Chapter 1650 Financial Problems

Author: Shihanjie

Wang Lin corrected his attitude after hearing what Zhou Xia said so seriously, and asked: "What did you find? Is someone cheating?"

Zhou Xia said: "It's possible that I'm not good enough and don't understand it thoroughly, but I feel that since you trust me so much, it's necessary for me to explain the problems I discovered to you clearly."

Wang Lin nodded: "It should be so."

Zhou Xia said: "I have been learning how to read financial statements recently. The performance of a company should be reflected in the financial statements."

Wang Lindao: "Yes, you are right to start here. Because you are the CFO, the chief financial officer, and you have to take care of the overall situation, not be an accountant or cashier."

Zhou Xia said: "To be clear, we can find the company's problems in the financial statements. The financial statements can help us recognize the potential risks. Even if there is a sophisticated financial fraud, there will always be clues, but this requires us to look at the details.

Find out the origin of the problem, for example, is the inventory on the balance sheet reasonable? Is the goodwill too high? Is the cash flow obtained from the disposal of fixed assets in the flow statement?"

Wang Lin listened to her talk and thought that he had entrusted the right person!

Zhou Xia is a good helper.

She is calm and unmoved by emotions.

She is good at learning and studies hard.

Although she is from the same mother, she is not as sentimental as Congee.

Congee is a literary person, but Zhou Xia is a career person.

Her short-lived marriage was because she focused too much on her career, which affected her family life.

However, she didn't know it herself, and she didn't think it was wrong.

In Zhou Xia's mind, women should have their own careers and cannot rely on men for everything.

She even believed that a woman could live without a man, but she could never lose her career.

The tasks Wang Lin assigned to her were all the most important tasks, and she lived up to expectations and did them in a reasonable and orderly manner.

In the past few years when Zhou Xia has been in charge of human resources, she has recruited many outstanding talents for Aixiu Group, from senior executives to middle-level employees to grassroots employees. Wherever she goes, there are talents recruited by Zhou Xia.

Zhou Xia would personally go to the major universities in Shanghai for recruitment every year, leaving behind the footprints of her hard work.

Before Aixiu Group went public, it withstood many tests of malicious sabotage, including but not limited to poaching, talent leveraging and other competitive methods.

But no matter how hard its opponents try, Aixiu Group's talent base remains rock solid.

This is of course thanks to Zhou Xia!

Because of this, Wang Lin made up his mind to appoint Zhou Xia as CFO.

Compared with human resources work, the importance of financial work is self-evident.

After Zhou Xia took over the responsibility, she asked Wang Lin to give her some time to learn financial knowledge.

In the past few months, Zhou Xia has been reading financial books whenever she has free time.

She applied for Shanghai University's crash course in finance and sought advice from the best in this field. Now she has entered the financial management field.

Wang Lin gave her an encouraging look and motioned for her to continue.

When he appointed Zhou Xia, he also wanted to do a better job in finance.

Many people make money every year, but have nothing every year. They never know where the money went?

Aixiu Group has hundreds of thousands of people and hundreds of factories.

If financial management is not done properly, no matter how much you earn, you will never be short of money.

Zhou Xia said: "Let me talk to you about the assets and liabilities first."

Wang Lindao: "I know this. We have borrowed a lot of loans from banks, and the interest rates are quite high."

Zhou Xia said: "The key accounts of liabilities are such as short-term borrowings, accounts payable, deferred income tax, etc. If a company often borrows money, then one day the company cannot borrow money, can it still operate? These are assets and liabilities

We need to delve into some details of the table, and at the same time, we can use the data to see whether the company has debt repayment risks and whether the short-term capital chain is broken, and we can get preliminary answers to these."

Wang Lin was startled: "Although we borrowed a lot of money, it's not so serious, right?"

Zhou Xia said: "I'm just talking about it in general."

Wang Lin let out a long breath: "Then please tell me the details."

Zhou Xia said: "Let me give you an example. A company's monetary capital is 10 million, and the company's market value is 10 billion. Do you think this situation is reasonable? A company's goodwill is 2.5 billion, and the company's total market value is only 50 billion.

Billion, do you think this situation is normal? The total market value of a company is 5 billion, and the construction project in progress has reached 1 billion. This has been the case for 5 consecutive years. What kind of company cannot complete the construction project in 5 years? "

Wang Lindao: "What do you want to say?"

Zhou Xia said: "Aixiu Group seems to be very prosperous, very developed, and excellent in all aspects, but our debt is very high. And is our current market value inflated? Is this beneficial to our development?"

Wang Lindao: "In recent years, we have indeed borrowed a lot of interest money from banks in order to expand Aixiu Plaza. I think it is not a bad thing for a company to have a certain amount of debt. The company's debt ratio is 40% to 60%.

The company's debt ratio is equal to 100% of total liabilities divided by total assets. Our company's current debt ratio is about 55%, right? I thought this was normal."

Zhou Xia said: "Aren't you afraid that the capital chain will be broken?"

