In the guidelines that draw up the economic and social policy of the country, it is proposed that state companies or cooperatives that show sustained losses in their financial balance sheets, insufficient working capital, that they cannot honor with their assets the obligations contracted or that obtain negative results in Financial audits will be subjected to a liquidation process or may be transformed into other forms of non-state management, so it is necessary to search for ways to face those factors that negatively affect the economic system. This work was developed with an explanatory applied character from a quantitative perspective, with the aim of applying financial analysis methods by calculating the financial indexes of liquidity, debt, activity and profitability.The company is provided with a tool that, when applied, positively influences its economic and financial management and decision-making. The calculation and analysis of the financial activity of the entity was carried out, which allowed to reach the conclusions, from which a set of recommendations are issued, which will contribute to the desired increase in the economic and financial efficiency of the Forestry Company Integral of Ciego de Ávila.that will contribute to the desired increase in the economic and financial efficiency of the Comprehensive Forestry Company of Ciego de Ávila.that will contribute to the desired increase in the economic and financial efficiency of the Comprehensive Forestry Company of Ciego de Ávila.
Keywords: methods, calculations, tool, financial analysis.
Summary
In the guidelines that draw the cost-reducing and social policy of the country presents him public enterprises or cooperatives that they show steadily in his financial balances lost, capital of insufficient work, that they may honor with his assets the contracted obligations or that they obtain negative results in financial auditings, they will be subdued to a process of liquidation or the forms of step will be able to turn into others not state-owned. What the quest of roads to confront those factors that have an effect on negatively the cost-reducing system becomes necessary. This work Procedure of Analysis Of The Situation Financial at the Forestal Honest Company Blind of Ávila, you developed with character applied explanatorily from a quantitative perspective,for the sake of applying the methods of financial intervening analysis the calculation of index them financiers of liquidity, indebtedness, activity and profitability. Himself bridle to the company a tool that to of being applicable, influence your cost-reducing and financial step positively and in decision making. The calculations and analysis of the financial activity of the entity come true, that allowed getting to the conclusions, to depart from which they emit a set of recommendations, that to of taking under consideration they will contribute to the desired increment of Ávila's cost-reducing and financial efficiency of Ciego's Forestal Honest Company.influence your cost-reducing and financial step positively and in decision making. The calculations and analysis of the financial activity of the entity come true, that allowed getting to the conclusions, to depart from which they emit a set of recommendations, that to of taking under consideration they will contribute to the desired increment of Ávila's cost-reducing and financial efficiency of Ciego's Forestal Honest Company.influence your cost-reducing and financial step positively and in decision making. The calculations and analysis of the financial activity of the entity come true, that allowed getting to the conclusions, to depart from which they emit a set of recommendations, that to of taking under consideration they will contribute to the desired increment of Ávila's cost-reducing and financial efficiency of Ciego's Forestal Honest Company.
Keywords: methods, calculation, tool, financial analysis.
Introduction
In this difficult economic situation that the world is going through, companies have many difficulties, especially the lack of profits. To the extent that businessmen are able to improve themselves through the study and better knowledge of their entity, they will know how to raise and control their decisions, as well as develop more and more analysis of their financial situation at a given time, to help them strengthen your judgment or decision on a specific matter. This is impossible without a competent financial accounting department that allows analyzing, evaluating and knowing the financial situation of the company, with a view to achieving increased efficiency through a better use of the funds that are allocated to the application of production and ensuring knowledge of the functions of the state.
In the company Forestal Integral de Ciego de Ávila, it is necessary to deepen the analysis of financial reasons, since it is necessary to achieve efficiency in its productions. This company is in the adjustment and application of Business Improvement so financial economic management is vital to be a cutting-edge center. For financial resources, more stability should be sought, in order to guarantee adequate financing for economic activity and its more rational use. That is why it is necessary to systematize the manual of accounting and finance standards, as well as the cost manual that are used in this type of company that, due to its complexity, maintains production in process for more than three years in forest plantations.those that form part of its sales due to the achievement and survival counts, moving to restored plantations and at the same time becoming part of the state's forest heritage. For this reason it is necessary to apply these rules and thus show the real financial accounting situation for the period.
