A Study Of The Listed Companies’ Profit Quality Based On The Analysis Of Cash Flow

Accounting profit is considered as a crucial measurement index of accounting information. On the one hand, it can embody the previous operation performance of the company. On the other hand, it can be used to predict the development trend after organically combined with other indexes. For market investors, the commonly-used index is an effective tool for them to evaluate the performance of various companies. And it is also directly regarded as the important reference index for the investors to make investment decisions.In the securities market, the legislative and the administrative institutions also take accounting profit as a vital evaluation index which measures the entire performance of the company in the process from coming into the market to exiting from the stock market by profit index and provides related appraisal.As the profit index plays a key role in the operating results and the profitability evaluation of the listed companies, it evokes accounting fraud behavior done by some listed companies through hyping profit targets and makes the phenomenon of profit manipulation with more and more measures and manners emerge continuously. As a consequence, the financial data in the profit statement can hardly accurately reflect the real business performance of the company, and the expectation of the company’s future development also arouses suspicion. Therefore, the first priority is to optimize the profit quality of the listed companies, and it has become a hot public spot which attracts attentions of the current accounting theory circle and the whole society, that is to guarantee the common interest of the market investors and report users, and to maintain the trading order of the securities market.This thesis starts from elaborating the relationship between the listed companies’profit quality and cash flow from the point of theoretical knowledge through collecting, sorting, and summarizing a large number of literature to construct a set of index system. This index system based on cash flow regards cash reliability, financial safety, stability, and growth as its core quality. Taking the A-shared real estate listed company in Shanghai and Shenzhen as an example and selecting forty companies’ financial data from 2010 to 2013, we can work out the rank of each company’ profit quality in the real estate industry by analyzing the index through the method of radio chart. The analysis of the comprehensive ranking of the profit quality reveals the differences of profit quality of the real estate listed companies in our country. The index can not only reflect the general condition of the profit quality of the domestic listed companies, but also lead numerous information users to pay more attention to the profit quality based on the cash flow in order to help them to improve the decision-making.