This work shows an economic-financial analysis in the Caracol Las Tunas Commercial Company located in the Municipality of Las Tunas, it is of great importance for the province and for the country for the products it offers.
The analysis of the financial economic situation was carried out taking the data from the Financial Statements for the first quarter of 2010, comparing it in 2009, evaluating different indices such as the working capital, liquidity, activity, indebtedness, economic and financial profitability ratios. a percentage analysis of the Income Statement. Coming to the conclusion that the company works efficiently in 2010, which is analyzed, although there are still some deficiencies towards which recommendations are focused in order to improve results and advance in the constant struggle to achieve economic efficiency. The universal method of Dialectical Materialism was used as the correct method of knowledge that presupposes the study of phenomena interrelated with each other.
INTRODUCTION
In the struggle of our people to make the economic strategy a reality, the battle for raising efficiency by mobilizing and taking advantage of the wealth of initiatives emanating from the labor collectives and also by discussing and controlling the plans in the assembly by the Efficiency are vital elements for achieving economic recovery and meeting the historical objectives to which our people aspire.
In this sense, Cuban companies must fulfill their role, defined by a set of obligations that derive from their role within society, the social nature of which is indisputable.
To achieve effective management, the management of the economic organization must make its decisions in accordance with the comprehensive diagnosis of the same, where the economic-financial diagnosis that is carried out from the analysis of the financial statements occupies an important place.
Knowing the importance of the systematic analysis of financial economic data that makes entities more efficient, the research aims to solve the following scientific problem. The process of economic-financial analysis is not systematized in the cause-effect relationship that allows evaluating the current management of projecting the situation of the Commercial Company Caracol Las Tunas on the basis of enhancing its strengths.
The general objective of this work is to analyze the financial and economic situation of the Caracol Las Tunas Commercial Company, to contribute to making the right decisions aimed at fulfilling the established objectives.
To fulfill the established objective, procedures, methods and techniques of economic-financial analysis of investigation and computational were used. The following hypothesis was formulated: The application of adequate techniques to analyze the financial statements should lead to the problems generated by the effects shown by these statements, and from there, through a cause-effect analysis, to the causes that have originated it, making it possible to carry out more rigorous evaluations for the projection of future results, which could have a substantial impact on the improvement of the management of said center and the more effective use of resources.
The research was developed from an exhaustive review of the specialized literature on the subject as well as reviews of various articles, in addition to the exchange made with managers and specialists of the entity.
In the investigation, the fundamental scientific method of economic analysis was used: Dialectical Materialism as the universal method of knowledge that reveals the content of the economic laws that act objectively in society.
THEORETICAL FOUNDATION
Financial analysis is a technique for evaluating the operational behavior of a company, diagnosis of the current situation and prediction of future events and, consequently, it originates towards obtaining previously defined objectives. It is also an integral part of the new management methods, since it covers all aspects of the company and detects the influence of the conditions in which they achieved their results.
The fundamental pillar of financial analysis is contemplated in the information provided by the company's financial statements, taking into account the characteristics of the users to whom they are directed and the specific objectives that originate them, among the best known and used are: the Balance Sheet or Situation Statement, the income statement (also called Profit and Loss) and the Statement of Origin and Application of Funds.
The balance sheet, also known as a statement of situation, aims to show the financial situation of the economic organization on a fixed date, so it is considered in a static state.
The profit or loss statement, also known as the income statement, shows the performance of an economic organization during a certain period, that is, it allows us to see if an entity made profit or loss in its operations. This is considered a dynamic state, since it refers to a certain period.
The statement of origin and application of funds shows the variations that have occurred in the financial position of the economic organization from one period to another, so it is also considered a dynamic static.
These aforementioned financial statements constitute the essential basis for carrying out the economic-financial analysis in question.
Financial statement analysis is the critical process aimed at evaluating a company's present and past financial position and results of operations, with the primary objective of establishing the best possible estimates and predictions about future conditions and results.
Financial Analysis: “To analyze is to know one thing through the financial statements: Balance, State of Origin and Application of Funds and Income Accounts. The financial analysis aims to interpret the facts based on a set of techniques that lead to decision-making. "
Economic analysis. "Within balance sheet analysis, it consists mainly of determining the percentage of return on capital invested in the business."