As the managers of the base business units know more about accounting, they will be able to raise and control their unit and its decisions, as well as develop more and more the analysis of their financial situation at a given time. Based on the above, the objective of the research is to apply the methods of financial analysis and cash management for an adequate use of its funds, which allows raising the quality of the administrative process and decision-making in the Forestry Company Integral of Ciego de Ávila.
Materials and methods
To carry out this research, several methods were used, through a logical analysis, it was possible to identify each existing problem and solve them. The comparison procedure was also used in the years analyzed to know their relationship, estimate their differences or similarities.
Another method used for the development of this research was consultations with specialists in the field, from the company Forestal Integral Ciego de Ávila and the documentary analysis through different information sources such as:
1- Balance sheet.
2- Income statement.
3- Balance checking balances.
4- Sub major of accounts receivable.
5- Situation of inventories.
6- Situation of cash receipts and expenses.
The Comprehensive Forestry Company of Ciego de Ávila is located at Calle Ciego de Ávila No. 51 between Maceo and Honorato del Castillo, Ciego de Ávila. In 1976 the forestry activity of the Avilanian territory was taken care of by the provincial direction of the National Institute of Forest Development and Exploitation in Camagüey through the Morón Forest Region that included the north of the territory and the Ciego de Ávila Forest region with the area South Central. With the new political-administrative division, the presidency of the National Institute for Forest Development and Exploitation creates the integral forestry company Ciego de Ávila for the direction and forest administration of natural and artificial forests and deforested areas, previously delimited, for the purpose of promotion and conservation,as well as the use or exploitation of the same for industrial purposes of direct use and / or artisanal transformation also to propagate the development and conservation of wild fauna in this way the entity begins its operations as of January 1, 1977, with ten silvicultural units, one in each municipality. Its main mission is to guarantee the sustainability of the forested areas, through the promotion, management and fulfillment of the forestry dynamics, achieving the fulfillment of the production, business and commercialization plans of the forestry industry with efficiency and optimal attention to man.
Importance of financial reasons.
It allows the finance specialist, together with the director, to make decisions and start from a detailed analysis of the results provided by the financial reasons. It allows checking the financial situation based on the present in order to make decisions and project actions.
Most frequent causes of financial difficulties:
- Capital insufficiency: it is a big mistake to start with insufficient capital since this leads to intense demand for loans with banks and other lenders and this brings with it the interest payment at times significantly high the company subsists but goes bankrupt When a crisis strikes Excess accounts receivable: Exaggerated generosity in loans results in less cash on hand, often done to force a sale, it can be very damaging in the end. The correct thing is to sell the merchandise for its quality. Excess inventory: When inventories are disproportionate to the needs of the company, this brings; losses due to deterioration, use of storage capacity and increased expenses for this concept,obsolete effects immobilized in unnecessary goods that can be invested in another resource Too much investment in fixed assets: An investment in fixed assets above the need results in an increase in the cost of production (depreciation would rise) decreases profitability and on the other side leads to an increase in idle capacity. Profit insufficiency: In the absence of proportional profits, there can be no investment to expand the business. (Sánchez, 2000: 35)As there are no proportional profits, there can be no investment to expand the business. (Sánchez, 2000: 35)As there are no proportional profits, there can be no investment to expand the business. (Sánchez, 2000: 35)
Result and discussion.
Application of financial analysis techniques.
In the Ciego de Ávila Comprehensive Forest Company, not all financial reasons are calculated and it is not included in the budgets, to solve this problem, the comprehensive system of financial reasons was developed, which will help you assess the business situation.
The reasons applied for the analysis between the years 2013-2014 of the entity are presented below.
Liquidity ratio.
