Lect . PhD. Florea Nicoleta Mihaela [630017]

UNIVERSITY OF CRAIOVA
FACULTY OF ECONOMICS AND BUSINESS ADMINSTRATION
SPECIALISATION FINANCE AND BANKING

BACHELOR ’S THESIS

Coordinator:
Lect . PhD. Florea Nicoleta Mihaela

Student: [anonimizat]
2017

UNIVERSITY OF CRAIOVA
FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION
SPECIALISATION FINANCE AND BANKING

Case study regarding the working capital of the company

Coordinator:
Lect . PhD. Florea Nicoleta Mihaela

Student: [anonimizat]
2017

CONTENT

INTRODUCTION ………………………….. ………………………….. ………………………….. ……………………. 2
CHAPTER 1 THE GENERAL PRESENTA TION OF WORKING CAPI TAL …….. ……… 3
1.1. Description of working capital ………………………….. ………………………….. ………………………… 3
1.2. Elements of working capital management ………………………….. ………………………….. ……….. 4
1.3. Working capital forms ………………………….. ………………………….. ………………………….. ……….. 6

Chapter 2 THE EVOLUTION OF WORKING CAPITAL AT SC CEREALCOM SA
…………………………………………………………………………… 9
2.1.Presentation of the company SCCEREALCOM SA ………………………….. ……………………… 9
2.2. Analysis of the main economic and financial indicators ………………………….. … 13
CONCLUSIONS ………………………….. ………………………….. ………………………….. …………………….. 30

References…………………………………………………………………………………………… ….32

1

Introduction

The enterprise1 as an organizational entity with a three -fold character: technical –
productive, economic and social represents the place of economic phenomena and processes
in order to produce goods or provide services demanded on the market.
Through the development of b usiness phenomena and processes, the aim is to
maintain the optimal level and then to develop the sales market, as well as to make financial
decisions regarding the development of the entity and the use of the resources procured in
terms of efficiency and profitability. Therefore, decisions lead to the occurrence of cash flows
that are the main object of the enterprise's financial implications.
Cash flows determined at S.C CEREALCOM S.A. Are therefore used to carry out the
basic activity which involves the cultivation of cereals (especially rice), leguminous plants
and seed -producing plants, the production of oil and vegetable fats, being constituted in
finished products, can be delivered to customers, costs for staff which is a component of great
importance within the enterprise and the payment made by the State with a view to repay tax
purposes. Performing all of the above mentioned operations is in fact the management of the
exploitation cycle.
Operating cycle management has a strong influence on assets and liabilities, the
patrimony of the enterprise that constitutes the case study presented, as this process involves
the efficient administration of a significant part of assets and liabilities in the balance sheet.
The main purpose of this paper is to qua ntify those exploitation needs necessary to
conduct the activity of S.C. CEREALCOM S.A., the determination of those current assets
(stocks, receivables, cash) that ensure the continuity of the economic processes and how they
can be financed through their o wn sources or attracted sources.
In managing the operating cycle, it is important to maintain a financial balance of the
enterprise that is the main objective of financial policy.
The financial2 equilibrium appears as an equality between the needs and reso urces
needed to carry out the supply, production and sales activity. It is based on three main rules:
1. The rule of minimum financial equilibrium;
2. The rule of maximum indebtedness;
3. The rule of maximum funding.
For an enterprise, it is not enough to maintain a certain financial balance or to
determine the need for exploitation and its financing sources, but it is absolutely necessary to

1 Marin Oprițescu, Nicolae Sichigea, Marcel Drăcea ,” Finanțele întreprinderi i”, Craiova 1997, pag. 5
2 Vintilă G., “Gestiunea financiară a întreprinderii ”, Ed. Didactică și Pedagogică, București 2000, pag.45

2
achieve the fundamental objective of economic activity, namely to obtain profit. This goal can
be achieved by promoting a pro duct marketing policy adapted to current market conditions by
selling only those products for which demand is available through good management of
company -created sources, to avoiding waste. And, at the end of the exercise, satisfactory
results for shareh olders will be achieved.
Profitability is determined by analyzing the ratio between benefit and turnover.
Profitability implies the correct management of resources in order to reduce the expenses
related to the exploitation cycle and the realization of sav ings. Recoverability or rotation
refers to the rotation speed of circulating assets, through which the periodicity with which
they are substituted is determined.
The way of organizing the financial activity has known and knows different
institutional forms , depending on the size of the enterprise, the complexity of the financial
activity and the development period that the enterprise 3crosses.
The economic environment is constantly changing, market conditions are changing
rapidly, so it is necessary for the enterprise to have the capacity to adapt to any intervention
that may endanger its activity, flexibility, mobility so as to maintain its optimum profitability
as well as its position on fair competition.