Therefore, it can be considered that economic analysis is the decomposition of economic phenomena into their integral parts, for the study of each of them in particular, in order to determine the link between them.
The content of the economic analysis is constituted by: the control of the fulfillment of the plan indicators, the detection of the achievements and deficiencies in the work, the evolution of the work of the company, the establishment of the eradication routes of the deficiencies detected during analysis and ways of further improvement of your activity.
The object of economic analysis is made up of the economic and productive activity of the company and aims to: Evaluate the results of the analyzed activity, highlight the existing reserves in the company, achieve an increase in production while increasing its quality, increase labor productivity, efficiently use assets, decrease costs and achieve efficiency. All this pointing out the existing deficiencies and proposing the measures that allow eliminating the causes that originate it.
These results are defined below according to the criteria of different authors:
BALANCE SHEET
According to Carlos Mallo:
The statement of position is a state that systematically represents the situation of the funds at a given moment in an entity. These funds are classified according to the principle of accounting duality of two aspects: the sources of financing and its image, investments.
According to D. Himmelblau:
The Balance Sheet is a compendium of the assets, liabilities and assets of a negotiation, systematically grouped to demonstrate at any given moment its financial conditions.
According to C. Homgren:
The Balance Sheet is a photograph of the financial statement in an instant of time. It has two counterbalanced sections: active and passive, and shareholders' equity.
PROFIT OR LOSS STATEMENT
According to D. Himmelblau.
The statement of profits (sometimes considered as a statement of profit or loss or statement of income and expenses) summarizes the changes in equity, which result from the operations of a business carried out between two dates, serving as a bridge between two successive balances. This accounting period can comprise a day, a week, a month or a year.
"… It can be said that an income statement is used to summarize the operating results of a business associating the income earned during a given period of time with the expenses incurred to obtain said income. "
STATE OF ORIGIN AND APPLICATION OF FUNDS
According to Moreno
This statement has been known by various names, such as the statement of origin and application of funds, statement of funds, statement of change in financial position, analysis of changes in working capital, names that depend mainly on the approach give you as to their preparation and forms of presentation.
The statement of changes in financial position is an important tool in financial analysis.
The statement of changes in the financial situation pursues two fundamental objectives:
a) Report on the changes occurred in the financial structure of the entity, showing the generation of resources from the operations of the period.
b) Relieve complete financial information on changes in the financial structure of the entity that do not show the balance and the statement of income and expenses.
According to C. Homgren.
Balance sheets are statements of financial position, while statements of change are obviously statements of change in financial position.
Balance sheets show the relative position on a given day. In contrast, the statements of change, the statements of earnings and the statements of retained earnings cover periods of time, they provide explanations for why the balance sheet rubles have changed.
Taking into account that the analysis of financial statements is the critical process aimed at evaluating the financial position, present and past, and the results of a company's operations, with the primary objective of establishing the best possible estimates and predictions about conditions and results. future, it is necessary to observe the following requirements:
- Classify the concepts and figures that make up the content of the financial statements. For the classification must be of figures relating to homogeneous concepts of the content of the financial statements. To classify the figures relating to homogeneous concepts must follow the same point of view.
It is unquestionable that the presentation of the financial statements in a comparative way increases the usefulness of these reports, highlighting the economic nature of the variations, as well as the tendency of the same that affect the development of the company.
Financial analysis methods are considered as the procedures used to simplify separating or reducing the descriptive and numerical data that make up the financial statements, in order to measure the relationships in a single period and the changes presented in various accounting years.
By economic analysis method is understood the way to approach the study of an activity, that is, it is the set of procedures with the help of which it is carried out is study, measurement and generalization of the influence of different factors on development processes of production through the evaluation of indicators and indices.
Analysis and synthesis are part of the investigative process and are an ongoing relationship. In order to be able to use analysis and synthesis in the research process, it is necessary to imagine the object of said research, as well as its component elements.
The analysis methods used in the financial statements comprise simple ratio methods, standard ratios, reduction to integral percentages and index numbers, increase or decrease methods, trend method and graphical method.
Below is a detail of what each of the methods described above consists of:
• Changes in weights and percentages:
The value of a change in pesos from one period to another is significant (absolute value), but expressing the change in terms of percentages adds a certain perspective. The value of any change in pesos is the difference between the value of a period studied and a base period for comparison. The percentage value is calculated by dividing the change value by the base period value multiplied by one hundred.