Current assets
Current or solvency ratio = Current liabilities
Year 2013 Year 2014
5006920 = $ 2.54 6226299 = $ 4.56
1968533 1365850
The Company in 2013 had $ 2.54 of current assets to face each peso of short-term debt and of $ 4.56 in 2014 which increased considerably by $ 2.02, moving away from the standard that is 2 to 1, this indicates that the Company has excess of immobilized money, current assets increased by $ 1,219,379, significantly influencing production in process, and current liabilities decreased by% 602,683.
Severe reason or acid test:
Severe ratio or acid test = Current assets - inventory
………………………………………………………..Current liabilities
Year 2013 Year 2014
5006920- 3874650 = 0.58 6226299-5331634 = 0.66
1968533 1365850
This index provides a more accurate idea of the liquidity of the company, it measures its immediate capacity to meet its short-term obligations, excluding inventories. The immediate liquidity index was $ 0.66, strictly liquid to face each peso of debt at the end of 2014, while the previous year it was $ 0.58, in both years it is below the ideal of 1 to 1 having an increase in 2014 by $ 0.08. This is due to the production in process that increased by $ 1,433,106 in 2014 compared to 2013, mainly agricultural production and forest plantations. Current assets represent 48% in 2013 and 51 in 2014 of total assets and within these, production in process has a fundamental impact with 31% and 39% respectively.
Treasury ratio:
Treasury ratio = Cash___
………………………… Current Liabilities
Year 2013 Year 2014
436820 = 0.22 = 22% 293351 = 0.21 = 21%
1968533 1365850
In 2013 $ 0.22 of cash was obtained for each peso of short-term liability and in 2014 $ 0.21, which shows us that the company has liquidity to cover its obligations.
Net working capital
Ratio Net working capital = Current assets-Current liabilities
Year 2013 Year 2014
5006920-1968533 = 3038387 6226299-1365850 = 4860449
The working capital allows knowing the availability of resources of the company to carry out current operations. It is not advisable to be excessive, as it means that the company has immobilized resources that it must invest to obtain income. With these results, we have resources to meet our short-term obligation without taking into account bad debts and idle inventories that are fictitious assets. At the end of 2014, it increased by 1 822 062 compared to 2013, this is due to the increase in current assets by $ 1 219 379 while current liabilities decreased by $ 602 683. The increase in assets basically depends on the production in process both forest plantations and agricultural productions.
Leverage ratios
Debt ratio:
Total liabilities
Debt ratio = Total assets * 100
Year 2013 Year 2014
7546415 = 0.72 = 72% 9249919 = 0.75 = 75%
10518748 12272113
The company in the two years analyzed is above the standard range (50%) by 22 and 25% respectively, that is, it is financing each asset peso with 0.72 cents of foreign capital in 2013 and 0.75 in 2014, the company must reduce the use of this foreign capital in order to stabilize its economic structure.
Reason for the degree of financial independence:
Stockholders' equity
Ratio of degree of financial independence = Total assets * 100
Year 2013 Year 2014
2972333 = 0.28 3022194 = 0.25
10518748 12272113
The company in the two years is below the standard range (50%) in 2013, shareholders invest 0.28 cents for each peso that the company owns and in 2014 they invest 0.25, decreasing by 0.03 compared to 2013.
Reasons for activity:
Inventory turnover and cycle:
…………………………………….. . Cost of sale__
Inventory turnover = average inventory
Average Inventory = Beginning Balance + Ending Balance
two
___ 360 days ________
- PP I = Inventory turnover
Year 2013 Year 2014
IP = (4108797 + 3874650) = $ 3991723 IP = (3874650 + 5331634) = $ 4603142
2 2
4496687 = 1.13 times 5731262 = 1.24 times
3991723 4603142
360 days = 318 days 360 days = 290 days
1.13 1.24
In 2013 inventories rotate 1.13 times, which means that they are rotating every 318 days, in 2014 they rotate 1.24 times, that is, every 290 days in both years they behave practically the same, inventories rotate only once a year, having a slight decrease in 2014 in 28 days.
