This work took place at the GEOCUBA Camagüey-Ciego de Ávila Company, which belongs to MINFAR and has its legal address at Avenida las Palmas and Circunvalación Norte.
This entity's main objective is to: Investigate, project, execute and market its products and services in geodetic, tidal, geotechnical, topographic, photogrammetric, remote sensing, cartographic, cadastral, hydrographic, oceanographic, marine study, and implementation activities. geographic information systems, aid to navigation, both on land and at sea.
This includes the creation and maintenance of the National Geodetic Networks, the State Map and the National Cadastre. It also performs geometric measurements to determine displacements and deformations of the Earth's crust, civil works and industrial machinery.
Different techniques of Financial Analysis were used such as the Horizontal and Vertical methods to the Balance Sheet and to the Income Statement in both currencies in order to make a comparison between two time periods in terms of the results obtained from the Financial Statements. In addition, they were used other methods of financial analysis to reflect the impact of operating, financing and investing activities during this time period. As well as the Historical Methods, Dupont and the working Capital change table.
INTRODUCTION
At the present time, the Cuban economy is struggling to improve its difficult conditions adopted since the 1990s with the collapse of the socialist camp, the disintegration of the USSR, and the blockade imposed on the Island by the United States. Cuba lost its main trading partners, so it was forced to begin insertion in a world market whose access routes are increasingly difficult for developing countries, but with the awareness that a company must generate wealth, it must create value, must give added value, and only in this way is it justified to exist.
By losing the main external sources of financing for our investments, it was a decisive factor in the changes suffered, together with the policy carried out by the North American government against the country, which has made access to the main international financial organizations almost impossible, limiting possibilities of acquiring financing.
Due to the aforementioned situation, Cuba needed to search for new strategies in order to increase its development.
Maintain as a premise that the state-owned company is the fundamental link in the economy; what it is about is to enhance your level of efficiency, authority and executive.
In this sense, Fernández A. considers efficiency ¨ as the greatest economic use of limited resources, it is synonymous with not wasting resources, maximizing the well-being of individuals or communities with the minimum of expenses, while effectiveness is understood as the achievement of the proposed objectives.
Currently, Cuba is carrying out profound transformations in the economic sphere in order to mitigate the burdens of the crisis it is undergoing and to lay the foundations for the country's development, safeguarding the social conquests of recent decades. One of the decisive lines of the economic takeoff to which the country is urged is precisely that of Improvement begun in the Cuban business subsystem; This consists of a process of continuous improvement of the internal management of the company whose main objective is to achieve competitiveness by increasing efficiency.
In achieving these levels of competitiveness, the financial subsystem played a fundamental role as the fundamental link in the economic area; In this sense, it occupies a special place and is contemplated in the General Bases for Business Improvement, the aspects related to the level of liquids and the administration of commercial credit, stating that the main functions of the company include: Economic evaluation and Financially, the results of the entire organization as a whole and of the base companies and business units that it groups, issuing the necessary guidelines and providing the appropriate advice that allows overcoming the negative aspects.
It is demonstrated that for the entity object of the investigation Company GEOCUBA CAMAGUEY-CIEGO DE ÁVILA, the financial aspects that are analyzed occupy a very useful topic, because precisely this entity is in the process of Business Improvement.
With the adoption of business improvement, accounting returns to privileged levels, since the control of material and financial resources is the cornerstone of the new management method.
Accounting as a science aims at the qualitative and quantitative study of heritage, both in its aesthetic and dynamic aspects, in order to achieve the proper management of the assets that comprise it. Accounting is a constantly evolving technique, based on reasoned and logical knowledge whose main objective is to record and synthesize the financial operations of an entity and interpret the results.
Hence the importance of fully utilizing the financial statement analysis techniques that provide the diagnosis of financial health. But in the entity under study, the financial analysis tools are not fully exploited.
Due to the aforementioned, the following problem arises: How to apply the techniques and analysis methods of financial management that allow them to be used as tools that facilitate decision-making for the Company's management?