• Percentage of trends:
It consists of determining the variations of a base year, in relation to the following years considered in the analysis. This helps demonstrate the extent and direction of the change.
• Component percentages:
These percentages indicate the size of each item included in a total, in relation to the total. Calculating the component percentage of several years, you can see the items that increase in importance and the least significant. States prepared in this way are called common-size states.
• Reasons:
A ratio is a simple mathematical expression of the relationship of one game to another. The reasons can be expressed in various ways.
Technically it is very difficult to obtain a reason, therefore infinite relationships can be calculated from the financial statements as a source of information, however, only a group of them are useful for the analyst since they must establish comparisons against some standard that is relevant as it can be.
• A previous figure (historical, it says what happened)
• An external figure (branch behavior)
• A projected figure (expected)
As previously stated, there are several methods to analyze the content of the financial statements, however, based on the comparison technique, we can classify them as follows:
1.- Vertical analysis method:
• Per Hundred Percent
Procedure
• Simple Ratio Procedure • Standard Ratio Procedure
2.- Horizontal analysis method:
• Increase and decrease procedure
3.- Historical analysis method:
• Trends procedure, which for comparison purposes can be presented based on:
• Series of figures or values
• Series of variations
• Series of indices
4.- Projected or estimated analysis method
• Budget control
procedure • Break-even point procedure
Vertical Analysis: Studies the relationships between the financial data of a company for a single set of statements, that is, for those that correspond to a single date to a single accounting period.
The vertical analysis of the Balance Sheet consists of comparing an item of the asset with the total amount of the balance sheet, and / or with the sum of the items of the liability or the total equity of the balance sheet. The purpose of this analysis is to evaluate the structure of the company's means and its sources of financing.
The vertical analysis of the Profit or Loss Statement studies the relationship of each item with the total of the goods sold or with the total of the productions sold, if said statement corresponds to an industrial company the amount obtained for the goods, productions or services in the period constitutes the basis for calculating the State of Profit and Loss indices. Therefore, in the vertical analysis the base (100%) can be total, subtotal, or split.
Details of the vertical analysis method procedures:
• Procedure of Integral Percent.
The Integral Percent procedure consists of separating the content of the financial statements on the same date or corresponding to the same period, in its elements or integral parts, in order to determine the proportion that each of them keeps in relation to everything. Its application can be extended to the Balance Sheet, the Income Statement or any other secondary statement.
When applying this procedure, it must be borne in mind that if the concepts and figures of two or more financial statements of the same company are compared, at different dates or periods, the percents will be false and will lead to error.
• Simple Reasons Procedure
This procedure consists of determining the different dependency relationships that exist by geometrically comparing the figures of two or more concepts that make up the content of the financial statements of a given company.
Now, for reasons we must understand: The magnitude relationship that exists between two figures that are compared to each other.
Simple reasons can be classified as follows:
1.- Due to the nature of the figures:
a) Static Ratios
b) Dynamic Ratios
c) Static - Dynamic
Ratios d) Dynamic - Static Ratios
2.- For its meaning or reading
a) Financial reasons
b) Rotation
reasons c) Chronological reasons
3.- For its Application or Objective:
a) Profitability Ratios
b) Liquidity
Ratios c) Activity
Ratios d) Debt Ratios
Profitability Ratios are those that relate the company's returns to sales, assets or capital.
Liquidity Ratios measure the ability of the company to meet its short-term obligations as they mature.
Activity Ratios measure the efficiency and liquidity of some specific accounts such as accounts receivable, accounts payable and inventories.
The Debt Ratios measure the portion of financial assets for third-party debts, they also measure the ability to cover their interests from the debts and immediate commitments.
• Standard Ratio Procedure
The standard ratios procedure consists of determining the different dependency relationships that exist to geometrically compare the average of the figures of two or more concepts that make up the content of the financial statements.
Horizontal Analysis: Studies the relationships between the financial elements for two sets of statements, that is, for the statements of dates or successive periods. Therefore, it represents a dynamic comparison over time.
Horizontal analysis by calculating percentages or ratios is used to compare the figures for two states. Because both the quantities compared and the percentage or ratio are presented in the same row or row.
This analysis is mainly useful for revealing trends in the Financial statements and their relationships.
