Research On Improvement Of Financial Indicators: Based On The "Asymmetry" Of Prudence Principle-seen From The Investor’s Point Of View

Financial analysis is in an increasingly prominent position in thecompany management and investment decisions. As one part of financialanalysts, investors rely mainly on the financial statements to analyzebecause they lack an effective way to obtain internal information. Theycalculate financial indicators to analyze and evaluate the company’sfinancial activities and operating results. However, existing financialindicators are still insufficient for investors and need to constantly refineand improve for making scientific decisions.The “asymmetry” of prudence principle is a principle for theaccounting information provider. This principle runs throughout theaccounting recognition and measurement and has a broad impact onfinancial statement data. However, this principle does not apply toinvestors when they use financial statements to calculate financialindicators and then to make financial analysis. To a certain extent, thisinapplicability will affect investors’ decisions. Therefore, investors needto correct the date of financial statement which is generated under theprudence principle. In this way, the results of financial indicators could bemore scientific and rational and the accuracy and usefulness of investors’decision will be improved.Firstly, this paper will analyze and summarize the research on the improvement of financial indicators and the theory of the “asymmetry” ofprudence principle. Then find a combination of the “asymmetry” ofprudence principle and the improvement of financial indicators, and thiscombination can provide a theoretical basis and an entry point for study.Secondly, this paper will analyze the existing defects of financialindicators in calculation and analysis based on the “asymmetry” ofprudence principle. The defects are reflected in the “unsymmetrical”accounting report data which is produced under the prudence principle,and the data is not applicable for investors. If investors calculate financialindicators using the accounting report data which is produced under theprudence principle, the results will be biased and will be usefulness fortheir decision-making. Finally, this paper will define how the“asymmetry” of prudence principle impacts the financial statements. Andon this basis, this paper will define what investors should do to adjust inthe related statement, and propose a way to improve financial indicatorsfor investors to adjustment the date of financial statement. Then, thispaper will make a preliminary evaluation about the improvement andprovide a theoretical support and reference methodological to helpinvestors to make more scientific financial analysis.