisions on the need to change accounting and reporting;–lawyers who need reporting information to assess compliance with contractual terms, compliance with the law in calculating profits and paying dividends, as well as determining the terms of pension provision;–press and information agencies, which require statements to prepare reviews, evaluate development trend and analyze activities of individual companies and industries, calculate generalized indicators of financial activity;–trade and production associations that use reporting for making statistical generalizations across sectors and conducting comparative analysis and performance evaluation at the sectoral level (Grahova and Gapsalamov, 2014);–trade unions, interested in reporting information to determine their salary requirements and terms of employment agreements, as well as to assess the development trends of the industry to which an enterprise belongs;–the state, first, acting by the bodies that check the correctness of drafting documents, calculating taxes and form a tax policy (Puchkova, 2015).The second group is represented by internal users:–company's management (who take managerial decisions);–managers of relevant levels who, according to the financial statements, assess the need for financial resources, the correctness of investment decisions and the effectiveness of the capital structure, determine the main areas of the dividend policy, prepare forecast reporting forms and perform preliminary calculations of the financial performance of the forthcoming reporting periods, assess the possibility of merging with another firm or its acquisition, as well as structural reorganization of the company;–all structural units (branches, representative offices etc.).The study conducted by Ponce et al. (2015) is considered quite interesting. It is based on the survey and analysis of the questionnaire of 849 information users. The researchers concluded that users of companies' financial statements differ for their reasons for using financial statements (professional or private), in their profession, in their experience and in their point of view (for example, suppliers are interested in the information about the solvency of the analyzed company, investors are interested in the profitability of the company). Therefore, it can be concluded that each user has a certain interest.4.MethodplogyThe theoretical basis of this research is represented by the scientific provisions contained in the works of foreign and Russian scientists, experts in accounting, audit,financial analysis and decision theory (Fedotova et al., 2017). The regulatory legal acts of the Russian Federation, the provisions of IFRS and GAAP, publications in the periodical press, databases of the Federal State Statistics Service and its territorial body for the Republic of Tatarstan, the results of statistical and sociological research in Russia and abroad, information materials analytical agencies, as well as information resources of the Internet (Kosintseva et. al., 2017). The methodological basis of the research consisted of general scientific methods (dialectical method, methods of system and structural and functional analysis, historical and comparative methods). These methods were used in a different combination and at different stages of the study, depending on the goals and objectives. Surely, it has contributed to ensuring the reliability of the analysis and the validity of the conclusions reached by the authors.5.ResultsTo improve the information content of company's financial statements and systematize the identified indicators, the authors propose the following:–to add to the profit and loss statement additional indicators that reflect income and expenditure indicators, i.e. indicate revenues in the indicator "Proceeds from the sale of products", and in the indicator "Revenue from work and services", respectively, to distribute the cost of goods and services sold in the following indicators: "Cost of sales", "Cost of work performed"; "Cost of services rendered".–in addition to the explanatory notes to the balance sheet and the financial results report, it is recommended to compile the balance sheet and the financial results report in the form of separate subdivisions. The detailed form of the financial results report is a standard financial results report, supplemented with additional lines that classify each indicator for each separate subdivision.–transformation of the balance sheet of Russian companies in accordance with international financial reporting standards. Transformation does not require the mandatory availability of specialized programs and can be performed using spreadsheets, for example, MS Excel. To transform the company's reporting, it isnecessary to develop a common strategy, which can be presented in the following way (Korableva and Kalimullina, 2016).First, there are discrepancies in financial indicators. For this the following is performed:–inventory of stocks at the reporting date, during which their market value is determined;–inventory of accounts receivable to accrue a reserve of doubtful and bad debts;–inventory of capital stock for establishing their net market value and impairment caused by the moral and physical deterioration of current operating assets.Second, three groups of reporting indicators (production, innovative and financial) are identified and systematized. The systematic approach calls for the need to consistently identify and evaluate the main activities of the enterprise. Based on the financial statements, the following activities, performed by the company are distinguished: production; innovative; financial.Third, a transformation model is being developed – a set of spreadsheets into which the financial reporting data is entered, including adjustments. A condition for the stable development of a company in performing each type of activity is the choice of estimated indicators. They should meet the requirements of rationality and sufficiency, since with its help one can characterize the results of one or another sphere of company's functioning. The proposed systematic method makes it possible to evaluate not the established results, but the trends of their appearance, the process itself and the driving forces of its functioning (Figure 2). Only in such a set of indicators is determined the actual development of the company, its true potential in business cooperation and is revealed the full realization of all its interests and its counterparties purposes. Transformation of the reporting enables to achieve the following results:–the ability to automate the accounting process through the introduction of a CRM- system. This will automate the strategy of interaction with customers (clients) to increase sales, optimize marketing and improve customer service by storing customer information and the history of relationships with them, establishing andimproving business procedures and subsequent analysis of results;–saving time and effort (Vasilev and Tuktarova, 2014; Bondarenko, 2009a; Kilinc et al., 2018; Sadykova et al., 2017; Tabachuk et al., 2018);–transparent adjustment system – adjustment postings are immediately reflected in the reporting.The implementation of the proposed activities will maximize the profit and profitability of the company by improving the quality of accounting information.Figure 2. Key indicators characterizing the company's development6.DiscussionThe research by Sakai et al. (2015) considers one of the main determinants of creating information for external recipients (such as investors, banks, insurance companies, treasury administration bodies etc.). The source of such information is the accounting system, consisting of two subsystems: financial accounting (focused on the external recipient of information) and management accounting (providing information to internal recipients).The comparative analysis of Fraser’s et al. (2009) research with the Sakai et al. (2015) method is of interest. The Sakai et al. method was originally proposed toextract causal information on financial indicators that characterize the performance of companies. The results of the comparison showed that the method proposed by Fraser et al. wins the Sakai et al. method and indicates a problem of inaccuracy of the information received by the analyzed companies.The research of Dwi Karya Susilawati (2015) reflects the impact of business ethics, corporate governance, the views of an auditor and owners on the quality of financial statements after they have taken their decisions. This study examines the various ways that lead to the growth of the company. The growth of the company partly depends on the creativity of the employees working in it. It was noted that it is easier to fix the problem of completeness and transparency of information at the very beginning of preparing the statements.7.ImplementationsSummarizing the above-said information, it can be stated that the essence of the company's financial statements is to achieve a balanced state that allows it to carry out expanded reproduction and provide economic relations with other economic entities regarding the formation, distribution and use of resources. The performance of the company should be evaluated in such a way that all those who are connected with it by economic relations should be able to get an answer to the question: how reliable the company as an economic and strategic partner in these relations is, and, consequently, make a management decision on the economic profitability of the continuation or starting joint activities with it.Evaluation of the company's development should be carried out from the position of the system approach. It can be implemented by identifying key indicators that directly or indirectly reflect the perspectives of all stakeholders in the effective operation of the company: owners, management personnel, employees, investors, creditors, society, etc. (Hanias et al., 2012). When evaluating the company's activities, it is more expedient to be guided more by production, innovation and financial indicators. It is they who characterize the company's real ability to constantly develop (Korableva et al., 2017a; Tarman, 2016). It should not be forgotten that in thecompany's scorecard, not only the calculation of indicators is important, but also the identification of the interest of users of analytical information.The author's vision of the application of the system approach is as follows. Financial reporting is the information base of financial analysis, the results of which can be used to manage the financial and economic activities of the company, to assess the effectiveness of its management, to choose the directions for investing capital. Based on the system indicators of financial reporting (financial, investment, innovative), interested users analyze the property and financial position of the organization, its solvency and financial results. Thus, financial reporting allows us to satisfy information requests of all groups of users, which make special demands on its content and order of formation.8.ConclusionsThe increased requirements for the reliability of financial statements have changed the approach to assessing the company's performance as one of the ways to identify and prevent material misstatements in the reporting. The study showed that to ensure the reliability of financial reporting, it is required to use a variety of means, among which a special place is taken by a systematic approach to analytical procedures.The authors believe that analytical work, which plays an important role in identifying and preventing misstatements in the reporting, should take a leading place not only in the accounting work of the company, but also in the work of information users. Therefore, the financial statements of the company can basically satisfy the information requests of all groups of users who raise special demands on its content and the order of its formation.Financial reporting and its analysis serve as a tool for identifying problems of managing the financial and economic activities of the company, to choose the directions for investing in capital and forecasting certain indicators and financial performance in general. Careful study of financial statements permits to disclose both the secrets of successful and effective company's performance, and the reasons forfailures and insolvency. Moreover, it helps to identify factors that adversely affect the company's performance.Based on this information, plans can be adjusted and ways to improve its operations can be outlined. For internal users, the financial statements of the company, as well as the accounting data that formed the basis for its formation, are important indicators both for operational management and for monitoring the safety of their property. The financial statements act as a means for users of reporting information to monitor the company's operations, promptly warn and identify signs of the bankruptcy of the company, form a unified state statistical survey base and macroeconomic indicators that can be used for tax purposes and for other purposes. In conclusion, it should be emphasized that in the context of economic transformation, the expediency of an integrated and systematic approach to the study of the company's financial statements is possible only based on international experience.中文译文：转型经济中公司财务报表作为决策信息基础的研究摘要随着经济转型的发展，迫切需要对管理决策的后果进行预测和分析。
