Study Of Financial Forecast Based On The Balance Sheet

Based on the review of study on the financial statement analysis and review of study on information content of accounts receivable and inventory disclosures, this thesis examines the usefulness of accounts receivable and inventory disclosures to predict future sales and earnings. For most entities, accounts receivable and inventory are important not only in terms of their magnitude but also as signals for both future sales and earnings prospects. The findings of firms in our country are consistent with the"earnings quality"concept of accounts receivable, which means unexpected accounts receivable are considered bad news from the"earnings quality"perspective. The behavior of inventory for industries is consistent with"production smoothing"model of inventory, unexpected changes in inventory are positive leading indicators of future sales and earnings. Moreover, the resulting inventory levels reflect managements'expectations about future demand, including private information.