Advantages of horizontal analysis
The advantages of horizontal analysis can be summarized as follows:
• The percentages or ratios of the horizontal analysis are only affected by the changes in an item, unlike the percentages of the vertical analysis that may have been affected by a change in the amount of the item, a change in the amount of the base or for a change in both amounts.
• The percentages or the ratios of the horizontal analysis are indices that allow us to synthetically appreciate the development of economic events. The comparison of these percentages or ratios corresponding to different items of the Profit or Loss state, that is, between items of different states, is particularly useful in the study of trends related to the development of economic activity.
Process
• Increase and Decrease Procedure
The increase and decrease procedure or variations procedure, as it is also known, consists in comparing the homogeneous concepts of the financial statements to two different dates, obtaining from the compared figure and the base figure a positive, negative or neutral difference.
Historical Analysis: It is applied to analyze a series of financial statements of the same company, at different dates or periods. “It is unquestionable that the presentation of the financial statements in a comparative way increases the usefulness of these reports, highlighting the economic nature of the variations, as well as the tendency of the same that affect the development of the company.
• Trends Procedure:
This procedure consists of determining the absolute and relative propensity of the figures of the homogeneous lines of the financial statements of a given company.
The projected or estimated method is applied to analyze Pro forma financial statements or Budgets.
• Budget Control Procedure
The Budget control procedure consists of drawing up a defined period of a financial and operational management and prevention program, based on previous experiences and reasoned deductions from the conditions foreseen for the future.
• Balance Point Procedure
The equilibrium point or critical point procedure from the accounting point of view, consists of predetermining an amount in which the company does not suffer losses or obtain profits, that is, the point where sales are equal to costs and expenses.
It must be meant that there are different opinions regarding the way of enunciating methods, techniques and procedures, and although all of them have been exposed, it does not mean that they will all be used in the economic-financial analysis, but that those will be chosen from those who they are created more suitable for the objectives proposed, always bearing in mind that the success of the analysis will also depend on the success in using these methods and procedures.
ANALYSIS OF THE FINANCIAL STATEMENTS OF THE COMMERCIAL COMPANY CARACOL LAS TUNAS.
CHARACTERIZATION OF THE COMMERCIAL COMPANY CARACOL LAS TUNAS
The Caracol Las Tunas Commercial Company. Located on José Mastrapa Street No. 52. Rpt Casa Piedra, it presents a sufficiently flat, decentralized and flexible structure in which the balance between the responsibilities and powers of the managers of the different Directorates, Base Business Units and the Managing Director; in turn it tries to achieve greater autonomy, efficiency and effectiveness in the management of all the Company's processes; in such a way that it contributes to the increase of cooperation at work and the identification between the groups, highlighting leadership as a key factor of success in the individual and collective organization, integrating all the personnel in the solution of problems and in decision making with your immediate boss.
Its purpose is to maintain its close relationship with the Company's Management Methods and Styles.
BUSINESS PURPOSE APPROVED BY RESOLUTION OF THE MINISTER OF ECONOMY AND PLANNING.
• Operate and develop store networks in own or leased premises in Cuba, in associations, franchises and other modalities, for the retail sale of merchandise including the offer of other commercial services and promotional activities, in convertible pesos, according to nomenclature approved by the Ministry of Internal Commerce.
MISSION
Offer the sale of high quality national and imported products, through the existing network of Stores in the Territory of Las Tunas, aimed at National and International Tourism, guaranteeing an excellent service that identifies us as a Business Group.
VISION
Achieve the full satisfaction of the needs and expectations of customers, through the offer of products of recognized prestige, accompanied by a service of exceptional professionalism, which promote the achievement of economic results that contribute to the development of our Society.
The company has 85 workers for 100% to meet the needs of our corporate purpose.
