Financial Statement Analysis: Applications

Trends in a company's financial ratios and differences between its financial ratios and those of its competitors or industry average ratios can reveal important aspects of its business strategy.

Cash flow forecast:
1. 宏观预测GDP增长值；
2. 相关性分析GDP增长与本公司销售额之间的联系；
3. 估计公司所占的市场份额，乘以整个行业销售额即为预测公司销售额；
4. 在简单的预测模型中，可用一些历史平均或这趋势调整利润率（gross margin, operating margin, and net income）来预测净利润；
5. 在复杂的预测模型中，损益表和资产负债表的每一项目都可以单独估计，分别假设其增长与销售收入增长的关系；
6. 多期间预测，分析师通常简单地假设销售额以一定比例次序增长；
7. 进行现金预测是，分析师必须假设未来现金流的来源与用途，尤其是营运资本，购入新资产的资本花费，举债或偿债，以及发行或回购股票；
8. 预测的基本假设是非现金营运资本占销售额的百分比不变；
9. 初步模型可以预示公司未来的现金需求，这些需求可以在未来通过计划必要的贷款来满足。

现金流预测具体操作注意：
sales*(1 + ?%);
cost of goods sold * ?% of sale
operating expenses * ?% of sale
noncash working capital * ?% of sale
investment in fixed capital * ?% of sale

Credit rating formula can be seperated 4 general categories:
1. Scale and diversification
2. Operatinal efficiency
3. Margin efficiency
4. Leverage

Potentially attractive equity investments can be identifed by screening a universe of stocks using minimum or maximum value of one or more ratios. Which (and how many) ratios to use, what minimum or maximum value to use, and how much importance to give each ratio all present challenges to hte analyst.

When companies use different accounting methods or estimates relating to ares such as invenory accouting, depreciation, capitalization, and off-balance-sheet financing, analysts must adjust the financial statemetns for comparability.