3 Nicolae Sichigea, ‘’ Gestiunea financiară a întreprinderii ’’, Editura Universitaria, Craiova, 2012

3

CHAPTER 1
GENERAL PRESENTATION OF WORKING CAPITAL

1.1. Description of Working capital

The working capital is that part of the permanent capital intended and used to finance
the current operating activity. Practically, when the permanent sources are larger than the
permanent money -sharing needs, the enterprise has a working capital fund . This surplus of
permanent resources released from the asset financing cycle may be used or "rolled out" for
the renewal of current assets. The working capital thus appears as a financial security margin
allowing the enterprise to cope with the various short -term risks without difficulty4. This
financial security margin guarantees the company's solvency by allowing it, in the event of
commercial problems or at the level of the fin ancial cycle of the operation, to preserve a
certain degree of autonomy and financial independence from its claimants.
If a company's current assets do not exceed its current liabilities, then it may run into
trouble paying back creditors in the short term. The worst -case scenario is bankruptcy. A
declining working capital ratio over a longer time period could also be a red
flag that warrants further analysis. For example, it could be that the company's sales volumes
are decreasing and, as a result, its accounts receivables number continues to get smaller and
smaller.Working capital also gives investors an idea of the company's underlying operational
efficiency. Money that is tied up in inventory or money that customers still owe to the
company cannot be used to pay off any of the company's obligations. So, if a company is not
operating in the most efficient manner (slow collection), it will show up as an increase in the
working capital. This can be seen by comparing the working capital from one period to
another; slow collection may signal an underlying problem in the company's operations.

Days Working Capital = Average Working Capital x360
Annual Sales Revenue

Working capital is a measure of liquidity, and days working capital is a measure that
helps to quantify this liquidity. The more days a company has of working capital, the more
time it takes to convert that working capital into sales. In other words, a high number is
indicative of an inefficient company and vice versa.

4
Working capital management commonly involves monitoring cash flow, assets and
liabilities through ratio analysis of key elements of operating expenses, including the working
capital ratio, collection ratio and the inventory turnover ratio. Efficient working capital
management helps with a company's smooth financial operation, and can also help to improve
the company's earnings and profitability. Management of working capital includes inventory
management and management of accounts receivables and accounts payables.

1.2. Elements of Working Capital Management

The working capital ratio, calculated as current assets divided by current liabilities, is
considered a key indicator of a company's fundamental financial health since it indicates the
company's ability to successfully meet all of its short -term financial obligations. Although
numbers vary by industry, a working capital ratio below 1.0 is generally indicative of a
company having trouble meeting short -term obligations, usually due to insufficient cash flow.
Working capital ratios of 1.2 to 2.0 are considered desirable, but a ratio higher than 2.0 may
indicate a company is not making the most effective use of its assets to increase revenues.

Working Capital
Cycle
Cash
Raw
Materials/Invento
ry
Finished
Goods
Account Receiva

5

Analysis based on the financial statement
The analysis based on the financial balance sheet or the patrimonial analysis aims at
identifying the state of equilibrium at the company level.
The purpose of this analysis is to determine how to achieve a balance between
resources (liabilities) and needs (active) on long -term and short -term.

1.2.1 . Calculation of working capital on a company

Working Capital = Current Assets – Current Liabilities.

Taking as its starting point the fundamental equation of balance can cause a second
relationship calculation of the working capital:

Assets = Equity + Debt
Current Liabilities -Short -term debt + long =term liabilities

This indicator of financial balance put in evidence the influence on the financing
structure of its formation, the extent to which it ensures the financial balance throug h equity,
which actually reflects the degree of financial autonomy. Inside the permanent capital, the
share capital borrowed must not be too high in relation to the equity, it must be around 50%, it
is therefore necessary to determine indicator own working capital and foreign working capital
or borrowed.

Working capital is a measure of both a company's efficiency and its short –
term financial statute.
The Working Capital can be:
1) Positive , permanent capital is bigger than the net assets therefore has a
surplus of permanent resources that will be used to finance current assets. Recording a
positive working capital apparently is only a sign of stability. It can be seen as an
company having a seemingly less stable equilibrium, it can face its maturity, speed o f
its current assets is higher than short -term debt, in other words it can survive in
imbalance.
2) Negative , as the permanent capital lower than net assets, therefore
permanent resources are insufficient to be covered by short -term debt. Here is a risk
to achieve a non -concordance between liquidity and asset liability chargeability.

6
3) W.C equal with 0 , and resulting permanent capital to be equal to net
current asset, net assets are financed entirely from permanent sources, without need of
extra permanent sou rces.

1.3. Working capital forms

Working Capital represent a margin of safety or security of a company financial
activity.Working Capital can be divided into its own working capital, foreign working capital,
and total net.
1) Own Working capital highlights its influence on the financing structure of its
formation, the extent to which it provides financial balance through equity, which reflects the
company's degree of financial autonomy.
This expresses the excess of equity relative to net assets. The result expresses negative
working capital or borrowed foreign, long -term indebtedness to finance short -term needs, an
important role in ensuring the autonomy or freedom in making decisions to invest in the
development of society.

