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Financial analysis refers to an assessment of the viability, stability and profitability of a company. It is performed in the form of reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their basis in making business decisions. Based on these reports, management may make very important for the business decisions: continue or discontinue its main operation or part of its business; make or purchase certain materials in the manufacture of its product; acquire or lease certain machineries and equipments in the production of its goods; issue stocks or negotiate for a bank loan to increase its working capital on so on.
Introduction 3
1. Theoretical framework 5
2. Baltiysky zavod. Company’s profile 8
3. Company’s organizational structure 14
4. Horizontal and vertical analysis 15
5. Company’s financial analysis 29
Conclusion
Interest bearing debt ratio 2003 = 1,19
Interest bearing debt ratio 2004 = 1,07
Interest bearing debt ratio 2005 = 1,12
Interest bearing debt ratio 2006 = 1,13
Debt to Equity Ratio = Total Liabilities / Total Stockholders' Equity
Debt to Equity Ratio 2003 = 6,14
Debt to Equity Ratio 2004 = – 16
Debt to Equity Ratio 2005 = 9,3
Debt to Equity Ratio 2006 = 8,9
Resume: The analysis suggests that the decrease of the company’s dependence on creditors and investors. Autonomy ratio characterizes the holders’ share. The organization can be called financially stable, if the ratio is < 0,6. As mentioned above these years are the period of financial uncertainty for Baltiysky Zavod.
Activity Analysis Ratios
Labour productivity = Sales / Number of workers
Labour productivity 2003 = 36,3
Labour productivity 2004 = 95,2
Labour productivity 2005 = 2131,6
Labour productivity 2006 = 966
Yield of capital investments = Sales / Non-operating income
Yield of capital investments 2003 = 0,54
Yield of capital investments 2004 = 1,13
Yield of capital investments 2005 = 22,3
Yield of capital investments 2006 = 8,3
Inventory turnover ratio = Cost of Goods Sold / Average Inventories
Inventory turnover ratio 2003= 0,03
Inventory turnover ratio 2004 = 0,06
Inventory turnover ratio 2005 = 1,06
Inventory turnover ratio 2006 = 3,5
Accounts receivable turnover ratio = Sales / Average Accounts Receivable
Accounts receivable turnover ratio 2003 = 0,07
Accounts receivable turnover ratio 2004 = 0,3
Accounts receivable turnover ratio 2005 = 5,6
Accounts receivable turnover ratio 2006 = 3,8
Shareholders' interest turnover = Sales / Equity and reserves
Accounts receivable turnover ratio 2003 = – 0,1
Accounts receivable turnover ratio 2004 = – 0,6
Accounts receivable turnover ratio 2005 = – 10,7
Accounts receivable turnover ratio 2006 = 10
Resume: According to business activity ratios Baltiysky Zavod uses its material, labor and financial resource effectively. The accounts receivable turnover ratio is going up from year to year. This fact suggests that the company is active on the market.
Profitability Analysis Ratios
Profit Margin = Net Income / Sales * 100%
Profit Margin 2003 = – 16%
Profit Margin 2004 = – 3,6%
Profit Margin 2005 = 18,8%
Profit Margin 2006 = 7,3%
Return on Equity = Net Profit / Stockholders' Equity * 100%
Return on Equity 2003 = 31%
Return on Equity 2004 = 87%
Return on Equity 2005 = 23%
Return on Equity 2006 = 0%
This ratio is calculated in order to see the return on ownership capital. It can be calculated either before or after taxes.
Payback Period Ratio= Equity and reserves/ Non-operating income/expenses
Payback Period Ratio 2003 = 3,2%
Payback Period Ratio2004 = 1,1%
Payback Period Ratio2005 = 4,3%
Payback Period Ratio2006 = 0%
Resume: Judging by the profitability ratios Baltiysky Zavod is accepted as medium- profitable. According to payback period ratios the enterprise is considered to have quick payback.
Conclusion
Baltiysky Zavod, JSC is one of the leading enterprises in the Russian shipbuilding industry. Today, as well as a century and a half ago, Baltiysky Zavod remains in the vanguard of the Russian shipbuilding industry integrating most modern, state-of-the-art technologies.
The company’s financial analysis confirms its stability on the market. Almost all the financial ratios shows that Baltiysky Zavod is growing stronger as times goes by.
However some data suggest that Baltiysky Zavod satisfies a want of owned and long-term borrowing costs and owned floating assets. It can be easily explained by the industry where the enterprise is operating. Baltiysky Zavod is a shipbuilding company and its activity requires lots of borrowing costs,
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