---
title: "Onion Financial Analysis Method Explained"
description: ""Seeing Through the Company via Financial Reports: The Onion Financial Analysis Method" innovatively proposes a three-layer financial deconstruction framework, using accessible case studies to"
type: "topic"
locale: "en"
url: "https://longbridge.com/en/topics/38696645.md"
published_at: "2026-02-12T15:00:24.000Z"
author: "[多空游戏](https://longbridge.com/en/profiles/12417258)"
---

# Onion Financial Analysis Method Explained

"Seeing Through Financial Statements: The Onion Financial Analysis Method" innovatively proposes a three-layer financial deconstruction framework, using accessible case studies to unveil the operational truths behind corporate financial data:

**Core Methodology**​

**Practical Tools**​

**Mindset Revolution**​

It emphasizes transitioning from a "data consumer" to a "financial skeptic," establishing three major defense mechanisms:

Through 50+ real case studies of listed companies, the book transforms professional financial analysis into a reusable business insight tool, suitable for investors and corporate managers to enhance their financial immunity.

Build personal analysis templates (author-provided templates for industries like baijiu/healthcare)

Use common sense to test the reasonableness of numbers (e.g., sudden changes in gross profit margin)

Maintain vigilance towards standard formats (e.g., subsidiary data in consolidated statements)

**Health Indicator**: Operating cash flow/Net profit ratio ≥1 is the safety threshold

**Footnote Mining Techniques**: Focus on changes in accounting policies, disclosure of related-party transactions

**Abnormal Pattern Detection**: Horizontal comparison with industry average + vertical tracking of 5-year data

**Industry Essence Perspective**​

Case comparison of Haitian Flavoring & Food Co., Ltd./Jinlongyu:

High gross margin in the condiment industry vs. small profits but quick turnover in the grain and oil industry

Mineral water cost structure (packaging accounts for over 60%)

**Business Process Tracing**​

Deduce four major operational links through financial data:

Raw material procurement (abnormal accounts payable turnover ratio)

R&D investment (capitalization rate compared with peers)

Product production (sudden change in inventory turnover days)

Product sales (accounts receivable aging analysis)

**Surface Data Deconstruction**​

Deconstruct key items of the three statements:

Balance Sheet: Identify methods of inflating assets (related-party transactions/expense capitalization)

Income Statement: Reveal timing games (manipulation of revenue recognition timing/profit smoothing)

Cash Flow Statement: Verify earnings quality (warning signs of divergence between operating cash flow and net profit)

### Related Stocks

- [03288.HK - HAITIAN FLAV](https://longbridge.com/en/quote/03288.HK.md)
- [603288.CN - HAI TIAN](https://longbridge.com/en/quote/603288.CN.md)
- [300999.CN - YKA](https://longbridge.com/en/quote/300999.CN.md)

---

> **Disclaimer**: This article is for reference only and does not constitute any investment advice.