The Object is: Financial Analysis
To resolve the above, the following general objective is proposed:
1.- Apply the analysis techniques of short-term financial management that contributes to the decision-making process in the direction of the Company GEOCUBA CAMAGUEY-CIEGO DE ÁVILA.
The field is: Techniques and methods of Financial analysis
The following hypothesis is formulated based on the importance, topicality of the topic and the significant contribution made to this entity:
If the short-term financial management analysis techniques are implemented efficiently, then it will be possible to make sound decisions by the Company's management.
Financial statements for the years 2014 and 2015 were observed and analyzed, both in foreign currency and in national currency, with the aim of calculating and interpreting the financial ratios that are of vital importance for any company in the effective decision-making to achieve the objectives. proposed by the entity.
The horizontal and vertical analysis was applied to the Balance Sheet and the Income Statement in both currencies in order to make a comparison between two or more time periods in terms of the results obtained from the Financial Statements.
In addition, the Historical, Projected, Dupont, and Equilibrium Methods were taken into account.
Results and Discussion.
The following is the calculation and financial analysis of the liquidity and activity, profitability and solvency ratios Geocuba Camagüey-Ciego de Ávila Company for the years ended in 2014 and 2015. (Data taken from the Financial Statements)
1.- Current Ratio = Current Assets
Current Liabilities
| Year 2014 | Year 2015 | |
|
National currency |
= $ 4854879.71 1327192.18 = $ 3.65 |
= $ 5317419.99 1526362.10 = $ 3.48 |
|
Badge |
= $ 2381268.66 702232.46 = 3.39 CUC |
= $ 2792740.96 1730759.86 = 1.61 CUC |
In both years, the liquidity ratio for the national currency indicates that it has sufficient investment in current assets to meet its obligations in the short term. In 2015, it has $ 3.48 of Current Assets to meet a $ 1.00 short-term obligation; in relation to 2014, this ratio decreases by $ 0.17. The decrease in this index is due to a decrease in current assets by $ 462540.28, especially in the item merchandise for sale and an increase in current liabilities by $ 199168.92, because the items accounts payable, obligations with the state budget increase and obligations with the organism.
In 2015, the CUC shows difficulties with its ability to pay. In the short term, in 2015, it has $ 1.61 of Current Assets to face a $ 1.00 short-term obligation; in relation to 2014, this ratio decreases by $ 1.78, due to the increase in current assets by $ 411472.3, with the items that decrease accounts receivable, inventories and merchandise for sale; there is also an increase in current liabilities by $ 97010.01, being the items bills of exchange and accounts payable which increase. This situation jeopardizes the urgent payment to your creditors.
2.- Severe Reason or Acid Test = Current Assets - Inventory
Current Liabilities
| Year 2014 | Year 2015 | |
|
National currency |
= $ 4854879.71-744130.99 $ 1327192.18 = $ 3.09 |
= $ 5317419.99-901445.94 $ 1526362.10 = $ 2.89 |
|
Badge |
= $ 2381268.66-1897553.36 702232.46 = 0.69 CUC |
= $ 2792740.96-2413376.35 1730759.86 = 0.22 CUC |
In both stages, the national currency has enough more liquid Assets to settle its obligations. In 2015, it had a lower result than in 2014 for this reason, as it had $ 2.89 of current assets deducted from inventories to meet $ 1.00 of obligations in the short term. This decrease is favorable because it tends to approach the theoretical ratio, it originates because all the components grow, but inventories and current liabilities increase in a greater proportion.
In both years, the foreign currency presents an unfavorable situation since they do not have enough more liquid Assets to pay off their obligations. In 2015, it had a lower result than in 2014 for this reason, having only $ 0.22 of Current Assets deducted from the Inventories to face up to a $ 1.00 of the obligations in the short term, lower by $ 0.47 the previous year. This decline originates because all the components grow, but in a greater proportion inventories increase by $ 515822.99 CUC and current liabilities by $ 1028527.4 CUC.