60 of them are women, representing 70.6%
25 of them are men, representing 29.4%
CUSTOMERS
1. CANADIANS
2. FRENCH
3. NATIONAL MARKET
MAIN TERRITORIAL AND NATIONAL SUPPLIERS
1. MEAT
COMPANY 2. DAIRY COMPANY
3. THABA
4. ITH SANTA LUCIA
5. BRASCUBA CIGARRILLOS
6. INT. CUBANA TABACO
7. HAVANA CLUB INTERNACIONAL
8. LOS
PORTALES SA 9. BUCANERO SA
10. CUBARON
11. CONFITERA CAMAGUEY
12. EMBER
13. SERVISA
14. CUBACAFE
15. SUCHEL LEVER
16. SUCHEL CAMACHO
17. SUCHEL TRANS
18. CTCH
19. CYCLES MINERVA
20. ECASOL
21. LOCAL INDUSTRIES HOLGUIN
INTERNATIONAL SUPPLIERS
1. ATLANTIC EXPORTS INTERNACIONAL SA
2. IMPORTADORA PANAMA SA
3. PANELECTRA INTERPRISES SA
4. INVERSIONES HOLLEM
5. REYDI SA
6. JOMAS SPORT
7. INDACO LIMITED SL
8. ABANICOS FOLGADO SL
9. MAGIC TRADING SA
10. ALCANTARA ESPAÑA SA
11. CARIBE MAR COMERCIAL GROUP SA
12. LATIN TULIP DUTTY FREE BV
13. IBERO TRUST DE MERCADO SA
14. COMERCIALIZADORA D`LEONE SA
15. VIBAS IMPORT - EXPORT
16. IMPERIAL ZONA LIBRE
Analysis through Financial Ratios.
One of the most used instruments to carry out financial analysis in the entities is that of the Financial Ratios, since they can measure to a high degree the efficiency and behavior of the company.
When using this technique, the limitations it has must be borne in mind, referring fundamentally to the information base that supports it, as is to be expected, the indexes will be objective to the extent that accounting permits. On the other hand, the reasons only discover the positive and / or negative aspects of a business but do not reveal the causes, nor do they offer solutions, precisely that is the task of the financial analyst, so that due to his agility and creativity in using this technique The success and usefulness of the analysis carried out and therefore effective decision-making by management will depend.
Taking into account that when carrying out the analysis through financial reasons, it is necessary to use several of them, since a single one in isolation does not provide the necessary information for the efficient assessment of the situation of the economic organization, they are used for the analysis the following:
1.- Index related to short-term liquidity:
a) Working Capital
b) Solvency
Index c) Liquidity Index or Acid test
2.- Indexes related to the activity.
a) Rotation and Collection Cycle of accounts receivable in the short term
b) Rotation and Payment Cycle of accounts payable in the short term.
c) Rotation and average term of the inventory of materials.
3.- Indices related to indebtedness.
a) Indebtedness Index.
Indices related to short-term liquidity
Liquidity in a company is judged by its ability to meet its short-term obligations as they mature, it refers not only to the entity's total finances, but to its ability to convert certain current assets and liabilities into cash.
Working Capital
A determining factor that is closely related to short-term decisions is working capital, working capital, available working capital, working capital or net revolving fund as it is called interchangeably.
Various authors define working capital as the difference that exists between current assets and current liabilities, this indicator can be considered as complementary to the solvency ratio, since it expresses in absolute values the margin of resources, which are expected to convert to cash within a period roughly equal to the maturity date of the short-term obligations.
The fundamental objective of it is to manage each of the current assets and liabilities in such a way that an acceptable level of this is maintained, since if it is not possible to maintain a satisfactory level, there is a risk of falling into a state of insolvency and even Furthermore, the company may be forced to file for bankruptcy.
This indicator is calculated by subtracting current assets and current liabilities and expresses the absolute capacity with which the company has operated, it also represents the amount of money, the items that almost constitute money and the money substitutes (advance payments) available after forecasting the payment of all current liabilities. Is calculated
Working Capital = Current Assets - Current Liabilities
WORKING CAPITAL
As evidenced in table 1 taking into account that the quality of working capital depends on the liquidity level of its items in the Quarter of 2010, it is lower compared to 2009, $ 11.9, causing an increase in current liabilities due to the increase in accounts payable to the investment process in 26.5 mp and 46.6 mp in the accounts payable in the short term with respect to 2009 See annex 2.
• Solvency Index
It is a measure of the Company's Liquidity, but it is also a way of measuring the margin of safety that the administration maintains to protect itself from the inevitable irregularity in the flow of funds through the current assets and current liabilities accounts. It indicates the degree to which the short-term creditor's rights are covered by files that are expected to become cash in a period more or less equal to the growth of the obligations. Is calculated.
There is a widespread practice of accepting a ratio of 2 to 1 as acceptable, as this allows the reduction in value of current assets by 50 percent and still face short-term obligations.