财务报表分析中英文对照外文翻译文献
文献信息文献标题: The Need Of Financial Statement Analysis In A Firm or0 rgnization(企业或机构财务报表分析的必要性)国外作者: Suneetha G 文献出处:《International Journal of Science Engineering and Advancel Technology (.JSEAT)) 2017, 5(6): 731-735字数统计:2541单词,15110字符;中文4377汉字外文文献:The Need Of Financial Statement AnalysisIn A Firm Or An Orgnization Abstract Financial statement analysis play a dominate role in setting the frame watt of managerial decisions through analysis and interpretation of financial statement This paper discusses about financial , strength and weakness of the company by properly establishing relationship between the items of balance shed and profit and loss account. In order to judge the profitability and financial soundness of the company horizontal, and vertical analyze or done. The various technique used in analyzing financial statement included 'comparative statement, common size statement, trend analysis and ratio analysis. The results suggest that the ratio approach is a highly useful tool in financial statement analysis, especially when a set of ratios is used to evaluate a firm's performanceKey words: Financial statement analysis, to evaluate a firm's performance Comparative statement. Common size statement, trend analysis and ratio analysis1 Introductionhe basis for financial analysis planning and decision making is financiainformation/a business firm has to prepares its financial accounts viz.. balance sheet profit and loss account which provides useful financial information for the purpose of decision making Financial information is needed to predict. Compare and evaluate the fin's earnings ability. The formers statements viz. profit and loss account shows that operating activities of the concern and the later balance sheet depicts the balance value of the acquired assets and of liabilities at a particular point of time. However these statements don't disclose all of the necessary for ascertaining the financial strengths and weaknesses of an enterprise. it is necessary to analyze the data depicted n the financial statements. The finance manager has certain analytical tools which helps is financial analysis and planning. [Doron nissim, stephen h. Penman, (2003) Financialstatement Analysis of Leverage and How it Informs About Profitability and Price-to-book Ratios. Survey of Accounting Studies. Kluwer Academic PublishersAs per examine by Dissim. StephePenman' on Financia proclamation investigation of Leverage and how it illuminates about gainfulness and cost to book proportions, money related explanation examination that recognizes use that emerges in financing exercises from use that emerges in operations. The examination yields two utilizing conditions. one for getting to back operations and one for obtaining over the span of operations. This examination demonstrates that the budgetary explanation investigation clarifies cross-sectional contrasts in present and future rates of return and additionally cost to-snare proportions, which depend onexpected rates of profit for value. This investigation helps in understandorkins influence contrasts in productivity in the cross-areas. changes in future productivity from current benefit and legally binding working liabilities from evaluated liabilities Yating Van, HW. Chuang, (2010) Financial Ratio Adjustment Process: Evidence from Taiwan and North America, ISSN 1450-2887 Issue 43 (2010)0 Euro Journa Publishing Inc. 20102. Financial statements analysisprocess of identifying the financial strengths and weaknesses of a firm from the available accounting data and financial statements. The analysis is done by properly establishing the relationship between the items of balance sheet and profitnd loss account. The first task of the financial analyst is to determine the information relevant the decision under consideration from the total information contained in financial statement. The second step is to arrange information in a way to highlightsignificant relationships. The final step is interpretation and drawing of infed conclusions. Thus financial analysis is the process of selection, relating and evaluation of the accounting data or informationPurpose of financial statements analysis Financial statements analysis is the meaningful interpretation of 'financial statements for panics demanding financial information. It is not necessary for the proprietors alone. In general, the purpose of financial statements analysis is to aidmaking between the users of accounts To evaluate past performance and financial position To predict future performance Tools and techniques of financial analysis Comparative balance sheet common size balance shee Trend analysis Ratio analysis Comparative balance sheet Comparative financial statements is a statement of the financial position of a business so designed as to facilitate comparison of different accounting variables for drawing useful inferences. Financial statements of two or more business enter prices may be compared over period of years. This is known as inter firm comparison Financial statements of the particular business enter pries may be compared over two periods of years. This is known inter period comparisonCommon size statements It facilities the comparison of two or more business entities with a commonbase .in case of balance sheet, total assets or liabilities or capital can be taken ascommon base. These statements are called common measurements or components percentage or 100 percent statements. Since each statement is representated as a %ofthe total of 100 which in variably serves as the baseIn this manner the announcements arranged to draw out the proportion of every benefit of risk to the aggregate of the monetary record and the proportion of every thing of cost or incomes to net deals known as the basic size articulationsPattern investigation Even examination of money related explanations can likewise be completed by figuring pattern rates. Pattern rate expresses quite a long while's budgetary formation as far as a base year. The base year rises to 100 % with every single other year expressed in some rate of this baseProportion investigation Proportion investigation is the technique or process by which the relationship of things or gatherings of things in the budgetary proclamations are registered. decided and introduced. Proportion investigation is an endeavor to determine quantitative measures or aides concerning the money related wellbeing and benefit of the business nture. Proportion investigation can be utilized both in pattern and static examinationhere are a few proportions at the examiner yet the gathering of proportions he wouincline toward relies upon the reason and the destinations of the investigationBookkeeping proportions are viable apparatuses of examination; they are pointers of administrative and over all operational productivity. Proportions, when appropriately utilized are fit for giving valuable data. proportion examination characterized as the deliberate utilization of proportions to decipher the money related explanations with the goal that the qualities and shortcomings of a firm and in addition its chronicled execution and current monetary condition can be resolved the term proportion alludes to the numerical or quantitative connection between things factors this relationship can be communicated as (Fraction (2)Percentages (3)Proportion of numbers These option strategies for communicating things which are identified with eacstigation,examination. It ought to be seen that processing the proportion does not include data in the figures of benefit or deals. What the proportions do is that they uncover the relationship in a more important manner in order to empower us to reach inferences from th As indicated by look into by the Yating yang and 11. W. Chuang. on 'Monetary Ratio Adjustment Process: Evidence from Taiwan and North America. measurable legitimacy of the proportion strategy in monetary articulation examination is researched. The outcomes hence recommend that the proportion approach is a valuable instrument in monetary explanation investigation, particularly when an arrangement of proportions is utilized to assess an association's execution. The straightforwardness of this strategy additionally underpins the utilization of proportions in money related basic leadership3.Money related proportions in perspective of GAAGAAP is the arrangement of standard systems for recording business exchanges and detailing accounting report passages. The components of GAAP incorporatethings onetaryd. and how to ascertain exceptional offer estimations. The models fused into (MAP give general consistency in assumes that are thusly used to ascertain imperative money related proportions that financial specialists and investigators use to assess the organization. Indeed, even agreeable monetary records can be trying to unravel, yet without a framework characterizing every class of section, corporate money related articulations would be basically dark and uselessThere are seven fundamental rule that guide the foundation of the Generall Accepted Accounting Principles. The standards of normality, consistency, perpetuality and genuineness go towardsurging organizations to utilize the legitimate bookkeeping hones quarter after quarter in a decent confidence push to demonstrate the genuine money related state of the organization. None remuneration judiciousness and progression build up rules for how to set up a monetary record, by and large to report the budgetary status of the organization as it is without treatin resources in irregular ways that distort the operations of the organization just to balance different sections. The rule of periodicity basic implies that salary to be gotten extra time ought to be recorded as it is booked to be gotten, not in a singular amountThe brought together arrangement of bookkeeping in this manner has various advantages. Not exclusively does it give a specific level of straightforwardness into an organization's funds. it likewise makes for generally simple examinations between organizations. Subsequently, GAAPempowers venture by helping financial specialists pick shrewdly. GAAP gives America organizations preference over remote ones where financial specialists, unless they have a cozy comprehension of the business may have a great deal more trouble figuring the potential dangers and prizes of a venture. GAAP applies to U.S.-based enterprises just, however every other real nation has bookkeeping measures set up for their local organizations. Now and again remote bookkeeping is genuinely like U.S. GAAP, changing in just minor and fectively represented ways. In different cases, the models change fundamentally aking direct examinations questionable, best case scenarioAdvantages and Limitations of Financial Ratio Analysis Financial ratio analysis is a useful tool for users of financial statement. It hasFocal pointselated proclamations It helps in contrasting organizations of various size and each other. It helps in drift examination which includes looking at a solitary organization over a period It highlights imperative data in basic frame rapidly. A client can judge an organization by simply taking a gander at few number as opposed to perusing of the entire monetary explanationsRestrictions Regardless of convenience, finance.ial proportion examination has a few burdens Some key faults of budgetary proportion examination areDifferent organizations work in various enterprises each having distinctive natural conditions, for example, control, showcase structure, and so on. Such factors curve so huge that a correlation of two organizations from various ventures may beecelvilFinancial bookkeeping data is influenced by assessments and presumptions Bookkeeping principles permit diverse bookkeeping arrangements, which disables likeness and subsequently proportion examination is less helpful in suchcircumstancesRatio investigation clarifies connections between past data while clients are more worried about present and future datThe investigation helps for breaking down the alteration procedure of moneelated proportionsmodel states three impacts which circular segment an association's interior impact, expansive impact, and key administration. It encourages(That a company's budgetary proportions reflect unforeseen changes in the business(2)Active endeavors to accomplish the coveted focus by administration and (3)An individual association's money related proportion developmentMonetary proclamations investigation is the way toward looking at connections among components of the organization's "bookkeeping articulations" or money related explanations (accounting report, salary articulation. proclamation of income and the announcement of held profit) and