Turnover of accounts receivable and average collection period:
Turnover of accounts receivable = Net sales_____________ ………………………………………………… average balance of accounts receivable
SPCC = beginning balance + ending balance
two
PPCC = ____ 360 ___________
………………..Rotation of accounts receivable
Year 2013 Year 2014
SPCC = (475057 + 769773) = $ 622415 SPCC = (769773 + 618854) = $ 694313
2 2
RCC = 5752549 = 9.24 times RCC = 7166150 = 10.32 times
622415 694313
360 days = 39 days 360 days = 35 days
9.24 10.32
In 2013, accounts receivable rotate 9.24 times, that is, every 39 days, and in the same period of 2014, they rotate 10.32 times, which makes the collection period of 35 days, decreasing in only 4 days in 2014 compared to 2013.
Turnover of accounts payable and average payment term:
Turnover of accounts payable = Purchases on credit _________
……………………………………………..Average balance of accounts payable
SPCP = beginning balance + ending balance
2
PPCP = ___ _ 360 _________
……………… Turnover of accounts payable
Year 2013 Year 2014
SPCP = (83790 + 288237) = $ 186013 SPCP = ( 288237 + 247307) = $ 267772
2 2
CPR = 721345 = 3.88 times CPR = 820243 = 3.06 times
186013 267772
360 days = 93 days 360 days = 118 days
3.88 3.06
Accounts payable rotate in 2013 3.88 times, approaching 4 times a year, decreasing in 2014 to 3.06 times. The average payment period was 93 days in 2013 and 118 days in 2014, increasing by 25 days.
Analysis of rentability:
Rotation of total assets
Total asset turnover = Net Sales_
………………………………………… Total Assets
Year 2013 Year 2014
5752549 = 0.55 times 7166150 = 0.58 times
10518748 12272113
In 2013, total assets rotate 0.55 times and in 2014 they rotate 0.58 times for each peso obtained in assets. When comparing both years, it is observed that the difference is not significant, keeping the rotation stable.
Fixed asset profitability ratio:
Ratio of profitability on fixed assets = net income * 100
Fixed assets
Year 2013 Year 2014
585693 = 0.76 = 76% 662972 = 0.82 = 82%
769 796 806557
In this reason, in 2013 a profitability of $ 0.76 is obtained for each peso invested in fixed assets or 76% for every $ 100.00, and in 2014 it is $ 0.82 or 82%, an increase of 6% is observed, product of the increase in fixed assets by $ 36,761 and profit by $ 77,279.
Profitability ratio over sales or profit margin:
Profitability over sales ratio = net profit * 100
Net sales
Year 2013 Year 2014
585693 _ = 0.10 = 10% 662972 = 0.09 = 9%
5752549 7166150
In 2013, $ 0.10 of net profit is obtained for each peso of sale or 10% for every $ 100, and in 2014 a $ 0.09 or 9% is observed, when comparing the previous year with the current year there is a decrease of $ 0.01 or 1%. The company increases its sales by $ 1,413,601 and its profit by $ 77,279.
Economic profitability ratio:
Economic profitability ratio = Net Income * 100
Total assets
Year 2013 Year 2014
585693_ = 0.06 = 6% 662972 = 0.05 = 5%
10518748 12272113
In 2013, 6% was obtained for every $ 100 invested in total assets and in 2014 it was 5%, when comparing both years, a decrease of 0.01% was obtained, for every 100 pesos invested in total assets due to the increase in the net income in $ 77,279 and of total assets in $ 1753365.
Return on equity ratio:
Ratio of return on equity = net income__ * 100
Stockholders' Equity
Year 2013 Year 2014
585693_ = 0.20 = 20% 662972_ = 0.22 = 22%
2972333 3022194
In 2013 a profitability of $ 0.20 or 20% is obtained for every $ 100 of the investment in equity and in 2014 it was $ 0.22 or 22% when comparing both years there is an increase of $ 0.02 or 2%, this situation is favorable for the entity as a result of the increase in net income of $ 77,279.