3.- Inventory turnover = Cost of sale
Average inventory
|
Year 2014 |
Year 2015 |
|
|
National currency |
= $ 5267190.59 511961.10 = 10.28 times |
= $ 4737147.92 1598870.34 = 2.96 times |
|
Badge. |
= $ 2025407.60 973676.36 = 0.84 times |
= 777214.6 3441165.09 = 0.22 times |
Average inventory term = ____360__________ _____
Inventory rotation
| Year 2014 | Year 2015 | |
|
National currency |
= 360 _ 10.28 = 35 days |
= 360_ 2.96 = 121 days |
|
Badge |
= 360_ 0.84 = 428 days |
= 360_ 0.22 = 1636 days |
Average inventory = Beginning inventory + ending inventory
two
| Year 2014 | Year 2015 | |
|
National currency |
= $ 550603.11 + 1022821.01 two = $ 511961.10 |
= $ 1022820.27 +1087460.21 two = $ 1598870.34 |
|
Badge |
= $ 1570772.72 + 1944211.19 two = $ 973676.36 |
= $ 1944200 + 2469065.09 two = $ 3441165.09 |
In both years, inventories show a slow movement although in 2014 the national currency shows a rotation cycle according to the entity's strategies, these slow movements are due to the increase in inventories since when there is a gap in the entry of raw material, mainly from graphic activity, large volumes of materials corresponding to previous periods were received in the analyzed years.
- - Accounts receivable rotation = Sales __________
Accounts receivable
| Year 2014 | Year2015 | |
|
Coin National |
= $ 10784189.7 859983.23 = 12.54 times |
= $ 12242106.06 827169.33 = 14.80 Times |
|
Badge |
= 2652866.61 215680.22 = 12.30 Times |
= 2847334.36 212487.64 = 13.40 Times |
Average collection period = _____________ 360_______________
Accounts receivable rotation
| Year 2014 | Year 2015 | |
|
National currency |
= ____360___ 12.54 = 28 Days |
= ____ 360___ 14.80 = 24 days |
|
Badge |
= ___ 360__ 12.30 = 29 Days |
= ___ 360__ 13.40 = 27 Days |
It is denoted that it has an efficient collection policy in the national currency, since it presents satisfactory results in both years. Its Accounts Receivable rotate in 2015, 14.80 times, converted into days, they take 24. It is shown that the company this year has carried out a better collection policy by reducing its cycle by 4 days compared to the previous year. It is notable that in both years its collection policy is below the theoretical 30 days.
In the case of the currency, it is denoted that it has a good collection policy, since it presents adequate results in both years, they behave in the same way. Its Accounts Receivable rotate 13.4 times, converted into days it takes 27 days, the entity shows an aggressive policy in relation to its accounts receivable by decreasing them by 4 and 2 days respectively, relative to 2014
- - Accounts payable rotation = ________ Purchases________
Debts to pay
| Year 2014 | Year 2015 | |
|
Coin National |
= $ 757023.67 70094.79 = 10.8 times |
= $ 1072400 86483.87 = 12.4 times |
|
Badge |
= 158084.16 19184.97 = 8.24 times |
= 202760.33 15019.29 = 13.5 times |
Average payment period = __________ 360 ____________
Accounts payable rotation
| Year 2014 | Year 2015 | |
|
Coin National |
= ____360___ 10.08 = 36 Days |
= _____360___ 12.4 = 29 Days |
|
Badge |
= ____360___ 8.24 = 44 Days |
= ___360___ 13.5 = 27 Days |
It is observed that it has a bad payment policy in 2014, because its Accounts Payable rotate in national currency 10.08 times, converted into days it takes 36 days. His situation has improved in 2015, because the number of rotations increases and collection days are reduced to 29 days. It is notable that in 2015 its payment policy is below the theoretical 30 days.
In the case of the currency, its Accounts Payable rotate in 2014 by 8.24 times, converted into days it takes 44 days. His situation has improved in 2015, because the number of rotations increases and collection days are reduced to 27 days.
6- Profitability on sales = Net profit * 100%
Net sales
| Year 2014 | Year 2015 | |
|
Coin National |
= ___ 3734634.42 * 100% 10784189.7 = 35.0% |
= __4870544.31 ___ * 100% 12242106.06 = 39.8% |
|
Badge |
= ____ 1506951.04 ___ * 100% 2652866.61 = 57.0% |
= ___ 1651679.02 ___ * 100% 2847334.36 = 58.1% |
In national currency, for 2014 this entity earns 35.0 cents for each peso sold, and for 2015, it earns 39.8 cents for each peso sold.