Wang Lindao: "The asset-liability ratio is an indicator used to measure a company's ability to use creditors to provide funds for operating activities, and to reflect the safety of creditors' loans. It is calculated by comparing the company's total liabilities with its total assets. It is reflected in the company's

Debt ratio among all assets

.The asset-liability ratio levels of different companies in different industries are different, some are 30%, and some are as high as 80%. Our current debt ratio is at a medium level. Calculated based on our company's profitability, this is not high.

.Even if the capital chain is broken, we can still balance our assets and liabilities."

Zhou Xia said: "Maybe I'm overthinking it! I haven't been involved in finance for a long time. I always thought that the company was very profitable and had a lot of spare money! When I saw such a high debt, I was really surprised!"

Wang Lindao: "But you are right to remind us that we should indeed pay attention to the issue of debt ratio. It is beneficial to reduce it appropriately. Well, when you are officially appointed as CFO, you can help me calculate it carefully and control the debt ratio.

Around 35%. Is this okay?”

Zhou Xia said: "According to my observation, our liabilities mainly come from the expansion of Aixiu Plaza. In other words, our factory is profitable, but because the expansion speed is too fast, the speed of making money cannot keep up, so you borrow money

Build a square. Is this kind of expansion considered blind? Can't we move forward steadily?"

Wang Lindao: "Business is all about seizing the opportunity. I believe that there is a huge market for large urban complexes in first-tier cities, especially in the next twenty years, business will be very good, so I borrowed money

Investment and rapid expansion. I am still conservative. If I were more courageous, I could build an Aixiu Plaza in every province and city across the country."

Zhou Xia said: "Oh my god! You are so ambitious! Then you have to borrow all the money from the bank to complete your great cause."

The two looked at each other and laughed.

Zhou Xia said: "Let's talk about the debt ratio first. Let me talk about the income statement. There are many things to look at in the income statement. Needless to say, revenue, including sales expenses, management expenses, research and development expenses, financial expenses, etc.

Costs, etc. need to be studied in depth to see if they are reasonable.”

Wang Lindao: "I have a hard target for investment in scientific research. My requirement is that it accounts for about 5% of revenue. We are not a high-tech company, but the research and development of various new products and new commodities cannot stop, and doing business is like sailing against the current.

, If you don’t advance, you will retreat.”

Zhou Xia said: "So this is also your standard! I said so much money is invested in research and development every year! I used to only focus on personnel work and did not pay attention to this aspect. I was shocked when I saw that the research and development expenses were so high!

Is it too much? Is it necessary to invest so much in research and development?"

Wang Lindao: "For some high-tech companies, R&D investment accounts for about 15% of revenue! That's scary!"

Zhou Xia said: "Okay, let's talk about the income statement again."

Wang Lindao: "There should be no problem with this, right?"

Zhou Xia said: "I only talk about what I see, gain, and think. I don't know if it's correct or not."

Wang Lin said: "Okay, keep talking."

Zhou Xia said: "The income statement has nothing more than three subjects, cash flow generated from operating activities, cash flow generated from investing activities, and cash flow generated from financing activities. Then among the specific items of operating activities, we must pay attention to the sales of goods and the receipt of services.

If you compare this data with revenue, you can see whether the company is making money by relying on its main business."

Wang Lindao: "Well! Our main business is still the factory."

Zhou Xia said: "Yes, this business is profitable and the profits are considerable. But the profitability of Aixiu Plaza is a bit weak. Through the financing activities in previous years, I can see how much money the company has borrowed. We need to understand one thing.

If a company relies entirely on borrowed money to operate, then what’s the point of the company’s business? If the company’s business can’t make any money, how can it repay these debts?”

Wang Lindao: "You have observed carefully, which is worthy of praise. So far, the overall operating income of Aixiu Plaza cannot offset the borrowings and interest. As I said just now, we are now in an expansion period, so we have a lot of borrowings.

.But we need to see the profits brought about by inflation and currency depreciation. If we borrow money now, we will not lose money in the long run."

Zhou Xia said: "How do you know that there will be inflation in the future?"

Wang Lindao: "This is the law of economic development and it is inevitable. Now you can buy a handful of vegetables with a dime, but in the future you won't be able to buy even an onion with a dime."

Zhou Xia said: "What you said is too scary, isn't it?"

Wang Lin smiled and said, "Maybe you won't even see a dime in banknotes in the future?"

Zhou Xia said: "It's like you can predict everything!"

Wang Lindao: "I am not predicting this. I am discovering the laws of economics. Believe me, my judgment will not be wrong. We have borrowed billions now, but it will be easy to pay back these billions in the future."

."

Zhou Xia let out a long sigh: "Several billions! Is it easy? If another person said this, I wouldn't believe it!"

Wang Lin stretched out his hand and lifted her beautiful chin: "So, do you believe me?"

Zhou Xia's delicate body trembled slightly: "What are you going to do?"

"you!"

"Um?"
Chapter completed!