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Web of Proceedings - Francis Academic Press
Web of Proceedings - Francis Academic Press

Interpretation of Financial Statements

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DOI: 10.25236/issec.2019.107


Haoran Wen, Tingting Zhu

Corresponding Author

Tingting Zhu


This paper gives consideration to analyze the financial statement. The main method to analyze financial statement is ratios analysis. Main includes three aspects: profitability ratios, liquidity ratios and long-term financial stability ratios. As is known to all, financial statements are an important part of a company. The main statements include the statement of financial position, the statement profit or loss and other comprehensive income, the cash flow statement, the statement of changes in equity. Through the analysis of financial statements, users can have a general understanding of the operation and management of the company. It is helpful for report users to make judgment and decisions. It is also conducive to the performance evaluation for managers. It reflects the concept of fiduciary responsibility and decision usefulness. Of course, the ratios analysis has some limitations, so we need some other information to help to analyze. This information includes both financial and non-financial information.


Ratios analysis, Profitability ratios, Liquidity ratios, Long-term financial stability ratios, Limitations, Non-financial factor information.