In CUC for 2014, this entity earns 57.0 cents for each peso it sells and for 2015, it earns 58.1 cents for each peso it sells.
7- Return on Total Assets = Net Income * 100%
Average Total Assets
| Year 2014 | Year 2015 | |
|
Coin National |
= ____ 3734634.42 ___ * 100% 10203918.91 = 3.66% |
= ____ 4870544.31 ___ * 100% 25105898.51 = 1.94% |
|
Badge |
= ____ 1506951.04 ___ * 100% 4293307.81 = 3.51% |
= ___ 1651679.02 ___ * 100% 5380061.96 = 3.07% |
In national currency, for 2014 this entity earns 3.66 cents for each peso of assets it owns, and for 2015, it earns 1.94 cents for each peso it owns.
At CUC for 2014, this entity earns 3.51 cents for each peso of assets it owns and for 2015, it earns 3.07 cents for each peso of assets it owns.
8-Return on Capital = Net Income * 100%
Average Equity
| Year 2014 | Year 2015 | |
|
Coin National |
= ____ 3734634.42 ___ * 100% 12153401.13 = 31.0% |
= ___ 4870544.31 ___ * 100% 13314950.8 = 37.0% |
|
Badge |
= ____ 1506951.04 ___ * 100% 1255471.53 = 120.0% |
= ___ 1651679.02 ___ * 100% 1416099.99 = 117.0% |
In national currency, for 2014 this entity earns 31.0 cents for each peso it invests, and for 2015, it earns 37.0 cents for each peso it invests.
In CUC for 2014, this entity earns 1.2 cents for each peso it invests and for 2015, it earns 1.17 cents for each peso it invests.
9- Debt ratio = Total Liabilities * 100%
Total active
| Year 2014 | Year 2015 | |
|
Coin National |
= ___ 7744101.72 _ __ * 100% 19897502.85 = 39.0% |
= ____ 9406176.16 ___ * 100% 22721126.96 = 42.0% |
|
Badge |
= ____ 1379108.27 ___ * 100% 2634579.8 = 53.0% |
= ___ 1855828.02 ___ * 100% 3271928.01 = 57.0% |
In national currency, for 2014 this entity finances each peso of assets it owns with 39.0 cents of foreign capital and for 2015, for each peso of assets, 42.0 cents of foreign capital.
In CUC for 2014, this entity finances each peso of assets it owns with 53.0 cents of foreign capital and for 2008, for each peso of assets, 57.0 cents of foreign capital.
Vertical and Horizontal Analysis Method
In the Statement of Income in National Currency with respect to Sales there was an increase of 990.5 mp, which represents a 110.4% growth with respect to the plan.
According to the total costs and expenses, it increased by 339.8 mp with a 104% value that is related to the growth in sales. Profit had an increase of $ 1207.2 mp, which represents 122.7%.
In the Statement of Income in CUC according to Sales there was an increase of $ 9.3 mp, which represents 100.3%, of compliance with the plan.
With respect to total costs and expenses, it increased by $ 1.2 mp with 100.1% and the Profit increased by $ 10.0 mp, which represents a 100.6% growth with respect to the plan. (See Annexes 1 and 2)
Historical Method
This graph shows good sales management, since the results in both currencies are increasing from one year to the other.
The entity denotes an increase in Net Income both in freely convertible currency and in the national currency, from one year to the other, which shows that the precise techniques for this increase were applied.
There is a growth in costs and expenses of 2015 with respect to 2014 in both currencies, however, these increases do not impair the entity's efficiency elements.
