The Research On The Financial Analysis System Based On The Rate Of Cash Return On Common Stockholders' Equity

There are a lot of ways to analysis financial in system, including DuPont analysis system, Wall analysis system. etc. DuPont is the basis of this paper. The core index of existing financial analysis system is ROE (Rate of Return on Common Stockholders'Equity), All analysis rates in this system are focus on the situation of income and profit, which is just relate the balance sheet and the income statement. Because of the deficiency of analysis of cash flow's situation. Stakeholders can not get a complete understanding of enterprise's financial condition, the management achievement and the capacity of cash return. Through the analysis of cash flow's situation, users of financial report understand enterprise's debt paying ability, payment capacity and Earning quality, So the cash flow analysis is a necessary completing for the existing analysis system, this complete make the system more available for disclosure of economic entity's financial situation. This paper start from the shortage of existing system, create a new financial analysis system, which includes the analysis of both profit and cash flow. RCOE is the core index of this analysis system. From the purpose of proving the RCOE is more comprehensive, we have done these: At first, study the theory of financial analysis. Secondly, define the RCOE, create a comprehensive system, which includes the analysis the statement of both profit and cash flow, through the comparing of ROE and RCOE, will find RCOE is suitable. Thirdly, author research a company's financial data in 2007 and 2008, by using RCOE system to disclosure a company's financial problem and to find the real reasons of these problem. Because the lack of practical, RCOE system has some shortages, so we need more practice to promote this new system.