At the end of the 2010 quarter, the company had 3.72 pesos of its current assets to face each peso of short-term debt, which compared to the period of 2009 obtained 5.64 pesos, that is, with 1.92 pesos less (5.64- 3.72) available To meet short-term obligations due to an increase in current assets of 61.8 mp (682.6-620.8) and current liabilities of 73.7 mp (183.7-110.0), current liabilities increased more rapidly than current assets.
• Liquidity Index or Acid Test
It measures the degree to which liquid resources are immediately available to pay off short-term credits. It expresses the real capacity that the entity has to cover its obligations, having the most liquid assets. Is calculated:
When the entity's inventories are not easily convertible into cash, this ratio shows the entity's liquidity better, on the contrary, if the inventories are easy to sell, the best measure is the solvency ratio that shows the entity's total liquidity.. For this reason the favorable practical order index according to the criteria of different authors should be 1-1, assuming that the other part covers the short-term liabilities are inventories. It should be noted that when there is a relatively large difference between the current and acid ratio, this indicates that the greatest weight within the current assets is held by inventories, therefore the immediate liquidity of the company is compromised and depends on the capacity inventory turnover,There is a danger of inability to pay if part of them are slow moving.
The liquidity index or acid test proves a favorable result in 2010, having in the first quarter 1.34 pesos of its most liquid assets to face each peso of short-term debt, which compared to the same period in 2009 improved by 0.54 pesos (1.34-0.8), from which it can be seen, that current assets increased by 61.8 mp (682.6-620.8), because cash increased by 153.1 mp (195.4-42.3), which is the most liquid account, in addition to an increase in sales of 89.0 mp (460.8-549.8) compared to the previous year, another aspect that influenced this increase is the decrease in inventories of 91.4 mp (436.9-528.3).
Activity Indices
• Accounts Receivable Rotation
It allows knowing the number of times that the average customer of the company is renewed, the number of times the commercial circle is completed in the period referred to in sales, the turnover of accounts receivable or the collection cycle shows that The resources invested in accounts receivable are quickly converted into cash. The collection cycle determines the period of time in which the entity recovers its credit sales (period of time between the credit sale operation and the collection of its amount from the customer).
As Table 4 shows, the accounts receivable in the period 2010 rotate 23 times in the quarter every 4 days, however in 2009 they do so 22 times every 4 days, as the rotation of the accounts receivable increased. 1 time compared to the previous year, influencing the increase in sales by 89.0 mp (460.8-549.8) and a decrease in accounts receivable by 5.1mp (20.0-25.1) due to the increase in sales and greater management of payment.
• Accounts Payable Rotation
The rotation of accounts payable indicates the number of times they are converted into cash in a given period, and the payment cycle is the average time that mediates between the economic event that gives rise to the obligation and the moment it is settled. the same. Is calculated:
Accounts payable rotated 1 time every 64 days in the first quarter of 2010, however in the same period of 2009 they rotated 8 times every 11 days, that is, they rotate 7 times less than in the previous year, this is due to the increase of the accounts payable at 76.4 mp (121.2-44.8), in 2009 the company had 35% of the income for payment to suppliers and currently only 18%, value assigned by the Group Caracol Business.
• Rotation of Inventories
The inventory turnover shows the times that it is renewed in a given period of time, and the average term is the time that mediates, on average, between the moments of purchase of materials and their consumption, also known as the average cycle of inventories. Its importance lies in that if it reflects that the entity maintains an excess of inventories that means that it has restricted funds in inventories that could be used elsewhere, in addition there would be other handling costs for the storage of merchandise, as well as the risk of them falling in disuse. On the other hand, if the inventory is too low, the entity may present difficulties for normal operation. Is calculated:
Inventories rotate in the first quarter of 2009 1.04 times every 87 days, and in 2010 1.05 times every 86 days. This indicator remained deteriorated as in 2009, taking into account that the Commercial Company must work with an average turnover of 3.5 times, because in the first quarter of 2009 all merchandise purchased in the second half of 2008 was received. and in the current year, high inventories are maintained due to 2009 purchases, without being able to sell the planned levels.
• Indebtedness Index
It is for these reasons to analyze the extent to which debt financing is used or its financial leverage.