Capital Working Method
| Geocuba Company Camagüey-Ciego de Ávila | ||
| Working Capital Change Chart | ||
| December, 31,2015 | ||
| Total | ||
| Accounts | Increases | Decreases |
| Current assets | ||
| Cash on hand | 123041.33 | |
| Cash in bank | 553229.47 | |
| Short-term accounts receivable | 49861.66 | |
| Prepayments to suppliers | 92082.81 | |
| Transferred profits | 1095731.54 | |
| Inventories | 673137.94 | |
| Current liabilities | ||
| Short-term bills payable | ||
| Short-term accounts payable | 40089.3 | |
| Anticipated collections | 10839.05 | |
| Deposits received | ||
| Obligations with the E. budget | 13063.60 | |
| Obligations with the body | ||
| Payroll | ||
| Withholdings payable | 12573.22 | |
| Provision for holidays | 11933.44 | |
| Provision for general repairs | 30725.69 | |
| Totals | 13408872.66 | 14731050.79 |
| Increase or Decrease in Working Capital | 1322178.13 | |
| 14731050.79 | 14731050.79 |
As shown in the previous table, a growth in working capital in 2015 is evidenced, mainly motivated by the increase in their assets, the inventory item which increases by more than half a million pesos, placing the company in a favorable situation. to meet its productive commitments by raising its levels of raw materials but at the same time it places it in a moment of deficit to face its payment obligations by evidencing the growth of accounts payable and the decrease in cash in cash and bank.
Dupont method
The Dupont technique is a system of control, analysis and connection of deviations of the investment factors, results and comprehensive objectives of a commercial, industrial or financial company.
Within the Investment Factors, we have the Assets of the Company.
Within the Results, Sales, Cost of Sale, Distribution and Addition.
In the first package of the formula, Profit is evaluated with respect to the Income generated from the exercise of the fundamental activity, while in the second package the efficiency in the composition of assets and their ability to generate Financial Income are evaluated.
Return on Investment = Net Income x Net Sales
Net Sales Total Assets
MN
| 2014 | 2015 | |
| NET SALES | $ 10784189.7 | $ 12242106.06 |
| TOTAL REVENUES | 11088470.39 | 12597910.92 |
| TOTAL COSTS AND EXPENSES | 7353835.97 | 7727366.61 |
| NET INCOME / LOSS | 3734 634.42 | 4870544.31 |
| TOTAL ASSETS | 19897502.85 | 22721126.96 |
2014 2015
% of Profit = Net Income = $ 3734 634.42 = $ 4870544.31
Net Sales $ 10784189.7 $ 12242106.06
= 35% = 40%
Rotation = Net Sales = $ 3734634.42 = $ 12242106.06
of assets Total Assets $ 19897502.85 $ 22721126.96
= 0.54 = 0.54
Return of = 35% x 0.54 = 18.9% = 40% x 0.54 = 21.6%
the investment
In 2015, the investments made can be considered profitable, the profit with respect to the income generated increased, despite the fact that the rotation of the asset remains the same, which represents that it was sold for each peso of asset 0.54 cents
CUC
| 2014 | 2015 | |
| NET SALES | $ 2652866.61 | 2847334.36 |
| TOTAL REVENUES | 2672751.26 | 2849135.51 |
| TOTAL COSTS AND EXPENSES | 1165800.22 | 1197456.49 |
| NET INCOME / LOSS | 1506951.04 | 1651679.02 |
| TOTAL ASSETS | 2634579.8 | 3271928.01 |
2014 2015
% of Profit = Net Profit = $ 1506951.04 = $ 1651679.02
Net Sales $ 2652866.61 $ 2847334.36
= 57.0% = 58.0%
Rotation = Net Sales = $ 2652866.61 = $ 1651679.02
Total Assets $ 2634579.8 $ 3271928.01
= 1.01 = 0.87
Return of = 57.0% x 1.01 = 57.57% 58% x 0.87 = 50.46
the investment
For the installation, the investment made in CUC in 2014 was much more profitable than 2015. The profit with respect to the Income generated increases, for each peso of assets it owns, only 0.87 cents were sold
CONCLUSIONS
During the elapsed period we were able to verify and conclude the following:
- There is sufficient investment in current assets to meet short-term obligations for both the national currency and in cuc. Inventories have a slow movement There is an efficient collection and payment policy in both currencies. The costs and expenses in CUC are the adequate ones according to the levels of efficiency that the entity has.
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