making correlations with pertinent data. It is a significant instrument utilized by financial specialists. leasers, monetary investigators proprietors. administrators and others in their basic leadership handle The most well known sorts of money related explanations examination curveHorizontal Analysis: monetary data are thought about for at least two years for a solitary organizationVertical anaery thing on a solitary monetary explanation is figured as a rate of an aggregate for a solitary organizationRatio Analysis: analyze things on a solitary budgetary articulation or look at the connections between things on two monetary proclamationsMoney related proportions examination is the most widely recognized type o budgetary explanations investigation. Monetary proportions delineate connections between various parts of an organization's operations and give relative measures of the company's conditions and execution. Monetary proportions may give intimationsand side effects of the money related condition and signs of potential issue regionsby and large holds no importance unless they are looked at against something else, as past execution, another organization/contender or industry normal. In this way, the proportions of firms in various enterprises, which confront distinctive conditions, are generally difficult to analyzeMoney related proportions can be a critical instrument for entrepreneurs and dministrators to gauge their advance toward achieving organization objectives, an toward contending with bigger organizations inside an industry; likewise, followin different proportions after some time is an intense approach to recognize patterns Proportion examination, when performed routinely after some time, can likewise give assistance independent ventures perceive and adjust to patterns influencing their operationsMoney related proportions are additionally utilized by financiers. Speculators and business experts to survey different traits of an organization's monetary quality or working outcomes, this is another motivation behind why entrepreneurs need to comprehend money related proportions in light of the fact that, all the time, a business' capacity to get financing or value financing will rely upon the organization's budgetary proportions. Money related proportions are ordered by the monetary part of he business which the proportion measures. Liquidity proportions look at the ccessibility of organization's money to pay obligation. Productivity proportions measure the organization's utilization of its benefits and control of its costs to create a satisfactory rate of return. Use proportions look at the organization's techniques for financing and measure its capacity to meet budgetary commitments. Productivity proportions measure how rapidly a firm changes over non-money resources for money resources. Market proportions measure financial specialist reaction to owning an organization's stock and furthermore the cost of issuing stockProportion Analysis is a type of Financial Statement Analysis that is utilized acquire a snappy sign of an association's money related execution in a few key territories. Proportion investigation is utilized to assess connections among money related proclamation things. The proportions are utilized to distinguish inclines after some time for one organization or to look at least two organizations at one point in ime. Money related explanation proportion investigation concentrates on three key parts of a business: liquidity, benefit, and dissolvability The proportions are sorted as Short-term Solvency Ratios, Debt MaRatios and Asset management Ratios. Productivity Ratios, and Market Value ratios Proportion Analysis as an instrument has a few vital elements. The information, which are given by budgetary proclamations. are promptly accessible. The calculation of proportions encourages the examination of firms which contrast in measure oportions can be utilized to contrast anassociation's money related execution and industry midpoints. What's more, proportions can be utilized as a part of a type of ttern investigation to recognize zones where execution has enhanced or crumbled after some time. Since Ratio Analysis depends on bookkeeping data, its adequacy is restricted by the bends which emerge in budgetary explanations because of such things as Historical Cost Accounting and swelling. Thusly, Ratio Analysis should just be utilized as an initial phase in money related examination, to get a snappy sign of an association's execution and to distinguish territories which should be explored further.中文译文:企业或机构财务报表分析的必要性摘要财务报表分析在制定管理决策框架方面起着主导作用,其方法是通过对财务报表进行分析和解释。
商业银行财务报表分析外文文献翻译
文献信息标题：The Research of Commercial Banking Financial Statement Analysis作者：Jimmy H期刊：Global Journal of Management and Business Research，第1卷，第2期，页码：32-41.年份：2016原文The Study on the Financial Statement Analysis of Commercial BankingJimmy H1 IntroductionIn the economic globalization, the earth is becoming a global village today, accounting as a business analysis system of a "language of business" in the economic and social status has been more and more obvious, the world is more and more attention to it all the more powerful function. Because of financial statements can record the economic business of the enterprises and institutions, so as the international accounting financial statements of general carrier of the "language of business", has become the focus of the enterprise information users rushed to. World investment guru warren buffet once said: "to invest in a company, I basically see the financial statements of the enterprise. “In addition, more information on the financial statements of the user, such as creditors, government and the public when making decisions, and basically to must carry on the analysis of financial statements, and then make a relevant conclusion. The current society, the analysis of financial statements, there are many analysis perspective, and enterprise value perspective is just one of them. Itself in the global market economy condition, enterprises can be treated as a commodity trading, the enterprise itself can be treated as a kind of commodities can be traded in the property market, for the goods from the various stakeholders, if interested in this product of the enterprise, will want to know the value of the enterprise. Therefore, the enterprise's financial statements will be regarded as a kind of to each relevant information users interested in enterprise's help, help them to make economic decisions related tools, i.e., the financial statements of the enterprise can beseen as reflecting a kind of carrier of enterprise value, at the same time is to analysis enterprise's financial statements can be thought of as a tool of enterprise value.2 Literature reviewWatkins (2009) proposed to focus on an analysis of the financial information and financial measures to consolidate the traditional hospital, used to reveal the relationship between hospital of non-financial information, to enhance the comprehensive analysis of the company, should focus on the analysis of non-financial information; Miguel (2010) pointed out that if is analyzed from the perspective of the creditors, just use the financial data index in the financial statements to calculate, to predict the strength enterprise's solvency, it is not accurate, need use credit risk at the same time the calculation result is analyzed, so as to effectively help the oblige. Isabel (2013) pointed out that when it comes to analyze the Banks and other creditors, if the financial statement analysis, to predict the solvency of the company, credit risk and so on to provide reliable reference; David (2014) pointed out that the current accounting information, if it can't completely and fully meet your analysis all the needs of the decisions, then you should be facing the other analysis to the company, with additional information analysis; Eustachio (2010) pointed out that can use the method of data mining to analyze the financial statements of the enterprise, make false statements to disclose to the company. In addition, Jose (2013) put forward from the perspective of financial statement analysis, should be to analyze the structure of financial ratio analysis, to analysis the company's financial statements; Drancy (2014) for the analysis of enterprise financial report is never should not is the ratio of single mechanical calculation, should be a combination of qualitative analysis with quantitative analysis to the integrated system., he argues, can be analyzed from the perspective of accounting policy choice, also can be done from the perspective of enterprise financial strategic analysis, of course not to say that may not be the Angle of financial ratios, even from the perspective of revenue and the enterprise developmental enterprises can analyze financial statements of the enterprise; Marcus (2014) pointed out that the future of the enterprise business process may encounter unforeseen various types of pressure and risk, through the scientific framework shouldarrange, analysis of the financial statements of the original, find in the financial statements have been able to significantly prompt inadaptability of enterprise, to build a new financial analysis framework, the value creation, strategy, value chain, such as ecological into the new system of financial analysis. Should expand new analysis framework for the development of later with the analysis of the enterprise value objectives, with the starting point of the analysis of the strategic analysis, value driving factors analysis as the main body, which is forms a new analysis framework.3 Commercial Banks, financial statement analysisThe upgrade of a financial statement is a kind of contract, as investors make investment decisions, Banks credit decisions, acquisition decisions of enterprise, evaluation of audit risk of certified public accountants, use financial statement analysis, is a kind of important carrier transmission of accounting information. Financial statements are to the enterprise in a certain period of the financial position and operating results in writing of the relevant information such as the summary of the documents. Its main function has the following two points: first of all, is the enterprise's revenue, cost structure, the size of the profits and dividends to investors, the daily operating results of an enterprise. The second is the enterprise capital chain information, enterprise's financing situation, enterprise's solvency and the future development potential and other relevant information, these can all be statements reflect the enterprise's financial position of the enterprise. Is the analysis of financial statements, financial statements and the related information as a starting point of the enterprise, in some special way, to the enterprise's operating results, financial condition, and so on and so forth were analyzed, and the purpose is to understand the past, the evaluation now, predict the future, to help enterprises to make decisions related to the interests of body. And under the condition of market economy, the enterprise itself is a kind of commodities can be traded in the property market, as the goods from the stakeholders, such as investors, creditors, managers, etc., it is necessary to evaluate the value of the enterprise, the most common is oriented to the way the world is the analysis of financial statements, but due to the accounting standards of commercial Banks and general manufacturing enterprises is not the same,want to evaluate the value of commercial Banks, if still use the original analysis method, the conclusion must be inaccurate. In financial statement analysis is needed to adopt to the financial statements of the general analysis method for analysis, but also to specific issues specific analysis, different from the general enterprise's financial statement analysis method. But no matter what kind of financial statement analysis method, the ultimate goal is to provide the interests of enterprises related body helps them to make economic decision-making information, namely the financial statement analysis itself can be regarded as an effective way to reflect the enterprise value of commercial bank.4 The enterprise value analysis theory and methodValues and price theory is a classical economics and modern economics have to mention a theory, is both ancient and modern, both basic theory and reality. Historically, there have been many famous economist, has carried on the thorough positive exploration on this issue. In this article, the use of enterprise value is a broad sense and narrow sense. Generalized enterprise value refers to the enterprise's own business value, analysis and evaluation on the enterprise itself, using all the collected information on the market, based on the analysis of independent cognitive level of the above analysis platform, the management circumstance of the enterprise to carry on the summary, and hope to the future of the enterprise a certain period of production and business operation activities of predict cash flows, and thus to