【Earning Report】Understanding Financial Statements in One Breath
The publication of results of HongKong listed companies is mainly concentrated in March and August of each year. The annual results announced in March are a comprehensive summary of the financial performance of the company in the previous fiscal year; the interim results announced in August focus on the operating results for the six months prior to this fiscal year. These two results releases provide investors with an important basis for assessing the company's financial condition and future prospects.
The results, which run four times a year from January to February (fourth quarter), April to May (first quarter), July (second quarter) and September to November (third quarter), are published four times a year. The results reflect the financial performance of the company in the previous quarter.
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Top 3 Financial Statements
In the performance report, financial indicators such as operating income, gross profit, net profit, cash flow are often involved in the financial condition of the company. These financial data help investors understand the financial performance and operating situation of the company. There are three basic financial statements of the company, which are the balance sheet, the income statement and the cash flow statement.
You can go through Futubull and see the lost financial situation of the company with one eye! Visible charts let you see how your company's finances are changing.
Open the quotation page > Company > Scroll down to Balance Sheet/Cash Flow/Profit Sheet.
Balance Sheet
Shows the total assets, liabilities, and shareholders' equity of the company at a specific point in time. Balance sheets can reflect a company's financial condition and balance sheet structure, helping investors understand a company's asset size, debt levels, and net worth.
Income Statement
Shows the company's operating income, costs, net profit, etc., for a specific period. The income statement reflects the company's operating performance and profitability and helps investors assess the company's operating performance and profitability.
Cash Flow Statement
Records the cash inflows and outflows of the company during a specific period. A cash flow chart helps investors understand a company's ability to repay cash and how funds work. Cash Flow is divided into three main categories: cash flow from operating activities, cash flow from investing activities, and cash flow from financing activities. These three major cash flows reflect the inflow of corporate cash.
1. Operating Activities
Records the cash flow generated by the company when it operates its main business, including the sale of goods, the purchase of raw materials, the payment of employee salaries, etc. Cash flow from operating activities is a crucial indicator in financial statements and it reflects the cash income earned by a company through its main business. A positive value of operating cash flow indicates the profit of the company's main business, while a negative value indicates a possible operating problem.
2. Investing Activities
The cash flow generated by the Company's investment-related activities. This includes buying or selling long-term assets, investing in stocks or bonds of other businesses, receiving dividends paid by subsidiaries or associates, and making cash expenditures for research or other long-term investments.
3. Financing Activities
Financing activities can include debt financing, equity financing, and dividend distributions. Issuance of shares or loans to banks will count as pooled cash inflows; dividends or share repurchases will count as pooled cash outflows.
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Key Metrics in Performance Reports
Do you need to look at a page of financial report data every time you want to learn about a company's performance? Futubull shows 8 key financial indicators using a simple chart so you can see changes in outlook and growth. Open the stock quotation page > Companies > Scroll down to the Financial Indicator.
The focus of Futubull is on a simple summary or forecast of the latest operating income and earnings-per-share status (outstanding/not and forecast), so that it is easy to find out ahead of time!
Revenue
The total revenue generated by the company through the main business during a given period, this indicator reflects the company's market demand and sales performance. High growth in revenue may indicate that a company's business is expanding, while a decrease in revenue may indicate that the business faces challenges.
Operating Costs
Operating costs are the costs that a company spends in the process of producing goods or providing services, including direct costs and indirect costs (such as raw materials, employee salaries, manufacturing costs). This indicator helps assess the operational efficiency and cost control of an enterprise.
Net Profit
A company's final profit after deducting all fees, taxes and interest is a key measure of a business's profitability and reflects the overall financial health of the business. Growth in net profit often indicates improved operational efficiency and effective cost control. Investors often look at net profit to assess a company's investment value and future growth potential.
Gross Margin
Gross MarginIt is the ratio of gross profit to operating income: (Revenue-Cost of Operation) /Revenue × 100%, which reflects the percentage of profit obtained by the company during production. Higher gross margins often mean companies can produce products at lower costs or have stronger market pricing capabilities.
Net Profit Attributable to Shareholders
Net profit refers to the profit attributable to shareholders after deducting all fees, taxes and minority shareholders' equity. This indicator is directly related to shareholder returns and reflects the company's profit contribution to shareholders.
Debt-to-Asset Ratio
Asset Liabilities RatioIt is the ratio of a company's total liabilities to total assets, reflecting the financial leverage and solvency of an enterprise. A higher balance sheet ratio may indicate a business's reliance on external financing and higher risks, but it may also mean businesses are expanding and investing. A reasonable balance sheet ratio helps balance risk and returns and ensures the financial stability of a business.
Current Ratio
The ratio of current assets to current liabilities is used to measure the short-term solvency of an enterprise. This indicator shows whether a business is able to repay short-term debt at maturity. A higher liquidity ratio usually means a business has better liquidity to cope with sudden capital needs.
Earnings Per Share
Earnings per share refers to a company's net profit divided by total share capital, which reflects the profitability of each share. It is an important indicator for investors to assess the value of a stock.
Return on Equity
THE RATIO OF NET PROFIT TO SHAREHOLDERS' EQUITY (NET MARGIN/AVERAGE SHAREHOLDER EQUITY × 100%), REFLECTING THE COMPANY'S ABILITY TO GENERATE PROFITS USING SHAREHOLDERS' CAPITAL, IS ONE OF BUFFETT'S MOST IMPORTANT METRICS TO READ THE FINANCIAL REPORT.
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