2) Foreign Working capital, shows s urplus of medium and long -term debt used to
finance the operating cycle. The level of working capital can not be correctly assessed by its
absolute size, suggestive as it is not the absolute value of the working capital.

Foreign Working Capital= Working C apital – Own Working Capital

3) Total working capital. Maturity mismatches between short -term liabilities and
assets in liquidities transformation requires establishment of a reserve, whose value must
cover differences due. Total working capital is precisely this reserve.
There are two situation:
a)Total Working Capital=Permanent Capital – Current Liabilites
b)Total Workign Capital=Current Assets – Short -term liabilities

4) Net working capital. Net working capital represents the surplus that remains
after estim ating potential financing assets.

Net Working Capital= Permanent Capital – Fixed Assets

To get a clearer view of the optimal size of the revolving fund must take into account
certain items. First it has to take into account the need or requirement of working capital that

7
is part of current assets to be financed from working capital. The optim al size of the revolving
fund can be appreciated only in relation to the degree to which part -financing the working
capital need of working capital.

1.3.1 . Influence factors
The influence factors of the working capital are determined on the basis of its
calculation:
Working Capital=Permanent Capital – Intangible fixed assets
If we want to increase the working capital, this requires maximizing previous
relationship so themaximizing of W.C can be achieved by increasing of the permanent capital
and decreasing the fixed assets. By analogy, considering the decrease of the working c apital,
this situation is materialized by the decrease of the permanent capital and the increase of the
fixed assets.
The factors influencing the level and trend of the working capital ar
Factors to diminishung W.C Factors to increase W.C
1. Increase in fixed assets
Investment –
tangible
– intangible
– financiar
Revaluation
Contributionj of
capital in kind/nature 1. Decrease in fixed assets:
Amortization
Fixed asset sales
Revaluation
Input withdrawal
Selling financial
securities
Diminishing permanent capital
Reducing permanent
capital
– Withdrawal of
shareholders
– distribution of
reserves
– the distribution
of dividends
– losses from
previous years
– reduction or
cancellation of regulated
provisions
refund of medium
and long term loans Increase permanent capital
Increase equity
– Accumulation of
reserves
– Capital injections
– Receiving subsidies
– Distribution of profit
for development
– Regulated
provisions
Medium and long term
borrowing

8

1.3.2 . Effects of influencing factors change
Influence factors wil l cause changes in the level of working capital. Comparing the
previous level of working capital resulted from the influence of the factors can be synthesized
following situations:
a) W.C1>W.C0 (working capitla increases). This is considered to be
positive because a growing portion of current assets is funded from permanent capital.
If this increase was due to the increase in long -term indebtedness by resorting to
medium and long -term loans, then the financial expenses (interest) that will have the
effect of diminishing the exploitation result will also increase. The financial situation
is improving if the increase in the working capital is due to the increase in equity. A
working capital pool that totally covers the stocks is not proof of a good resource
management because instead of more expensive permanent resources, temporary
resources could be used.
b) W.C1 <W.C0 (working capital decreases). This situation is often
considered negative, because the current assets are covered to a lesser extent by
permanent re sources. If this decrease of the working capital is due to the increase of
the fixed assets then the financial situation is improved due to the results of the
investment exploitation (only in the case of productive investments). Also, the
decrease in the w orking capital can be offset by a more efficient management of the
current assets. Reducing the working capital is negative when it diminishes due to the
reduction of the share capital.
c) W.C1 = W.C0 (working capital remains unchanged). This situation is
theoretically possible but practically can be encountered rarely because it presupposes
the total harmonization of the resources with the necessity of their allocation. It meets
for short periods, the financial and accounting operations causing permanent chan ge of
the bearing fund in the sense of increasing or diminishing it.

9

CHAPTER 2
THE EVOLUTION OF WORKING CAPITAL AT
SC. CEREALCOM S.A

2.1. Prezentation of the company SC CEREALCOM S.A

SC Cerealcom S.A. Teleorman was founded in 1997 on the base of HG no. 184/1997
Regarding the establishment companies by taking over part of the patrimony of the National
Agency of Agricultural Products – RA, with state capital. Later, in 1999, the company was
transformed into a private capital society, and in 2002, it expanded its activity inFollowing the
fusion by S.C. Rosiori S.A – what became Cerealcom SA Oil Branch Rosiori.
The main field of activity is the cultivation of grain (exclusiv rice), leguminous plants
and seed -producing plants.
Secondary activities:
 Wholesale of grain, seeds, and unprocessed tobacco.
 The production of oil and vegetable fat.
 Wholesale of oil and vegetable fat.
The company carries out its activity at its headquarters and at the following secondary
offices (branches and wor k points):
Branches:
CEREALCOM S.A TELEORMAN -SUCURSALA ULEI ROSIORI
Work Points:
Siloz Alexandria
Depozit Tiganesti
Baza Suhaia
Siloz Olteni
Depozit Slavesti
Depozit Necsesti
Siloz Rosiori
Depozit Balta Sarata
Siloz Turnu Magurele
Siloz Zimnicea
Siloz Videle
Depozit Silistea
Depozit Ciolpani
Atelier mecanic si Coloana Auto