calculate how much business can create in the fixed number of year of the expected value. In the narrow sense definition of enterprise value, Copeland and others in the 1998 book "evaluation" pointed out: the shareholders value by the value of the value of enterprises is focused on the profitability and development potential; investors can for existing shareholders want companies or is to provide a better profitability potential investment. Shareholder value is how much of a future can obtain benefits, if the future can get more profits, shareholders will now give up capital liquidity, namely shareholders if they could get more value-added part of the future capital, the shareholders will only be for the current liquidity of sacrifice in his hands. So, investors will be investment is valued enterprise future profitability, investors want togain more cash flow from investment returns, not only is the enterprise current assets generate future cash flows and excess profit ability to bring the cash flow to investors.5 The financial statement analysis can reveal the enterprise valueEnterprise financial statements, financial statement analysis to the enterprise can be regarded as a kind of can reveal an effective means of enterprise value. Financial statement is a reflection of the daily business activities of the enterprise; reflect the statements of the enterprise value. Usually when an enterprise is analyzed using three statements, respectively, the balance sheet, income statement and statement of cash flows. The balance sheet can be seen as points on a particular day accounting personnel to the enterprise value taken a snapshot, use at a specific date financial status to reflect the enterprise value. The income statement is to measure performance of enterprise in a certain period of time, is through reflect the performance of enterprises in a certain period to reflect the enterprise value of the report. The cash flow statement reflects through the inflows and outflows of cash flow of the enterprise actual situation reveal the enterprise value. Thus, analysis of financial statements of the enterprise value can be revealed, namely the enterprise financial statements reflect the enterprise value of the carrier, financial statement analysis is an effective tool of enterprise value.译文商业银行财务报表分析研究Jimmy H1 引言当今世界，正逐步经济全球化，会计作为商业分析体系中的一门“商业语言”在经济社会中的地位已经越来越明显了，世人对它越发强大的功能越来越关注。
外文文献及翻译
Essentials for Financial Statements Analysis Gibson.C.H. Journal of Financial Statement Analysis Vol.12 No.2,2009 Overview of financial statements analysisThe analysis of financial data employs various techniques to emphasize the comparative and relative importance of the data presented and to evaluate the position of the firm. These techniques include ratio analysis, common size analysis, review of descriptive material, and comparisons of results with other types of data. The information derived from these types of analyses should be blended to determine the overall financial position. No one type of analysis supports overall findings or serves all types of users. You have to select two listed companies existing in the same industry (e.g. Unilever and Proctor and Gamble in the food and personal care products, etc) Get their financial statements for the most recent three years and Perform the afore-mentioned analysis.Financial Analysis techniques such as ratio analysis and common size financial statements can provide valuable insight into a company’s operations, risk characteristics, and valuation beyond what is readily apparent by examining raw data. When data is presented analytically, differences across time periods, interrelationships of financial statement accounts and comparisons among companies, are more easily understood. An effective analysis encompasses both computations and interpretations. A well reasoned analysis differs from a mere complication of various pieces of information, computations, tables, and graphs by integrating the data collected into a cohesive whole. Analysis of the past performance, for example, should address not only what happened but also why it happened and whether it advanced company’s strategy. Some of the key questions to address include:●What aspects of performance are critical for this company tosuccessfully compete in the industry?●How well did the company’s performance meet these critical aspects?(This is established through computations and comparison withappropriate benchmarks, such as the company’s own historicalperformance or competitors’ performance.)●What are the key causes of this performance, and how would thisperformance affect the company in the future?●What is the likely impact of trends in the company, industry, andeconomy on the future cash flows?●What are your recommendations as an analyst?Financial Analysis TechniquesThe following techniques can help you in achieving the overall objective of financial statement analysis of the companies.1. Ratio AnalysisRatio Analysis Ratio analysis is the calculation and comparison of ratios which are derived from the information in a company's financial statements. Financial ratios are usually expressed as a percent or as times per period.a) Liquidity RatiosLiquidity ratios measure a firm’s ability to meet its current obligations. These include Current Ratio, Acid Test Ratio, Sales to Working Capital, Working capital.b) Leverage RatiosLeverage ratios measure the degree of protection of suppliers of long term funds. These include Time Interest Earned, Fixed Charge Coverage, Debt Ratio, Debt / Equity Ratio, Debt to Tangible Net worth Ratio, Current Worth / Net worth Ratio, Total Capitalization Ratio, Fixed Asset Ratio / Equity Ratio, Long term Assets versus Long term Debt.c) Profitability RatiosProfitability ratios measure the earning ability of a firm. These include Net Profit Margin, Return on Assets, DuPont Return on Assets, Operating Income Margin, Operating Assets Turnover, Return on Operating Assets, Sales to Fixed Assets, Return on Investment (ROI), Return on Total Equity, Gross Profit Margin.d) Activity RatiosActivity ratios measure a firm's ability to convert different accounts within their balance sheets into cash or sales. These include Accounts Receivable Turnover。
小企业决策中财务报表的使用外文文献翻译
文献信息：文献标题：The use of financial statements for decision making by small firms（小企业决策中财务报表的使用）国外作者：Shawn Carraher，Howard Van Auken文献节选：《Journal of Small Business & Entrepreneurship》, 2013, 26(3):323-336字数统计：英文1777单词，10320字符；中文3278汉字外文文献：The use of financial statements for decision making by smallfirmsAbstract This paper uses a sample of 312 small firms to examine the use of financial statements by analyzing factors that (1) affect the use of financial statements and (2) owners' comfort in interpreting financial statements. Financial statements provide important information that should be used to help guide decisions. The findings showed that owner comfort in using financial statements to make decisions was inversely associated with frequency of preparation and directly associated with level of revenues. Additionally, the results showed that whether the whether the owner uses financial decisions when making decisions was indirectly associated with education level and having the statements prepared externally and directly associated with owner comfort interpreting the information in financial statements. The results should be useful for owners of SMEs and providers of services to SMEs to better understand which factors affect the use of financial statements and the process by which financial statements get incorporated into decisions.Keywords: Small firm financing; Small firm decisionsFinancial statements allow stakeholders to use available financial information togain a better understanding of and manage their firm. Although the use of financial statements can help stakeholders and owners make better decisions, owners of small firms often are poorly equipped to use financial statements effectively. In this case, even reliable, timely financial statements are insufficient, if owners do not know how to interpret and use them (Van Auken 2005).Furthermore, the use of financial statements is closely linked to and supportive of the firm's strategic goals, because decisions made without regard to their financial impact can lead to a confused company focus and financial distress (Horngren et al. 2009). The importance of the decisions is evident from the high discontinuance/failure rate among small firms (van Praag 2003). Owners of small firms often lack strong finance skills and may not fully understand the impact of their decisions; their inappropriate decisions threaten their small firm's viability and create extensive operational problems (Timmons and Spinelli 2004). Instead, firms must use the information contained in financial statements to evaluate and generate investment opportunities (Breen, Sciulli, and Calvert 2004), gain information to manage their business, and operate efficiently and effectively (Shields 2010). The effective interpretation and use of financial statements is especially important, considering that poor financial management is a leading cause of financial stress and business failure (Carter and Van Auken 2005; Coleman 2002; Headd 2003; Wiklund and Shepherd 2005).Such usages and interpretations tend to be influenced by owners' perceptions of their firms' potential. Entrepreneurs generally are optimistic—perhaps overly so—about their firm's financial potential, which can lead to inaccurate assessments of the probability of failure, ineffective decisions, and financial distress (Landier and Thesmar 2009; Smith 2011). Assistance with interpreting the meaning of and appropriate usage of information contained in financial statements therefore might help owners make better, more informed decisions (Breen, Sciulli, and Calvert 2004). Yet Gooderham et al. (2004) report that small firms tend not to seek external financial advice; instead, they rely on accountants as financial advisors and express confidence in financial advice according to the quality of the services rendered.To address the issues associated with owners' use of financial statements, we examine which factors determine the use of financial statements by small to medium-sized enterprises (SMEs), as well as their owners' comfort in interpreting them. Both issues are critical, especially considering that financial statements affect all stakeholders, yet most research on the use of financial information and financial statements has focused on large firms, with few examples of studies of how SMEs use financial statements in making decisions (Shields 2010). The important information in financial statements must be incorporated into any firm's operational and strategic decision-making processes though, because ignoring or misusing that information can harm all areas of the firm: unreliable operations, ineffective marketing, and an inability to hire qualified personnel (McMahon 2001; Timmons and Spinelli 2004).A key determinant of decision making tactics is the entrepreneur's background and firm characteristics (Avery, Bostic, and Samolyk 1998; Chaganti, DeCarolis and Deeds 1996; Watson 2002). For example, business owners who lack knowledge about the likely impact of their decisions on their firms may make choices that create risk and reduce potential returns (Van Auken 2001). Romano and Ratatunga (1994) and Romano, Tanwwski, and Smyrnios (2001) recognize that decision making in small firms is complex and involves many factors, whereas Busenitz and Barney (1997) note that limited experience and overconfidence often leads to inappropriate decisions, in which case small firms are particularly vulnerable to the impact of poor financial decisions because of their limited resources.Owners' comfort with using financial statements to make decisionsOwners who are not comfortable using financial statements to inform their decisions likely use the statements less than do owners who are more comfortable. This type of comfort may be affected by various factors. For example, firms that prepare financial statements internally rather than externally have employees who are knowledgeable about financial statements. Such internal expertise should facilitate greater interaction and explanations between the owner and the hired expert (Smallbone, North, and Leigh 1993), which in turn may make owners more comfortable with the use of financial statements.Educational level also influences financial decisions (Watson 2002). Advanced levels of education increase the likelihood that business owners have access to traditional debt and investment funding (Carter et al. 2003). They also help owners understand financial statements and communicate more effectively (Hanlon and Saunders 2007; Neeley and Van Auken 2010). Cassar (2009) thus reports that owners with a stronger finance and accounting background are more likely to use external sources for advice.In terms of firm characteristics, the level of revenue, which can serve as a proxy for firm size, affects many small firms' decisions, including both operational and strategic