I am continuing my research on
Let me explain some general analysis points when reading financial statements:
Review of the Securities Report: The company's securities report is a very important source of information for evaluating the company's health, growth, and risks. Descriptions about human capital and SEG investments, in particular, are useful for evaluating whether the company is investing in future growth and the quality of that investment.
Balance Sheet (BS):
Provision for Retirement Benefits: This represents the estimated costs related to retirement benefits that the company will pay in the future. If this amount is large, future cash flow pressures are anticipated.
Profit and Loss Statement (PL):
Sales: This is the main source of company income. High sales are a good sign, but the costs associated with those sales must also be considered.
Selling, General and Administrative Expenses: General expenses incurred to achieve sales. If this amount is disproportionately high compared to sales, there may be efficiency concerns.
Salaries, travel expenses, welfare expenses: Payments made to employees. These are directly related to the company's operations.
Provision for Retirement Benefits: On the PL, this item represents retirement benefit expenses recognized during the period.
Outsourcing: Costs when tasks are outsourced to external vendors. Often related to manufacturing or service provision.
Cost of Goods Manufactured: Direct costs incurred to manufacture a product. Whether this is broken down in detail may serve as an indicator of transparency in cost management.
Other Metrics:
Salary + Welfare Expenses / Sales: Salary Payment Ratio. This indicates the percentage of payments to employees out of sales. If very high, it may impact profitability.
Salary + Welfare Expenses + Training Costs / Sales: Human Investment Ratio. Indicates the proportion of investment in employees relative to sales. If high, it suggests investment in long-term growth.
Non-Metropolitan Area Payments / Total Salary Payments: Regional Contribution Rate. Indicates how much the company is contributing to the regional economy.
Non-Metropolitan Employment Numbers / Total Employment Numbers: Another measure of the Regional Contribution Rate, indicating how many jobs the company is creating outside of major cities.
Temporary Staffing / Sales: Indicates dependence on temporary workers. If high, it may indicate a reliance on temporary workers rather than regular employees.
Reconfirming once more, based on financial statements and public information, these analysis indicators:
Human Capital: Human capital is gaining attention as an investment target for sustainable corporate growth and enhanced competitiveness. Expenses like training costs and welfare expenses, which are investments in employees, can be said to contribute to talent development and employment stability in a company.
Salary Payment Ratio: (Salary + Welfare Expenses) / Sales. If this rate is high, it can be judged that the return to employees is high.
Human Investment Rate: (Salary + Welfare Expenses + Training Costs) / Sales. If this rate is high, it can be judged that the company is investing in employee development and welfare.
Regional Contribution Rate: Payments to Non-Metropolitan Areas / Total Salary Payments AND Employment Numbers in Non-Metropolitan Areas / Total Employment Numbers. If these rates are high, it can be judged that the company is contributing to the local community.
External Standard Taxation: The external standard taxation system taxes companies based on external standards such as capital, interest payments, and land rent, not on the scale or profits of the business. Companies with a capital of 100 million yen or less are subject to this system, and there are moves to deliberately keep capital below 100 million yen to reduce taxation.
I am applying these metrics to publicly released company financial statements to serve as an investment reference and considering if they can be a factor in transforming the way companies operate.
Ultimately, I am aiming for a self-sufficient economic cycle in regional economies, focusing on the essentials of clothing, food, and housing.
#FinancialAnalysis
#HumanCapitalInvestment
#RegionalEconomicGrowth
#SustainableBusiness
#EmployeeWelfare
#ProfitAndLossInsights
#BalanceSheetMetrics
#LocalCommunitySupport
#CorporateTransparency
#EconomicSelfSufficiency