Debt ratios measure the business's ability to contract short-term debts with the resources that count. Is calculated:
For each peso of total assets invested in 2010 23% was financed by third parties and in 2009 financing by third parties was 22%, higher by 1%, compared to the previous year, this index increased due to the increase of accounts payable at 76.4 mp (121.2- 44.8).
Debt on capital
For each peso of capital there are 30 cents financed by creditors for 2010 and 2009 respectively, this ratio maintained the same value in both years.
It expresses the percentage that represents the Own Financing of the Total Financing, that is, how many pesos of Own Financing does the company have for each weight of Total Financing.
At the end of 2009, the Company financed itself with 78% of its own capital, however in 2010, its own financing decreased by 1% to reach 77%, that is, the Company financed itself in 2010 almost in its whole.
ANALYSIS OF ECONOMIC PROFITABILITY
Economic return or return is the ratio of profit before interest and taxes to total assets. It is considered by many authors for the importance that “The Queen of Reasons” accrues and that is why it manages to consume to a large extent the effect of the profits generated by the business on the entire investment employed by the company during a period of weather; hence many call it the return on investment. It allows to know the return achieved on the average investment, therefore, it helps to measure the degree of efficiency with which the assets have been managed.
Fundamental Equation of Economic Profitability
To increase the ratio, it is necessary to improve the profitability of sales and the turnover of total assets, it may also happen that the margin increases more than the decrease in turnover. Therefore, economic profitability measures the effect on sales management, on cost management and on asset management.
To further delve into the analysis of economic profitability, the chain substitution method can be applied to the equation, and in this way the influence of margin on sales and asset turnover on the variation in economic profitability can be determined..
RE: For each peso of total invested assets, an approximate profit of 0.02 cents is obtained in 2010 and 0.01 cents in 2009, it is because in 2010 profits increased but total assets also increased. See Annex 3.
RV: For each peso of sale approximately $ 0.07 is obtained in 2010 and $ 0.04 in 2009, it increases by $ 0.02 due to the increase in profits given by the applied commercial margins, although sales decreased by 89.0 mp.
RAT: For each peso of total assets invested in 2010 0.28 cents were sold and in 2009 0.34 cents, it decreased by 0.06 cents, this was mainly due to the increase in total assets of 61.7 mp and a decrease in sales of 89.0 mp.
The Financial Return of 2010 is higher than that of 2009 due to an increase in assets of 61.7 MP (1592.0 - 1653.7) and in Capital of 37.4 MP
(1273.9 - 1236.5), in addition, the net profit for each peso of Capital is increased by $ 0.005635
(0.019328 - 0.024963).
Conclusions
- Working Capital in the 1st Quarter of 2010 shows a decrease compared to the same period of the previous year of $ 11.9 MP. Accounts payable rotated 7 times less than the previous period. The inventory rotation cycle increased by 0.01 times. Despite having a high inventory, sales or income are not met. The company does not use the Financial Statements as an instrument for decision making.
recommendations
- Conceive as an objective in the income budget and in sales activity the constant and stable increase in Working Capital. Trace skills in order to reduce the tendency to increase accounts payable, that is, eliminate the causes that negatively affect the ability of the company to meet its short-term obligations, arguing to the Comercial Caracol business group the limitations for payment to suppliers, based on the decrease in the approved budget for the company. Draw up a strategy that allows for increased turnover of inventories.Increase sales management through sellers, teaching them or preparing them better to carry out the activity through greater knowledge of the products that are marketed,achieving with this the reduction of inventories. Use the Financial Statements as an instrument for decision making.
Bibliography
- Dra. C. Santa T. Carrillo Ramos, University of Las Tunas. The analysis and interpretation of the Financial Statements Collective of Authors: Reference Material. Analysis and interpretation of the Financial Statements. Castells del Río. Lic. Caesar. Techniques for analyzing financial statements. Editora Pueblo y Educación. Cuba 2004.Editorial of Social Sciences, Havana 1988, Economic Issues Ernesto Che Guevara.Finances a Day. General Standards of Business Accounting. Section I, Volume I. Ministry of Finance and Prices. Cuba.González Torres, Lic. Antonio. Techniques for analyzing financial statements. Editora Pueblo y Educación. Cuba 2004. Finances in the Company: Information, Analysis, Resources and Planning. Fourth Edition, / se /, / s. to /.
