A Study On Financial Analysis System From CEO’s Perspective

The fundamental issue of an enterprise is to survive and develop in keen competition, which depends on its own value. Therefore, enterprises need to keep creating value and maximizing its value to survive and develop, that’s the reason why the nature of an enterprise is to create value.With globalization and intensifying competition worldwide, the risk of an enterprise to survive and develop is increasing, and value-creation is increasingly focused on. Nowadays, value management, value creation and value maximizing are hot words worldwide, which reflecting that people are focusing and chasing value creation, therefore, we need to identify the factors driving value creation and the mechanism of value creation, and need to build a financial analysis system to assess value and to disclose value creation so as to drive value creation.As the separation of ownership and operating management and the establishment of CEO system, CEO becomes the representative and captain of value creation. Most CEO of multinational groups are also Board Chairman in recent years, such roles determine CEO’s function of owners supervision over management. Representatives of both owner and management determine the basic and core mission of CEO, that is to create value. The overlapping role and specific mission of CEO determine his perspective of enterprise value and value creation and he need a tool as a starting of his value management to measure and disclose value creation. Embodied in financial analysis system is to reconstruct financial analysis system from CEO’s perspective based on value creation.The basic stand of this article is the role and mission of a CEO. The article analyzed the criteria of financial analysis system from CEO’s perspective based on the need of CEO’s financial need. Then, selecting EP, the core financial index, and the financial analysis system from CEO’s perspective, to assess value creation by eliminating other indexes and comparing typical comprehensive financial indexes based on enterprise value theory and value creation theory as well as the connotation and criteria of financial analysis from the CEO’s perspective. Next, reconstruct financial analysis system from CEO’s perspective by decomposing layer by layer the EP indexes and disclose the driving factors and mechanism of value creation. Finally, a case study of company A is presented to apply EP and to illustrate how EP drove value creation.The founding of this study is reconstruction and test of financial analysis system from CEO’s perspective, which is the based on the theory of value and the principle of value creation. Then new system is helpful to CEO’s decision and profitable to enterprises.