decisions. Higher revenue suggests that the firm has greater resource levels and access to more resources. Changing levels of revenue also alter the firm's perspective on its resource constraints and needs (Byers, Groth, and Wiley 1997). Neeley and Van Auken (2010) confirm that the level of revenue affects small firms' decisions, and Busenitz and Barney (1997) suggest that organizational size affects decisions, in that larger firms have more resources and information on which to base their decisions. In turn, financial statements are critical to understanding how revenue levels affect small firms, because they must plan for associated resource demands.Finally, the frequency of preparation may be an indicator of an owner's comfort in using financial statements to make decisions. Firms that have financial statements prepared less often likely are less sophisticated and suffer from less understanding of their importance for decision making (Cassar 2009; Cassar 2008). The reduction of uncertainty, especially in competitive environments, is directly associated with the frequency of financial statement preparations. Small firms that have their financial statements prepared less frequently may perceive a benefit from the lower costs of infrequent reports. These firms likely fail to recognize the benefits of more timely financial information, are not willing to incur higher costs, and feel less comfortable in using the information they would obtain. These effects, in combination, lead to the following hypotheses:H1: An owner's comfort in using financial statements to make decisions is associated (a) positively with whether financial statements are prepared internally, (b)positively with the firm's total revenue during previous year, (c) negatively with how often the firm's financial statements are prepared, and (d) negatively with the owner's level of education.Owners' actual use of financial statements to make decisionsFew published studies examine the use of financial statements by small businesses. Bruns and McKinnon (1993) report that managers want better information and that the quality of information they obtain determines the effectiveness of their decisions (Berger and Udell 1998; Gibson 1992). Traditional finance theory assumes rational decision making, but behavioral finance also acknowledges the potential influence of overconfidence and optimism on decisions (Barberis and Thaler 2002; Ritter 2003). Sian and Roberts (2009) report that owners' understanding of financial statements varies widely, such that many owners are confused by the information. The complexity of the statements makes them less useful to SME owners, who instead rely on their accountants to explain the information to them. Owners who are not comfortable with their understanding of financial statements are less likely to use those financial statements when making decisions. Whereas a lack of financial skills can signal a need for owner training on how to use financial statements (Cassar and Ittner 2008; Berger and Udell 1998), owners with a stronger finance and accounting background are more likely to use external accounts for advice because they understand the importance of accurate statements (Cassar 2009; Sian and Roberts 2009).Holmes and Nichols (1988) also note that the use of annual financial statements is associated with firm characteristics and demographics. For example, the frequency of financial statement preparation varies with the use of outside funding and venture size (Cassar 2009). Small firms also may tend to be less financially sophisticated (McMahon 2001; McMahon and Stanger 1995), so they rarely use financial statements when making decisions (Halabi, Barrett and Dyt 2010). In addition, the type of financial statement prepared varies with firm characteristics.Sales, often used as a proxy for firm size (Carter and Van Auken 2005), may help signal the likely complexity of a firm's operations and financial reporting needs.Berger and Udell (1998) suggest that smaller firms are more financially opaque but become more financially transparent as they grow; accordingly, owners' use of financial statements should vary with sales. Higher sales imply higher resource needs, greater financial exposure, and the need for more financial information. Lower sales instead may motivate owners to devote more attention to the associated financial impact on their firm.Not only are owners who are better educated more likely to use financial statements,but so should owners of firms with higher levels of revenue be, because they have needed to learn about financial statements as the firm grew. That is, they should be more likely to use and more comfortable interpreting financial statements. In firms that prepare their own financial statements internally, as we reasoned previously, the firm and its owner should be more capable in using financial statements. Finally, firms that prepare financial statement more often (e.g., monthly as opposed to annually) likely appreciate the value of the information contained in the statements. This reasoning leads us to predict:H2: An owner's use of financial statements to make decisions is positively associated with (a) the owner's comfort with using financial statements, (b) the internal preparation of financial statements, (c) the firm's total revenue during the previous year, and (d) the owner's level of education.中文译文：小企业决策中财务报表的使用摘要本文运用312家小型企业作为研究样本来检验财务报表的使用情况，其中主要分析了两方面的因素: (1)影响财务报表使用情况的因素；(2) 企业所有者在财务报表解读过程中获得的舒适感。
财务报表分析外文文献及翻译
财务报表分析外⽂⽂献及翻译Review of accounting studies,2003,16(8):531-560 Financial Statement Analysis of Leverage and How It Informs About Protability and Price-to-Book RatiosDoron Nissim, Stephen. PenmanAbstractThis paper presents a ?nancial statement analysis that distinguishes leverage that arises in ?nancing activities from leverage that arises in operations. The analysis yields two leveraging equations, one for borrowing to ?nance operations and one for borrowing in the course of operations. These leveraging equations describe how the two types of leverage affect book rates of return on equity. An empirical analysis shows that the ?nancial statement analysis explains cross-sectional differences in current and future rates of return as well as price-to-book ratios, which are based on expected rates of return on equity. The paper therefore concludes that balance sheet line items for operating liabilities are priced differently than those dealing with ? nancing liabilities. Accordingly, ?nancial statement analysis that distinguis hes the two types of liabilities informs on future pro?tability and aids in the evaluation of appropriate price-to-book ratios.Keywords: financing leverage; operating liability leverage; rate of return on equity; price-to-book ratioLeverage is traditiona lly viewed as arising from ?nancing activities: Firms borrow to raise cash for operations. This paper shows that, for the purposes of analyzing pro?tability and valuing ?rms, two types of leverage are relevant, one indeed arising from ?nancing activities b ut another from operating activities. The paper supplies a ?nancial statement analysis of the two types of leveragethat explains differences in shareholder pro?tability and price-to-book ratios.The standard measure of leverage is total liabilities to equity. However, while some liabilities—like bank loans and bonds issued—are due to ?nancing, other liabilities—like trade payables, deferred revenues, and pension liabilities—result from transactions with suppliers, customers and employees in conducting operations. Financing liabilities are typically traded in well-functioning capital markets where issuers are price takers. In contrast, ?rms are able to add value in operations because operations involve trading in input and output markets that are less perfect than capital markets. So, with equity valuation in mind, there are a priori reasons for viewing operating liabilities differently from liabilities that arise in ?nancing.Our research asks whether a dollar of operating liabilities on the balance sheet is priced differently from a dollar of ?nancing liabilities. As operating and ?nancing liabilities are components of the book value of equity, the question is equivalent to asking whether price-to-book ratios depend on the composition of book values. The price-to-book ratio is determined by the expected rate of return on the book value so, if components of book value command different price premiums, they must imply different expected rates of return on book value. Accordingly, the paper also investigates whether the two types of liabilities are associated with differences in future book rates of return.Standard ?nancial statement analysis distinguishes shareholder pro?tability that arises from operations from that which arises from borrowing to ?nance opera tions. So, return on assets is distinguished from return on equity, with the difference attributed to leverage. However, in the standard analysis, operating liabilities are not distinguished from ?nancing liabilities. Therefore, to develop the speci?cation s for the empirical analysis, the paper presents a ?nancial statement analysis that identi?es the effects of operating and ?nancing liabilities on rates of return on book value—andso on price-to-book ratios—with explicit leveraging equations that explain when leverage from each type of liability is favorable or unfavorable.The empirical results in the paper show that ?nancial statement analysis that distinguishes leverage in operations from leverage in ?nancing also distinguishes differences in contemporaneous and future pro?tability among ?rms. Leverage from operating liabilities typically levers pro?tability more than ?nancing leverage and has a higher frequency of favorable effects.Accordingly, for a given total leverage from both sources, ?rms with hig her leverage from operations have higher price-to-book ratios, on average. Additionally, distinction between contractual and estimated operating liabilities explains further differences in ?rms’ pro?tability and their price-to-book ratios.Our results are of consequence to an analyst who wishes to forecast earnings and book rates of return to value ?rms. Those forecasts—and valuations derived from them—depend, we show, on the composition of liabilities. The ?nancial statement analysis of the paper, supported by the empirical results, shows how to exploit information in the balance sheet for forecasting and valuation.The paper proceeds as follows. Section 1 outlines the ?nancial statements analysis that identi?es the two types of leverage and lays out expres sions that tie leverage measures to pro?tability. Section 2 links leverage to equity value and price-to-bookratios. The empirical analysis is in Section 3, with conclusions summarized in Section 4.1. Financial Statement Analysis of LeverageThe following ?nancial statement analysis separates the effects of ?nancing liabilities and operating liabilities on the pro? tability of shareholders’ equity. The analysis yields explicit leveraging equations from which the speci?cations for the empirical analysis are developed.Shareholder pro?tability, return on common equity, is measured asReturn on common equity (ROCE) = comprehensive net income ÷common equity (1) Leverage affects both the numerator and denominator of this pro?tability measure. Appropriate ?nancial statement analysis disentangles the effects of leverage. The analysis below, which elaborates on parts of Nissim and Penman (2001), begins by identifying components of the balance sheet and income statement that involve operating and ?nancing activities. The pro?tability due to each activity is then calculated and two types of leverage are introduced to explain both operating and ?nancing pro?tability and overall shareholder pro?tability.1.1 Distinguishing the Protability of Operations from the Protability of Financing ActivitiesWith a focus on common equity (so that preferred equity is viewed as a ?nancial liability), the balance sheet equation can be restated as follows:Common equity =operating assets＋financial assets－operating liabilities－Financial liabilities (2)The distinction here between operating assets (like trade receivables, inventory and property,plant and equipment) and ? nancial assets (the deposits and marketable securities that absorb excess cash) is made in other contexts. However, on the liability side, ?nancing liabilities are also distinguished here from operating liabilities. Rather than treating all liabilities as ? nancing debt, only liabilities that raise cash for operations—like bank loans, short-term commercial paper and bonds—are classi?ed as such. Other liabilities—such as accounts payable, accrued expenses, deferred revenue, restructuring liabilities and pension liabilities—arise from operations. The distinction is not as simple as current versus long-term liabilities; pension liabilities, for example, are usually long-term, and short-term borrowing is a current liability.Rearranging terms in equation (2),Common equity = (operating assets－operating liabilities)－(financial