Conclusions
The entity presents a favorable situation in terms of the ability to pay to satisfy short-term needs in both years, not happening in the acid test that is below the ideal average, but presenting immediate liquidity to cover its obligations. In both years, the entity behaves above the standard range (50%) in terms of the use of external financing, presenting little financial independence. In the years analyzed, the life cycle of the inventory is high but acceptable depending on the type of entity it is within the established range. Regarding the profitability of the company, in the years analyzed 2013-2014 it presents a favorable situation, positively influencing the company.
Consulted bibliography
- Collective of authors: Analysis and Interpretation of Financial Statements. II Economic Preparation Program for tables, Reference Material, Havana, 2005. Dale Kennedy, R. and Muller, M: Financial Statements, analysis and interpretation, Editorial Riyoti Hispano-Americano, 1983. Demestre, A., Castells, C. and González, A: Techniques for analyzing financial statements, First Edition, Grupo Editorial Publicentro, Habana, 2001. Gilma, L: Fundamento de Administración Financiera, t1 and 2, Edition MES.Hongren, Ch. T: Contabilidad Financiera, Instituto Cubano del Libro, La Habana, 1976. Maldonado, A: General Accounting Studies, Venezuela, Ministry of Finance and Prices, Resolution 235, Cuban Standards of Accounting and Financial Information, 2005, Havana, Cuba. Page 20. Paragraph 76.PCC. Guidelines of the VI Congress of the Party, Havana,2011 Perdomo Moreno, A, A nalysis of Financial Statements, Mexico, 1997. Ramírez Padilla, D. N: Administrative Accounting, McGraw-Hill Publishing House, Mexico, 1990. Joint Resolution 56 of 2000. Ministry of Economy and Planning, Ministry of Justice, Ministry of Finance and Price and Ministry of Commerce. Joint Resolution 64 of 2000. Ministry of Economy and Planning, Ministry of Justice, Ministry of Finance and Price and Ministry of Commerce. Resolution 235 of 2005 of the Ministry of Finance and Prices MFP, 2005 Resolution 294 of 2005 of the Ministry of Finance and Prices MFP, 2005 Sánchez Sibello, A: Accounting for Executives, University of Ciego de Ávila (MES), Cuba 2000, p13.Editorial McGraw-Hill, México, 1990. Joint Resolution 56 of 2000. Ministry of Economy and Planning, Ministry of Justice, Ministry of Finance and Price and Ministry of Commerce. Joint Resolution 64 of 2000. Ministry of Economy and Planning, Ministry of Justice, Ministry of Finance and Price and Ministry of Commerce Resolution 235 of 2005 of the Ministry of Finance and Prices MFP, 2005 Resolution 294 of 2005 of the Ministry of Finance and Prices MFP, 2005 Sánchez Sibello, A: Accounting for Executives, University of Ciego de Ávila (MES), Cuba 2000, p13.Editorial McGraw-Hill, México, 1990. Joint Resolution 56 of 2000. Ministry of Economy and Planning, Ministry of Justice, Ministry of Finance and Price and Ministry of Commerce. Joint Resolution 64 of 2000. Ministry of Economy and Planning, Ministry of Justice, Ministry of Finance and Price and Ministry of Commerce Resolution 235 of 2005 of the Ministry of Finance and Prices MFP, 2005 Resolution 294 of 2005 of the Ministry of Finance and Prices MFP, 2005 Sánchez Sibello, A: Accounting for Executives, University of Ciego de Ávila (MES), Cuba 2000, p13.Ministry of Finance and Price and Ministry of Commerce Resolution 235 of 2005 of the Ministry of Finance and Prices MFP, 2005 Resolution 294 of 2005 of the Ministry of Finance and Prices MFP, 2005 Sánchez Sibello, A: Accounting for Executives, Universidad de Ciego de Ávila (MES), Cuba 2000, p13.Ministry of Finance and Price and Ministry of Commerce Resolution 235 of 2005 of the Ministry of Finance and Prices MFP, 2005 Resolution 294 of 2005 of the Ministry of Finance and Prices MFP, 2005 Sánchez Sibello, A: Accounting for Executives, Universidad de Ciego de Ávila (MES), Cuba 2000, p13.
