Financial analysis: collection of case studies
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Financial analysis: collection of case studies
Вид издания: Учебное пособие
Collection of case studies is a supplement to the textbook "Financial analysis". Its aim is the formation of students ' practical skills of analysis, selection and evaluation of analytical information to implement effective economic policies of business entity, for the preparation and adoption of reasonable management decisions, planning and monitoring. The book is for bachelors, masters, listeners of courses of improvement of qualification, including the second higher and distance education, as well as all future and practicing business analysts.
Казакова, Н. А. Financial analysis: collection of case studies: Учебное пособие / Казакова Н.А., Дун И.Р., Бобкова М.П. - Москва :НИЦ ИНФРА-М, 2018. - 54 с.ISBN 978-5-16-106744-4. - Текст : электронный. - URL: https://znanium.com/catalog/product/972205 (дата обращения: 19.06.2021). – Режим доступа: по подписке.
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N. Kazakova, I. Dun, M. Bobkova Financial analysis: collection of case studies Москва znanium com электронно-библиотечная система Инфра-М 2018
N. Kazakova, I. Dun, M. Bobkova Financial analysis: collection of case studies Пособие Москва Инфра-М; Znanium.com 2018
UDC 338.3 (075) LBC 65.053 j73 K14 Kazakova, N. Financial analysis: collection of case studies / N. Kazakova, I. Dun, M. Bobkova. - Moscow: Infra-M; Znanium.com, 2018. - 54 p. ISBN 978-5-16-106744-4 (online) Collection of case studies is a supplement to the textbook "Financial analysis". Its aim is the formation of students ' practical skills of analysis, selection and evaluation of analytical information to implement effective economic policies of business entity, for the preparation and adoption of reasonable management decisions, planning and monitoring. The book is for bachelors, masters, listeners of courses of improvement of qualification, including the second higher and distance education, as well as all future and practicing business analysts. © N. Kazakova, I. Dun, M. Bobkova, 2016, 2018 ISBN 978-5-16-106744-4 (online)
UDC 338.3 (075) LBC 65.053 j73 K14 Authors: Nataliya Kazakova -doctor of economic sciences, professor, head of Business analysis department of Plekhanov Russian University of Economics. Irina Dun-candidate of economic sciences, associate professor of Business analysis department of Plekhanov Russian University of Economics. Marina Bobkova-senior lecturer, Business analysis department of Plekhanov Russian University of Economics. Victoria Nevar- translation of the case studies. Reviewers: J. Kevorkova -doctor of economic sciences, Professor of the audit and financial control department of the Financial University under the Government of the Russian Federation. N. Karzaeva -doctor of economic sciences, Professor, head of economic analysis and audit department of Russian Timiryazev State Agrarian University. Financial analysis: collection of case studies/ N. Kazakova, M. Bobkova — M. — Tel-Aviv: «E.RA» publishing, 2016. — 54 p. Collection of case studies is a supplement to the textbook "Financial analysis". Its aim is the formation of students ' practical skills of analysis, selection and evaluation of analytical information to implement effective economic policies of business entity, for the preparation and adoption of reasonable management decisions, planning and monitoring. The book is for bachelors, masters, listeners of courses of improvement of qualification, including the second higher and distance education, as well as all future and practicing business analysts. © N. Kazakova © I. Dun © M. Bobkova All rights reserved ISBN 978-965-567-011-0
CONTENTS Preface................................................................ 4 1. Information sources and methods used in financial analysis............................................................... 6 2. Diagnostics of the condition and development of businesses............................................................ 11 3. Financial analysis of sales and costs of production and sale of products (services)............................................................ 15 4. Methods of analysis of efficiency of functioning of the company............................................................... 19 5. Analysis of sources of financing economic activity and business development 24 6. Financial analysis in the system of controlling of the business stability............................................................. 31 7. Analysis of cash flows and company's solvency...................... 37 8. Analysis of the financial condition of the borrower, and the assessment of his creditworthiness................................................... 41 9. Financial analysis in the assessment of probability of bankruptcy............................................................ 50
