Commercial Banks Cash Flow Analysis

Cash flow analysis of commercial banks takes the statistics of cash flow statements as its resources for comparison and study. It helps to understand the bank' s cash flow conditions, interprets its management ability, assesses its capacity for payment and solvency and makes more comprehensive use of the information about the bank' s assets, liabilities and profits so as to make further analysis of the quality of profits and forecast cash flow in the future.The focus of this article lies in the methods of cash flow analysis presently adopted by commercial banks and the deficiencies therein. It begins with main figures of China' s commercial banks under macro-monitor of supervisory authorities, which emphasize the bank' s solvency.For self-management of commercial banks, cash flow reflects its general profitability and viability. Therefore, the figures of commercial banks' cash flow analysis cover its dependence on outside capital, profits quality, capital expenditure, payment for long-term debts, operation of self-owned cash, allocation of cash dividends, reinvestment and rewards in cash form, and debt guarantee, etc. These figures analyze the cash flow of commercial banks from different aspects, disclose their operation and management conditions and provide evidence beneficial to its future strategies.The deficiency in cash flow conditions of China' s commercial banks is very obvious in the following aspects: firstly, difference in the scope of accounting estimate compared with international accounting standards. Secondly, great difference in the classification of items compared with U. S. accounting standards for cash flow. Thirdly, in our analysis of cash flow, most statistics comes from the end of a certain accounting period. The analysis itself mainly focuses on quantity and lacks matching.The suggestion provided by this article for solution to these problems includes the standardization of criteria for cash flow statistics, the adoption of free cash flow figures so as to further study the problems in them and the methods of matching analysis in appraisal of certain projects.The insufficient disclosure of problems existing in cash flow of China' s commercial banks is mostly results of governmental interference and policies. Commercial banks shall put the emphasis of its work on the following aspects in the future: one the one hand, to take the drawing of deposits as an important task, but not over dependent on it. On the other hand, to take the quality of its loans as a life-and-death issue, weighing repayment of loans as much as lending.