liabilities－financial assets)Or,Common equity = net operating assets－net financing debt (3) This equation regroups assets and liabilities into operating and nancing activities. Net operating assets are operating assets less operating liabilities. So a rm might invest in inventories, but to the extent to which the suppliers of those inventories grant credit, the net investment in inventories is reduced. Firms pay wages, but to the extent to which the payment of wages is deferred in pension liabilities, the net investment required to run the business is reduced. Net ?nancing debt is ?nancing debt (including preferred stock) minus?nancial assets. So, a ?rm may issue bonds to raise cash for operations but may also buy bonds with excess cash from operations. Its net indebtedness is its net position in bonds. Indeed a ?rm may be a net creditor (with more ?nancial assets than ?nancial liabilities) rather than a net debtor.The income statement can be reformulated to distinguish income that comes from operating and ?nancing activities: Comprehensive net income = operating income－net financing expense (4) Operating income is produced in operations and net ?nancial expense is incurred in the ?nancing of operations. Interest income on ?nancial assets is netted against interest expense on ?nancial liabilities (including preferred dividends) in net ?nancial expense. If interest i ncome is greater than interest expense, ?nancing activities produce net ?nancial income rather than net ?nancial expense. Both operating income and net ?nancial expense (or income) are after tax.3Equations (3) and (4) produce clean measures of after-tax o perating pro?tability and the borrowing rate:Return on net operating assets (RNOA) = operating income ÷net operating assets (5) andNet borrowing rate (NBR) = net financing expense ÷net financing debt (6) RNOA recognizes that pro?tabilit y must be based on the net assets invested in operations. So ?rms can increase their operating pro?tability by convincing suppliers, in the course of business, to grant or extend credit terms; credit reduces the investment that shareholders would otherwise have to put in the business. Correspondingly, the net borrowing rate, by excluding non-interest bearing liabilities from the denominator, gives the appropriate borrowing rate for the ?nancing activities.Note that RNOA differs from the more common return on assets (ROA), usually de?ned as income before after-tax interestexpense to total assets. ROA does not distinguish operating and ?nancing activities appropriately. Unlike ROA, RNOA excludes ?nancial assets in the denominator and subtracts operating liabilities. Nissim and Penman (2001) report a median ROA for NYSE and AMEX ?rms from 1963–1999 of only 6.8%, but a median RNOA of 10.0%—much closer to what one would expect as a return to business operations.1.2 Financial Leverage and its Effect on Shareholder ProtabilityFrom expressions (3) through (6), it is straightforward to demonstrate that ROCE is a weighted average of RNOA and the net borrowing rate, with weights derived from equation (3): ROCE= [net operating assets ÷common equity× RNOA]－[net financ ing debt÷common equity ×net borrowing rate (7) Additional algebra leads to the following leveraging equation:ROCE = RNOA＋[FLEV× ( RNOA－net borrowing rate )] (8) where FLEV, the measure of leverage from ?nancing activities, isFinancing leverage (FLEV) =net financing debt ÷common equity (9) The FLEV measure excludes operating liabilities but includes (as a net against ?nancing debt) ?nancial assets. If ?nancial assets are greater than ?nancial liabilities, FLEV is negative. The leveraging equation (8) works for negative FLEV (in which case the net borrowing rate is the return on net ? nancial assets).This analysis breaks shareholder pro?tability, ROCE, down into that which i s due to operations and that which is due to ? nancing. Financial leverage levers the ROCE over RNOA, with the leverage effect determined by the amount of ?nancial leverage (FLEV) and the spread between RNOA and the borrowing rate. The spread can be positive (favorable) or negative (unfavorable). 1.3 Operating Liability Leverage and its Effect on Operating ProtabilityWhile ?nancing debt levers ROCE, operating liabilities lever the pro?tability of operations, RNOA. RNOA is operating income relative to net operating assets, and net operating assets are operating assets minus operating liabilities. So, the more operating liabilities a ?rm has relative to operating assets, the higher its RNOA, assuming no effect on operating income in the numerator. The intensity of the use of operating liabilities in the investment base is operating liability leverage: Operating liability leverage (OLLEV) =operating liabilities ÷net operating assets (10) Using operating liabilities to lever the rate of return from operations may not come for free, however; there may be a numerator effect on operating income. Suppliers provide what nominally may be interest-free credit, but presumably charge for that credit with higher prices for the goods and services supplied. This is the reason why operating liabilities are inextricably a part of operationsrather than the ?nancing of operations. The amount that suppliers actually charge for this credit is dif?cult to identify. But the market borrowing rate is observable. The amount that suppliers would implicitly charge in prices for the credit at this borrowing rate can be estimated as a benchmark: Market interest on operating liabilities= operating liabilities×market borrowing ratewhere the market borrowing rate, given that most credit is short term, can be approximated by the after-tax short-term borrowing rate. This implicit cost is benchmark, for it is the cost that makes suppliers indifferent in supplying cred suppliers are fully compensated if they charge implicit interest at the cost borrowing to supply the credit. Or, alternatively, the ?rm buying the goods o r services is indifferent between trade credit and ?nancing purchases at the borrowin rate.To analyze the effect of operating liability leverage on operating pro?tability, w e d e?ne:Return on operating assets (ROOA) =(operating income＋market interest on operating liabilities)÷operating assets(11)The numerator of ROOA adjusts operating income for the full implicit cost of trad credit. If suppliers fully charge the implicit cost of credit, ROOA is the return of operating assets that would be earned had the ?rm no operating liability leverage. suppliers do not fully charge for the credit, ROOA measures the return fro operations that includes the favorable implicit credit terms from suppliers.Similar to the leveraging equation (8) for ROCE, RNOA can be expressed as:RNOA = ROOA＋[ OLLEV ×(ROOA－market borrowing rate )] (12) where the borrowing rate is the after-tax short-term interest rate.Given ROOA, the effect ofleverage on pro?tability is determined by the level of operating liability leverage and the spread between ROOA and the short-term after-tax interest rate. Like ?nancing l everage, the effect can be favorable or unfavorable: Firms can reduce their operating pro?tability through operating liability leverage if their ROOA is less than the market borrowing rate. However, ROOA will also be affected if the implicit borrowing cost on operating liabilities is different from the market borrowing rate. 1.4 Total Leverage and its Effect on Shareholder ProtabilityOperating liabilities and net ?nancing debt combine into a total leverage measure:Total leverage (TLEV) = ( net financing debt＋operating liabilities)÷common equityThe borrowing rate for total liabilities is:Total borrowing rate = (net financing expense＋market interest on operating liabilities) ÷net financing debt＋operating liabilitiesROCE equals the weighted average of ROOA and the total borrowing rate, where the weights are proportional to the amount of total operating assets and the sum of net ?nancing debt and operating liabilities (with a negative sign), respectively. So, similar to the leveraging equations (8) and (12):ROCE = ROOA ＋[TLEV×(ROOA －total borrowing rate)](13)In summary, ?nancial statement analysis of operating and ?nancing activities yields three leveraging equations, (8), (12), and (13). These equations are based on ?xed accounting re lations and are therefore deterministic: They must hold for a given ? rm at a given point in time. The only requirement in identifying the sources of pro?tability appropriately is a clean separation betweenoperating and ?nancing components in the ?nancial statements.2. Leverage, Equity Value and Price-to-Book RatiosThe leverage effects above are described as effects on shareholder pro?tability. Our interest is not only in the effects on shareholder pro?tability, ROCE, but also in the effects on shareholder value, which is tied to ROCE in a straightforward way by the residual income valuation model. As a restatement of the dividend discount model, the residual income model expresses the value of equity at date 0 (P0) as:B is the book value of common shar eholders’ equity, X is comprehensive income to common shareholders, and r is the required return for equity investment. The price premium over book value is determined by forecasting residual income, Xt –rBt-1. Residual income is determined in part by income relative to book value, that is, by the forecasted ROCE. Accordingly, leverage effects on forecasted ROCE (net of effects on the required equity return) affect equity value relative to book value: The price paid for the book value depends on the expect ed pro?tability of the book value, and leverage affects pro?tability. So our empirical analysis investigates the effect of leverage on both pro?tability and price-to-book ratios. Or, stated differently, nancing and operating liabilities are distinguishable components of book value, so the question is whether the pricing of book values depends on the composition of book values. If this is the case, the different components of book value must imply different pro?tability. Indeed, the two analyses (of pro?tab ility and price-to-book ratios) are complementary.Financing liabilities are contractual obligations for repayment of funds loaned. Operatingliabilities include contractual obligations (such as accounts payable), but also include accrual liabilities (such as deferred revenues and accrued expenses). Accrual liabilities may be based on contractual terms, but typically involve estimates. We consider the real effects of contracting and the effects of accounting estimates in turn. Appendix A provides some examples of contractual and estimated liabilities and their effect on pro?tability and value.2.1 Effects of Contractual liabilitiesThe ex post effects of ?nancing and operating liabilities on pro?tability are clear from leveraging equations (8), (12) and (13). These expressions always hold ex post, so there is no issue regarding ex post effects. But valuation concerns ex ante effects. The extensive research on the effects of ?nancial leverage takes, as its point of departure, the Modigliani and Miller (M&M) (1958) ?nancing irrelevance proposition: With perfect capital markets and no taxes or information asymmetry, debt ?nancing has no effect on value. In terms of the residual income valuation model, an increase in ?nancial leverage due to a substitution of debt for equity may increase expected ROCE according to expression (8), but that increase is offset in the valuation (14) by the reduction in the book value of equity that earns the excess pro?tability and the increase in the required equity return, leaving total value (i.e., the value of equity and debt) unaffected. The required equity return increases because of increased ? nancing risk: Leverage may be expected to be favorable but, the higher the leverage, the greater the loss to shareholders should the leverage turn unfavorable ex post, with RNOA less than the borrowing rate.In the face of the M&M proposition, research on the value effects of ?nancial leverage has proceeded to relax the conditions for the proposition to hold. Modigliani and Miller (1963) hyp othesized that the tax bene?ts of debt increase after-tax returns to equity and so increase equityvalue. Recent empirical evidence provides support for the hypothesis (e.g., Kemsley and Nissim, 2002), although the issue remains controversial. In any case, since the implicit cost of operating liabilities, like interest on ?nancing debt, is tax deductible, the composition of leverage should have no tax implications.Debt has been depicted in many studies as affecting value by reducing transaction and contracting costs. While debt increases expected bankruptcy costs and introduces agency costs between shareholders and debtholders, it reduces the costs that shareholders must bear in monitoring management, and may have lower issuing costs relative to equity. One might expect these considerations to apply to operating debt as well as ?nancing debt, with the effects differing only by degree. Indeed papers have explained the use of trade debt rather than ?nancing debt by transaction costs (Ferris, 1981), differentia l access of suppliers and buyers to ?nancing (Schwartz,1974), and informational advantages and comparative costs of monitoring (Smith, 1987; Mian and Smith, 1992; Biais and Gollier, 1997). Petersen and Rajan (1997) provide some tests of these explanations.In addition to tax, transaction costs and agency costs explanations for leverage, research has also conjectured an informational role. Ross (1977) and Leland and Pyle (1977) characterized ?nancing choice as a signal of pro?tability and value, and subseque nt papers (for example, Myers and Majluf, 1984) have carried the idea further. Other studies have ascribed an informational role also for operating liabilities. Biais and Gollier (1997) and Petersen and Rajan (1997), for example, see suppliers as having mo re information about ?rms than banks and the bond market, so more operating debt might indicate higher value. Alternatively, high trade payables might indicate dif?culti es in paying suppliers and declining fortunes.Additional insights come from further relaxing the perfect frictionless capital markets assumptions underlying the original M&M nancing irrelevance proposition. When it comes to operations, the product and input markets in which rms trade are typically less competitive than capital markets. In deed, ?rms are viewed as adding value primarily in operations rather than in nancing activities because of less than purely competitive product and input markets. So, whereas it is difficult to ‘‘make money off the debtholders,’’ ?rms can be seen as ‘‘mak ing money off the trade creditors.’’ In operations, ?rms can exert monopsony power, extracting value from suppliers and employees. Suppliers may provide cheap implicit ?nancing in exchange for information about products and markets in which the ?rm operates. They may also bene?t from ef?ciencies in the ?rm’s supply and distribution chain, and may grant credit to capture future business.2.2 Effects of Accrual Accounting EstimatesAccrual liabilities may be based on contractual terms, but typically involve estimates. Pension liabilities, for example, are based on employment contracts but involve actuarial estimates. Deferred revenues may involve obligations to service customers, but also involve estimates that allocate revenues to periods. While contractual liabilities are typically carried on the balance sheet as an unbiased indication of the cash to be paid, accrual accounting estimates are not necessarily unbiased. Conservative accounting, for example, might overstate pension liabilities or defer more revenue than required by contracts with customers.Such biases presumably do not affect value, but they affect accounting rates of return and the pricing of the liabilities relative to their carrying value (the price-to-book ratio). The effect of accounting estimates on operating liability leverage is clear: Higher carrying values for operatingliabilities result in higher leverage for a given level of operating assets. But the effect on pro?tability is also clear from leveraging equation (12): While conservative accounting for operating assets increases the ROOA, as modeled in Feltham and Ohlson (1995) and Zhang (2000), higher book values of operating liabilities lever up RNOA over ROOA. Indeed, conservative accounting for operating liabilities amounts to leverage of book rates of return. By leveraging equation (13), that leverage effect ?ows through to shareholder pro?tability, ROCE.And higher anticipated ROCE implies a higher price-to-book ratio.The potential bias in estimated operating liabilities has opposite effects on current and future pro?tability. For example, if a ? rm books higher deferred revenues, accrued expenses or other operating liabilities, and so increases its operating liability leverage, it reduces its current pro?tability: Current revenues must be lower or expenses higher. And, if a ?rm reports lower operating assets (by a write down of receivables, inventories or other assets, for example), and so increases operating liability leverage, it also reduces current pro?tability: Current expense s must be higher. But this application of accrual accounting affects future operating income: All else constant, lower current income implies higher future income. Moreover, higher operating liabilities and lower operating assets amount to lower book value of equity. The lower book value is the base for the rate of return for the higher future income. So the analysis of operating liabilities potentially identi?es part of the accrual reversal phenomenon documented by Sloan (1996) and interprets it as affecting leverage, forecasts of pro?tability, and price-to-book ratios.3. Empirical AnalysisThe analysis covers all ?rm-year observations on the combined COMPUSTAT (Industry and Research) ?les for any of the 39 years from 1963 to 2001 that satisfy the following requirements: (1)the company was listed on the NYSE or AMEX; (2) the company was not a ?nancial institution (SIC codes 6000–6999), thereby omitting ?rms where most ?nancial assets and liabilities are used in operations; (3) the book value of common equity is at least $10 million in 2001 dollars; and (4) the averages of the beginning and ending balance of operating assets, net operating assets and common equity are positive (as balance sheet variables are measured in the analysis using annual averages). T hese criteria resulted in a sample of 63,527 ?rm-year observations.Appendix B describes how variables used in the analysis are measured. One measurement issue that deserves discussion is the estimation of the borrowing cost for operating liabilities. As most operating liabilities are short term, we approximate the borrowing rate by the after-tax risk-free one-year interest rate. This measure may understate the borrowing cost if the risk associated with operating liabilities is not trivial. The effect of such measurement error is to induce a negative correlation between ROOA and OLLEV. As we show below, however, even with this potential negative bias we document a strong positive relation between OLLEV and ROOA.4. ConclusionTo ?nance operations, ?rms borrow in the ?nancial markets, creating ?nancing leverage. In running their operations, ?rms also borrow, but from customers, employees and suppliers, creating operating liability leverage. Because they involve trading in different types of markets, the two types of leverage may have different value implications. In particular, operating liabilities may re?ect contractual terms that add value in different ways than ?nancing liabilities, and so they may be priced differently. Operating liabilities also involve accrual accounting estimates that may further affect their pricing. This study has investigated the implications of the two types of leverage for pro?tability and equity value.The paper has laid out explicit leveraging equations that show how shareholder p ro?tability is related to ?nancing leverage and operating liability leverage. For operating liability leverage, the leveraging equation incorporates both real contractual effects and accounting effects. As price-to-book ratios are based on expected pro?tab ility, this analysis also explains how price-to-book ratios are affected by the two types of leverage. The empirical analysis in the paper demonstrates that operating and ?nancing liabilities imply different pro?tability and are priced differently in the stock market.Further analysis shows that operating liability leverage not only explains differences in pro?tability in the cross-section but also informs on changes in future pro?tability from current pro?tability. Operating liability leverage and changes in operating liability leverage are indicators of the quality of current reported pro?tability as a predictor of future pro?tability.Our analysis distinguishes contractual operating liabilities from estimated liabilities, but further research might examine operating liabilities in more detail, focusing on line items such as accrued expenses and deferred revenues. Further research might also investigate the pricing of operating liabilities under differing circumstances; for example, where ?rms have ‘‘market power’’ over their suppliers.会计研究综述，2003,16(8):531-560财务报表分析的杠杆左右以及如何体现盈利性和值⽐率摘要本⽂提供了区分⾦融活动和业务运营中杠杆作⽤的财务报表分析。
会计学财务报表中英文对照外文翻译文献
会计学财务报表中英文对照外文翻译文献(文档含英文原文和中文翻译)译文：中美财务报表的区别(1)财务报告内容构成上的区别1)美国的财务报告包括三个基本的财务报表，除此之外，典型的美国大公司财务报告还包括以下成分：股东权益、收益与综合收益、管理报告、独立审计报告、选取的5-10年数据的管理讨论与分析以及选取的季度数据。
2)我国财务报告不注重其解释，而美国在财务报告的内容、方法、多样性上都比较充分。
中国的评价部分包括会计报表和财务报表，财务报表是最主要的报表，它包括前述各项与账面不符的描述、财会政策与变化、财会评估的变化、会计差错等问题，资产负债表日期，关联方关系和交易活动等等，揭示方法是注意底部和旁注。
美国的财务范围在内容上比财务报表更加丰富，包括会计政策、技巧、添加特定项目的报告, 报告格式很难反映内容和商业环境等等，对违反一致性、可比性原则问题，评论也需要披露的，但也揭示了许多方面，比如旁注、底注、括号内、补充声明、时间表和信息分析报告。
(2)财务报表格式上的比较1)从资产负债表的格式来看，美国的资产负债表有账户类型和报告样式两项描述，而我国是使用固定的账户类型。
另外，我们的资产负债表在项目的使用上过于标准化，不能够很好的反映出特殊的商业项目或者不适用于特殊类型的企业。
而美国的资产负债表项目是多样化的，除此之外，财务会计准则也是建立在资产负债表中资产所有者投资和支出两项要素基础上的，这一点也是中国的财会准则中没有的。
2)从损益表格式的角度来看，美国采用的是多步式，损益表项目分为两部分，营业利润和非营业利润，但是意义不同。
我国的营业利润在范围上比美国的小，例如投资收益在美国是归类为营业利润的而在我国则不属于营业利润。
另外，我国的损益表项目较美国的更加规范和严格，美国校准损益表仅仅依赖于类别和项目。
报告收可以与销售收入及其他收入相联系，也可以和利息收益、租赁收入和单项投资收益相联系；在成本方面，并不是严格的划分为管理成本、财务成本、和市场成本，并且经常性销售费用、综合管理费用以及利息费用、净利息收益都要分别折旧。
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附件1：外文资料翻译译文财务报表分析A.财务比率我们需要使用财务比率来分析财务报表，比较财务报表的分析方法不能真正有效的得出想要的结果，除非采取的是研究在报表中项目与项目之间关系的形式。
例如，只是知道史密斯公司在一个特定的日期中拥有10000美元的现金余额，对我们是没有多大价值的。
但是，假如我们知道，这种余额在这种平衡中有4%的流动负债，而一年前的现金余额有25%的流动负债。
由于银行家对公司通常要求现金余额保持在银行信用度的20%，不管使用或不使用，如果公司的财务状况出现问题，我们可以立即发现。
我们可以对比比较财务报表中的项目，作出如下结论：1. 项目之间的资产负债表比较：a）在资产负债表中的一个日期之间的比较，例如项目，现金与流动负债相比；b）同一项目在资产负债表中一个日期与另一个日期之间的比较，例如，现在的现金与一年前比较；c）比较两个项目之间在资产负债表中一个日期和一个相似比率在资产负债表中的另一个日期的比率，例如，现在现金流动负债的比率与另一个项目一年前的相似比率和已经标记的现金状况趋势的比较。
2．项目报表中收入和支出的比较：a）一定时期中的报表项目的比较；b）同一项目在报表中现阶段与上个阶段的比较；c）报表中项目之间的比率与去年相似比率的比较；3．资产负债表中的项目与报表中收入和支出项目的比较：a）在这些报表项目之间的一个给定的时间内，例如，今年净利润可能以百分比计算今年净值；b）两个报表中项目之间的比率在这几年时间的比较，例如，净利润的比率占今年净值的百分比与去年或者前年的相似比率的比较如果我们采用上述比较或比率，然后依次比较它们，我们的比较分析结果将获得重要意义：1. 这样的数据比较是报表缺少的，但这种数据对于金融史和条件判断是十分重要的，例如，商业周期的阶段性；2. 使用财务财务比率分析财务报表，从竞争角度，人民比较关注类似业务的比较。
财务报表的比较可能被表示成项目之间的比较，例如，现金状况除以流动负债项目总产品的现金使所得出的商来表示总现金的项目测试。
每个比可以用两种方式表示，例如，销售固定资产的比率可被表示为销售固定资产的比率。
我们将以这样的方式表达每一个比例，增加不同期间，将有利于降低财务状况中的不利的金融条件。
我们应使用下列财务比率来分析比较财务报表：一. 流动资金比率：1. 流动资产与流动负债的比率；2. 现金流动负债总额的比率3. 现金、可售证券、票据和应收账款与流动负债总额的比率；4. 销售应收款项的比例，也就是说，应收账款周转率；5. 商品库存，即存货周，商品成本率；6. 应收票据与应收账款的比率；7. 应收账款与存货的比率；8. 库存与营运资金净额的比率；9. 应付票据与应付账款的比率；10.库存与应付帐款的比率。
二. 固定资产及无形资产的资本比率：1. 销售固定资产的比率，即固定资本的周转；2. 销售无形资产的比率，即无形资产周转率；3. 每年的折旧和与报废费用的比率，即折旧资产核销；4. 固定资产净值的比率。
三. 资本比率：1. 债务净值的比率；2. 资本存量与总市值的比率；3. 固定资产与长期债务的比率。
四. 收入和支出的比率：1. 销售净营业利润的比率；2. 净营业利润与总资本的比率；3. 销售额与经营成本及开支的比率；4. 销售净利润的比例；5. 净利润与净值的比率；6. 销售与财务费用的比率；7. 借入资本与资本成本的比率，；8. 投资与投资收入的比率；9. 非经营性收入与经营溢利净额的比率；10.净营业利润与营业外支出的比率；11.净利润与资本存量的比率；12.净利润与再投资净利润总额比率，即普通股股息率；13.利润利息与利息开支的比率。
财务比率是永久性的这种分类并非详尽无遗，其他比率可用于购买指示。
此外，一些比率反映了资金使用的效率，，而其他反映资金融资的效率。
销售应收款项、存货，固定资产和无形资本、净营业利润、资本总额和销售的比率以及销售经营成本及开支的比率反映了在资金使用的效率。
大多数其他比率反映了金融效率。
B.财务报表分析技术报表和数据是否充足？在我们比较分析给出的财务报表之前，我们希望确保财务报表是合理和足够充分的。
当然，它们应该尽可能完整。
他们也应该是近期的数据。
如果不是这样，其使用必须限制在其所涵盖的期间。
例如2008年条件的结论不能完全地建立在2006年报表数据上。
比较资产负债表是否可以反映当时的情况？如果是这样，重要的是要知道金融条件在高点和低点的财务状况。
当资产流动性非常快和债务很低时，我们必须避免过分造成在低点时的商务判断；当流动性较差的资产和债务可能是比较高的时候，我们应避免过分否定在最高点时的判决。
建议发行新证券，要根据任何日期的资产负债表反映的财务状况估计？如果是这样的话，为了确定于该日期的实际财务状况，减少证券发行数量是很有必要的。
如果债券被出售，也必须有类似的金额减去根据估计所得款项的问题是如何在声明中反映的资产或负债。
报表是审核的还是未经审核的？这就是常说的经审计的报表，也就是完整的审计，而不是未被注册会计师审核即批准的报表。
这是真实的，但是报表分析师应该确定给出的审计公司是否超出职责范围。
正在运行的资本状况是否良好？如果要分析报表的目的是合理且足够充分的，下一步是分析关注的营运资本的趋势和位置。
我们可以开始确定的流动资产对流动负债的比率。
这个比率关注可能的能力，而不损害其净营运资本偿付义务。
这是一种借用额外的营运资金或续借没有困难的短期贷款的措施。
其他的事情都是相等的条件下，流动负债超过流动资产越大，短期债券人的风险越小，信贷业务越好。
假设保守的估值和全部流动资产和流动负债均计算在内，流动资产两美元的利率对于一美元的流动负债是“经验法则”的比例通常被认为是令人满意的。
经验法则的流动比率对于运营资本的状况和趋势并不是一个令人满意的测试。
不到两美元，对于一美元来说，流动比率少于两美元可能足够了，或者超过两美元的流动比率对于一美元可能是不恰当的。
这只取决于流动资产的流动性这一点。
流动资产的流动性随现金状况的变化而变化。
流动资产因为现金出现的比例越大，流动资产作为一个整体流动的越快。
一般来说，现金应等于至少20％的总流动负债（流动负债总额）。
银行家通常需要关注保持银行结余等于20％的信贷额度是否使用。
开放式信贷额度在资产负债表上没有显示，因此，总的流动负债（应付银行票据）是用来测试现金状况的，就像有两个流动比率，现金比率20％是多了还是少了是经验法则的标准。
现金余额是否令人满意，取决于销售条款、购买、存货周转率。
一个公司销售商品对于现金流入量和现金流出量要比比赊货销售更加满意。
支付现金购买所有消费品的买卖比使用长期信用卡需要更多的现金。
其他条件相同的情况，售出存货越快，现金流入量越接近现金流出量。
现金余额的需求会受商业周期的阶段的影响。
当结算的时候，不景气的运营资本可能带来销售暴跌，而充足的现金结余额有助于维持银行信贷和支付费用清算。
金融政策的差异会影响现金结余的大小。
一个公司认为具备尽可能多的银行开行的利好政策，而另一个公司可能只要具备一些标准，就可以满足贷款的合理特定要求。
第一公司的现金余额可能会远远多于第二家公司。
流动资产的流通性随着“严峻的考验”的程度而变化。
流动资产的流动性随现、可售证券、票据和应收账款（扣除坏账准备充足的储备）的比率、流动负债总额（划分总的前四个项目的总流动负债）的变化而变化。
这就是所谓的“严峻考验”当前条件下的流动性。
1:1的比率是令人满意的，因为流动负债可以很容易地支付，债权人在库存商品的不确定价值上没有任何风险，小于1:1的比率可能就足够了，如果应收账款的快速收集和库存很容易，很快销售一空，也就是说，其营业额变动的风险很小。
流动资产的流通性随着应收款项的偿还能力而变化。
这可以根据年销售额的平均应收账款或者年应收账款来确定，除非应收票据不能代表证正常金额的信贷客户。
销售条件必须考虑在应收款项的营业额中。
例如，如果年销售额是1,200,000美元，平均应收款项总计100,000美元，那么应收款项的营业额为1,200,000/100,000=12.现在，如果对顾客来说，信贷条款的期限是三十天，我们就可以看到应收款项可以很快还清。
报酬也应该考虑到市场条件和商业周期的阶段性。
对于农业方面的贷款条件比工业更加多，在经济繁荣时期是有好处的，但是在金融危机或者经济不景气的时候却很慢。
应收款项的流通性也反应在应收账款的利率上，在多数情况下货物在往来账户上代表性地销售，应收账款利率的下降可能预示着信用标准的下降，通常关闭逾期账户。
如果可能的话，应收款项的计划表应该给出那些没有支付的款项和过期三十天，六十天，九十天的款项。
这种计划表的价值在于展示信用的的有效性和款项回收，和解释应收款项的营业额的流动趋势。
应收款项的流通额流通的越快，收不回的账目的损失风险越小；在其他相等的条件下，应收账款的投入资本的存款利润越大，总资本的利润越高。