PREFACE In the context of growing international integration and increased competition, the need for professionalism in economics, management, education, science becomes clear. The reform of management system of economic agents, transition to international standards in accounting, auditing, monitoring and management of business processes require innovations in higher education. In government and departmental documents of the Russian Federation on the reform of business management is noted that the most important component of their fiscal policy should be "analysis of financial and economic state of economic entities with consideration of the strategic objectives, adequate to market conditions, and finding ways to achieve them". Therefore, federal state educational standards of higher education set the goal of formation of the readiness of future personnel in the sphere of economics and management for analytical work, capable to select and consolidate the necessary information, perform deep financial analysis of economic activities and justify the tactical and strategic actions of the company. Nowadays the analysis can be called a philosophy of management decisions. It is a logical dialectical approach to business management based on the evaluation of transparent and relevant information using formal analytical procedures and informal methods of research, and taking into account the patterns of development of economic processes. Financial analysis is deservedly considered as a tool of scientific cognition and practical study of the processes of functioning and development of economic entities. Modern economists, managers, marketers should possess professional methodology of financial analysis, because any business begins with investing money, continues through the movement of money and ends with results that have monetary value. Financial analysis performs creative functions in business management, studying and assessing information on the use of economic resources and financial results, helping to establish links between indicators and business processes, ensuring correct understanding of business development, identifying its real capabilities and difficulties preventing its economic growth, which ultimately lead to improved business performance. The results of the financial analysis are the base for the development of business plans of strategic development. System of key financial indicators provides controlling of financial sustainability of the business, acts as an indicator of an optimality of structure of sources of financing and the financial environment of economic entity, controlling the availability of reserves of financial strength and development of the economic potential of the company. At the same time, I would like to emphasize that even the most complex analysis cannot guarantee the only right decision. Analytical justification is always relative to the accepted system of criteria and the limits of the available
information. Therefore, the most successful analyst will be not the one who knows many methods of analysis, but the one who is able to apply analytical tools consciously, depending on the situation, availability and quality of information, specifics of the analyzed object, objective analysis, applying critical approach to the obtained results. Collection of case studies is a supplement to textbooks on discipline "Financial analysis". Its aim is the formation of students ' practical skills of analysis, selection and evaluation of analytical information to implement effective economic policies of business entity, for the preparation and adoption of reasonable management decisions, planning and monitoring. Best wishes for future analysts, Natalya Kazakova
1. INFORMATION SOURCES AND METHODS USED IN FINANCIAL ANALYSIS Solving a case on this topic requires knowledge on the formation of the information base for financial analysis, as well as ability to identify financial indicators and determining factors in the management system, mastering skills for practical application of accounting, statistical, econometric and qualitative methods of analysis. JSC "Fashion and Design” was established in 2006, on the basis of the reorganization of the pre-existing business. The trademark was registered in 2007. Profile of activities — engineering, design, modeling, development, manufacture and distribution of textiles, clothing. The concept of the trade mark of the company is quality clothing and underwear for family shopping. Model "Fashion and design" is a reflection of bold design ideas, the latest trends and fashion. Twice a year the company develops new collections: autumn-winter and spring-summer. Share capital is 99 694 thousand rubles, divided into 900 499 ordinary shares and 96 441 preferred shares with a nominal value of 100 rubles per share. The company conducts its business activities in several regions of the Russian Federation: business is divided in accordance with the accounting policies in four operating segments, corresponding to the product range. Table 1 presents the main economic indicators of the company and its immediate surroundings. Table 1 Main economic indicators of JSC "Fashion and Design" The Indicators Previous period reporting period Revenues (the amount of products sold), mln. rub. 10 563 11 010 Variable cost of goods sold, mln. rub. 7 296 8 029 Costs on ordinary activities (commercial products), total; 8 087 8 910 Including - labour costs and charges, mln rubles. 1 311 1 541 - material costs, mln rubles. 6 075 6 539 - depreciation of fixed assets and intangible assets 177 211 - other direct costs 524 619 Fixed costs, mln. rub., total; 791 881 Including
