Financial Statements Of The Role And Limitations Of The Analysis

In the highly developed market economic environment,various interest groups areconcerned about companies's Financial Statements and operation results.Because of theseparation of the company ownership and the management, they don't involve in thecompany operations and get the financial information by the financial statements. But theinformation of the Financial Statements is generally concentrated and abstract. Furtheranalysis of the Financial Statements is needed for outside users.Although the FinancialStatements can provide some information about the business,they have limits which weshould know while we analyse the Financial Statements.This paper is base on the analysis of the Financial Statements of the Ningxia MeiliZhiye Limited Corporation in the year of 2004. As an outside user of the FinancialStatements, the author indicated that the quality of the total assets and the profit state arepromising in the corporation. But the solvency of long-term or short-term loans is doubtfulin the future. The above analysis is meaningful for investors to make decisions.Additionally, because of the limits of the Financial Statements such as Accountingmethods, the truth of the information offered by the Financial Statements etc.. It isimproper for investors to count on the Financial Statements. There are more other factorsbesides the Financial Statements investors need to think about to make reasonabledecisions.