作者: C. O. Hardy and S. P. Meech附件2：外文原文（复印件）ANALYSIS OF FINANCIAL STATEMENTSA. The Financial RatiosWe need to use financial ratios in analyzing financial statements.—— The analysis of comparative financial statements cannot be made really effective unless it takes the form of a study of relationships between items in the statements. It is of little value, for example, to know that, on a given date, the Smith Company has a cash balance of $1oooo. But suppose we know that this balance is only -IV per cent of all current liabilities whereas a year ago cash was 25 per cent of all current liabilities. Since the bankers for the company usually require a cash balance against bank lines, used or unused, of 20 per cent, we can see at once that the firm's cash condition is exhibiting a questionable tendency.We may make comparisons between items in the comparative financial statements as follows:1. Between items in the comparative balance sheeta) Between items in the balance sheet for one date, e.g., cash may be compared with current liabilitiesb) Between an item in the balance sheet for one date and the same item in the balance sheet for another date, e.g., cash today may be compared with cash a year agoc) Of ratios, or mathematical proportions, between two items in the balance sheet for one date and a like ratio in the balance sheet for another date, e.g., the ratio of cash to current liabilities today may be compared with a like ratio a year ago and the trend of cash condition noted2. Between items in the comparative statement of income and expensea) Between items in the statement for a given periodb) Between one item in this period's statement and the same item in last period's statementc) Of ratios between items in this period's statement and similar ratiosin last period's statement3. Between items in the comparative balance sheet and items in the comparative statement of income and expensea) Between items in these statements for a given period, e.g., net profit for this year may be calculated as a percentage of net worth for this yearb) Of ratios between items in the two statements for a period of years, e.g., the ratio of net profit to net worth this year may-be compared with like ratios for last year, and for the years preceding thatOur comparative analysis will gain in significance if we take the foregoing comparisons or ratios and; in turn, compare them with:I. Such data as are absent from the comparative statements but are of importance in judging a concern's financial history and condition, for example, the stage of the business cycle2. Similar ratios derived from analysis of the comparative statements of competing concerns or of concerns in similar lines of business What financial ratios are used in analyzing financial statements.- Comparative analysis of comparative financial statements may be expressed by mathematical ratios between the items compared, for example, a concern's cash position may be tested by dividing the item of cash by the total of current liability items and using the quotient to express the result of the test. Each ratio may be expressed in two ways, for example, the ratio of sales to fixed assets may be expressed as the ratio of fixed assets to sales. We shall express each ratio in such a way that increases from period to period will be favorable and decreases unfavorable to financial condition.We shall use the following financial ratios in analyzing comparative financial statements:I. Working-capital ratios1. The ratio of current assets to current liabilities2. The ratio of cash to total current liabilities3. The ratio of cash, salable securities, notes and accounts receivable to total current liabilities4. The ratio of sales to receivables, i.e., the turnover of receivables5. The ratio of cost of goods sold to merchandise inventory, i.e., the turnover of inventory6. The ratio of accounts receivable to notes receivable7. The ratio of receivables to inventory8. The ratio of net working capital to inventory9. The ratio of notes payable to accounts payableIO. The ratio of inventory to accounts payableII. Fixed and intangible capital ratios1. The ratio of sales to fixed assets, i.e., the turnover of fixed capital2. The ratio of sales to intangible assets, i.e., the turnover of intangibles3. The ratio of annual depreciation and obsolescence charges to the assets against which depreciation is written off4. The ratio of net worth to fixed assetsIII. Capitalization ratios1. The ratio of net worth to debt.2. The ratio of capital stock to total capitalization .3. The ratio of fixed assets to funded debtIV. Income and expense ratios1. The ratio of net operating profit to sales2. The ratio of net operating profit to total capital3. The ratio of sales to operating costs and expenses4. The ratio of net profit to sales5. The ratio of net profit to net worth6. The ratio of sales to financial expenses7. The ratio of borrowed capital to capital costs8. The ratio of income on investments to investments9. The ratio of non-operating income to net operating profit10. The ratio of net operating profit to non-operating expense11. The ratio of net profit to capital stock12. The ratio of net profit reinvested to total net profit available for dividends on common stock13. The ratio of profit available for interest to interest expensesThis classification of financial ratios is permanent not exhaustive. -Other ratios may be used for purposes later indicated. Furthermore, some of the ratios reflect the efficiency with which a business has used its capital while others reflect efficiency in financing capital needs. The ratios of sales to receivables, inventory, fixed and intangible capital; the ratios of net operating profit to total capital and to sales; and the ratios of sales to operating costs and expenses reflect efficiency in the use of capital.' Most of the other ratios reflect financial efficiency.B. Technique of Financial Statement AnalysisAre the statements adequate in general?-Before attempting comparative analysis of given financial statements we wish to be sure that the statements are reasonably adequate for the purpose. They should, of course, be as complete as possible. They should also be of recent date. If not, their use must be limited to the period which they cover. Conclusions concerning 1923 conditions cannot safely be based upon 1921 statements.Does the comparative balance sheet reflect a seasonable situation? If so, it is important to know financial conditions at both the high and low points of the season. We must avoid unduly favorable judgment of the business at the low point when assets are very liquid and debt is low, and unduly unfavorable judgment at the high point when assets are less liquid and debt likely to be relatively high.Does the balance sheet for any date reflect the estimated financialcondition after the sale of a proposed new issue of securities? If so, in order to ascertain the actual financial condition at that date it is necessary to subtract the amount of the security issue from net worth, if the. issue is of stock, or from liabilities, if bonds are to be sold. A like amount must also be subtracted from assets or liabilities depending upon how the estimated proceeds of the issue are reflected in the statement.Are the statements audited or unaudited? It is often said that audited statements, that is, complete audits rather than statements "rubber stamped" by certified public accountants, are desirable when they can be obtained. This is true, but the statement analyst should be certain that the given auditing film's reputation is beyond reproach.Is working-capital situation favorable ?-If the comparative statements to be analyzed are reasonably adequate for the purpose, the next step is to analyze the concern's working-capital trend and position. We may begin by ascertaining the ratio of current assets to current liabilities. This ratio affords-a test of the concern's probable ability to pay current obligations without impairing its net working capital. It is, in part, a measure of ability to borrow additional working capital or to renew short-term loans without difficulty. The larger the excess of current assets over current liabilities the smaller the risk of loss to short-term creditors and the better the credit of the business, other things being equal. A ratio of two dollars of current assets to one dollar of current liabilities is the "rule-of-thumb" ratio generally considered satisfactory, assuming all current assets are conservatively valued and all current liabilities revealed.The rule-of-thumb current ratio is not a satisfactory test ofworking-capital position and trend. A current ratio of less than two dollars for one dollar may be adequate, or a current ratio of more than two dollars for one dollar may be inadequate. It depends, for one thing, upon the liquidity of the current assets.The liquidity of current assets varies with cash position.-The larger the proportion of current assets in the form of cash the more liquid are the current assets as a whole. Generally speaking, cash should equal at least 20 per cent of total current liabilities (divide cash by total current liabilities). Bankers typically require a concern to maintain bank balances equal to 20 per cent of credit lines whether used or unused. Open-credit lines are not shown on the balance sheet, hence the total of current liabilities (instead of notes payable to banks) is used in testing cash position. Like the two-for-one current ratio, the 20 per cent cash ratio is more or less a rule-of-thumb standard.The cash balance that will be satisfactory depends upon terms of sale, terms of purchase, and upon inventory turnover. A firm selling goods for cash will find cash inflow more nearly meeting cash outflow than will a firm selling goods on credit. A business which pays cash for all purchases will need more ready money than one which buys on long terms of credit. The more rapidly the inventory is sold the more nearly will cash inflow equal cash outflow, other things equal.Needs for cash balances will be affected by the stage of the business cycle. Heavy cash balances help to sustain bank credit and pay expenses when a period of liquidation and depression depletes working capital and brings a slump in sales. The greater the effects of changes in the cycle upon a given concern the more thought the financial executive will need to give to the size of his cash balances.Differences in financial policies between different concerns will affect the size of cash balances carried. One concern may deem it good policy to carry as many open-bank lines as it can get, while another may carry only enough lines to meet reasonably certain needs for loans. The cash balance of the first firm is likely to be much larger than that of the second firm.The liquidity of current assets varies with ability to meet "acid test."- Liquidity of current assets varies with the ratio of cash, salable securities, notes and accounts receivable (less adequate reserves for bad debts), to totalcurrent liabilities (divide the total of the first four items by total current liabilities). This is the so-called "acid test" of the liquidity of current condition. A ratio of I: I is considered satisfactory since current liabilities can readily be paid and creditors risk nothing on the uncertain values of merchandise inventory. A less than 1:1 ratio may be adequate if receivables are quickly collected and if inventory is readily and quickly sold, that is, if its turnover is rapid andif the risks of changes in price are small.The liquidity of current assets varies with liquidity of receivables. This may be ascertained by dividing annual sales by average receivables or by receivables at the close of the year unless at that date receivables do not represent the normal amount of credit extended to customers. Terms of sale must be considered in judging the turnover of receivables. For example, if sales for the year are $1,200,000 and average receivables amount to $100,000, the turnover of receivables is $1,200,000/$100,000=12. Now, if credit terms to customers are net in thirty days we can see that receivables are paid promptly. Consideration should also be given market conditions and the stage of the business cycle. Terms of credit are usually longer in farming sections than in industrial centers. Collections are good in prosperous times but slow in periods of crisis and liquidation.Trends in the liquidity of receivables will also be reflected in the ratio of accounts receivable to notes receivable, in cases where goods are typically sold on open account. A decline in this ratio may indicate a lowering of credit standards since notes receivable are usually given to close overdue open accounts. If possible, a schedule of receivables should be obtained showing those not due, due, and past due thirty, sixty, and ninety days. Such a, schedule is of value in showing the efficiency of credits and collections and in explaining the trend in turnover of receivables. The more rapid the turnover of receivables the smaller the risk of loss from bad debts; the greater the savings of interest on the capital invested in receivables, and the higher the profit on total capital,other things being equal.Author(s): C. O. Hardy and S. P. Meech。