The Indicators Previous period reporting period commercial expenses, mln. rub. 171 215 management costs, mln. rub. 620 666 Profit from sales, mln. rub. 2 476 2100 Profit before tax 2 032 4 260 Net income, mln. rub. 1 639 3 430 Property of organization, total 8 771 11 955 Fixed assets, mln. rub.: - on the initial (replacement) value 5 425 5 859 - residual value (according to the balance sheet) 2 445 2 668 - leased 1 690 7 524 - leased and on conservation 633 630 - depreciation of fixed assets, mln. rub. 2 980 3 191 - fixed assets received during the year, mln. rub. 300 501 - fixed assets retired over the year, mln. rub. 78 68 Current assets total, mln. rub. 3 351 5 220 Current costs (stocks and short-term receivables) 2 423 3 563 million. rub. Stocks, mln. rub. 995 1 504 The number of personnel, person. 916 868 Owned capital, mln. rub. 6 940 6 938 Undistributed profits (uncovered loss) mln. rub. 5 073 5 419 Credits mln. rub. 1 107 1 824 Short-term liabilities, total 1 167 3 855 - short-term accounts payable, mln. rub. 724 3 193 The average rate on credit resources,% 17 20 Inflation rate,% 8 12 Producer price indices for industry,% 7 8 The average producer price indices of raw materials, 10 15 components, utilities,% The consumer price index,% 9 11 The average wage growth rate,% 5 10 Multiplier "capitalization (net assets) to realization" 0.65 0.63 Multiplier "capitalization (net assets) to profit" 4.2 2
In Russia the share of light industry is less than 1% of GDP, and the products of Russian production takes only 30-40% of the textile market, 60-70% is the leading foreign manufacturers. The leading supplier countries: Italy, Germany, Holland, England, Korea, Turkey, India and China. Among the textile manufactures significant export potential has the production of linen that can be explained by high foreign demand for linen fabrics and a good combination of price and quality of the fabrics produced in Russia. The largest volume of production of fabrics has cotton fabric (about 80%). Textile production in comparison with other branches of light the industry has a high level of concentration. The level of concentration is particularly high in the production of silk fabrics and non-woven materials (percentage of three companies-leaders is more than 50%). The projected growth rate of demand for textile products in the next two years is about 6-7% per year, while the volume of retail trade textile products will reach 15 billion USD. Growth of consumer demand for textile products gives the growth potential for the Russian production. Therefore, the macroeconomic situation is favorable for the company both in the country and region where it operates. The data characterizing the growth of consumption of products of textile industry in the domestic market reflects the volatility of demand, but over the past five years growth rates are above the average growth rate of GDP (table 2). Table 2 The dynamics of consumption the textile industry in the domestic market The growth rate of consumption of products, % The Market prior the average segment previous period previous period previous previous report- rate of -2 -1 period period period growth Women's Clothing 90 8 -7 -6 8 14 Men's knitwear 57 10 21 141 3 20 Baby Goods 25 12 -24 12 -12 8 Sports Clothing 102 5 -34 28 -26 6 The concentration on the markets for the products of women's clothes, baby goods and sportswear is reduced, according to this the intensity of competition increases, while the degree of concentration in the market of men's knitwear increases. In general, sportswear market is characterized by the maximum concentration. The number and composition of sellers in the markets don't change, and it indirectly characterizes the entrance barriers to the market as insurmountable, that also has a positive effect on the company's operations and other sellers operating in these markets.
The company's market share in the markets of products of women's clothing and men's knitwear is declining and remains relatively constant in the markets of baby goods and sportswear (table 3). This is seen as a negative factor and indicates the loss of its positions in the most attractive markets. Table 3 The dynamics of the market share of JSC "Fashion and design" in sales The company's market share in sales,% Market segment prior to the previous period previous period The reporting period Women's clothing 32 24 23 Men's knitwear 13 10 8 Baby goods 5 5 5 Sports clothing 4 5 4 Thus, market environment of JSC "Fashion and design" is characterized by positive trends in macroeconomic, regional and sectoral climate and negative processes that are associated with an increased investment activity of competitors. As a result, there is a process of reducing of the company's market position in the markets of women's clothing and men's knitwear. The high dependency of the company from one supplier, whose share is growing and approaching 70% ,is evaluated as negative. At the same time investment processes in the industry contribute to the growth of production capacity, growing demand for products creates preconditions for increase of business efficiency. Task 1. What are the sources of information that were used to compile analytical note. What methods and techniques of analysis were used for its compilation? Task 2. On the basis of information about the company make a general brief characteristic of business. What are the main criteria of assignment the company to a certain group of economic agents? Task 3. Analyze aggregated comparative analytical balance and profit and loss account by filling in the table 4 . Table 4 Aggregated comparative analytical balance and profit and loss account Previous (base) The reporting Indicators period period Absolute deviation amount, Specific amount, Specific amount, Specific mln. rub. weight,% mln. rub. weight,% mln. rub. weight,%
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