10
The shares are part of the same category of shares, they are ordinary, nominative,
indivisible,fully paid and issued in dematerialized form. The issuer's shares gives on their
holdersequal rights. Each action entitles the holder to a vote in the General Assembly,the right
to vote and to be elected in the governing bodies and the right to participate in the
distributionbenefits.
The share capital of S.C. Cerealcom S.A. Alexandria is 51.793.803 lei, divided into
517.938.025 nominative shares with a nominal value of RON 0.10 and between 2013 and
2016 no shares were issued.

The shares are divided in the company as the following:
Shareholders: Nr. Of shares Percentage
INTERAGRO S.A ,Bucuresti 250.948.450 48,4514%
S.C INTERACTIO
S.R.L,Bucuresti 121.291650 23,4182%
Others 93.889.650 18,1276%
INTERAGRO S.R.L,Zimnicea 51,808,275 10,0028%
TOTAL: 517,938,025 100%
31/12/2016

The beneficiaries of the services provided by the company are mainly the traditional
clients. Society maintained good relations with his clients.The main clients are: ADM
Romania Trading SRL, Expur SA, Floarea International, NideraRomania, Bunge Romania,
Ameropa, Cargill Agriculture.
Biggest clients on share in t otal turnover are ADM Romania Tranding SRL with
31,89% and Expur SA Slobozia with 22,48%.
According to the law and the articles of incorporation, the management is ensured by
the General Meeting of the Shareholders. The Association is managed by the Board of
Directors, consisting of 3 members.
On March 16, 2017, the Board of Directors of CEREALCOM SA is:
Name Function Age Rating Experience
Cadar Marcel Gicu President 49 Agronomist
engineer 26 years
Stoicescu Mariana Member 65 Economist,
accountant 40 years
Dogaru Sorin Cezar Member 50 Agronomist
engineer 26 years

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The executive management of CEREALCOM SA is ensured by:
Name Function
Iliescu Florea General Director
Jurubita Carmen Economic Director

The company carries out it’s activity with a number of 224 employees.
Nr.
Crt. Specification Cerealcom
S.A
Teleorman Sucursala
Ulei Rosiorii
de vede Total
I. Higher Education
-Leadership
-enginieeres,economists,lawyers 16
2
14 14
2
12 30
4
26
II. Secondary Education
-technicians
-accountants 23
3
20 13
5
8 36
8
28
III. Qualified Workers 50 38 88
IV. Unqualified Workers 39 31 70
TOTAL(I+II+III+IV) 128 96 224
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned

The structure of the employees according to the levels of study highlights that 13.39%
of the staff have higher education and 16.07% have secondary education, while 39.29% are
qualified workers and 31.25% are unqualified workers.
In 2014, the company had the highest number of employees in the last 5 years, 360 in
2012 and 2013 being 326 respectivelz 320, but in the last two years the number of employees
has decreased to 244 in 2015 and 224 in 2016.
Share of the turnover of the products / services provided by the company in the last 3
years:

12
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned

Nr.
crt Indicators 2012 2013 2014 2015 2016

1. Turnover 51,585,255.00 73,278,240.00 74,500,144.00 38,514,050.00 31,380,380.00
2. Total
Revenue 53,958,160 72,705,608 74,629,350 38,460,983 28,332,544
3. Total
Expenses 53,795,774 70,056,224 72,289,155 46,331,877 35,965,280
4. Gross
result 162,386 2,649,384 2,340,195 -7,870,894.00 -7,632,737
5. Tax 63,665 413,622 363,575 0 0
6. Net result 98,665.00 2,235,762.00 1,976,620.00 -7,870,894.00 -7,632,737
7. Average
number
of
employees 326 320 360 240 224
8. Work productivity
=𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐧𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐞𝐬 W2012=158,23 W2013=229 W2014=206,94 W2015=160,47 W2016=128,38
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned Product/Service 2014 2015 2016
Turnover % Turnover % Turnover %
Agricultural
products,various
goods 51,203,729 68,7 24,397,991 63,3 19,606,689 62,5
Chemical fertilizer 3,509,783 4,7 2,775,125 7,2 52,590 0,2
Storage and
processing services 14,761,722 19,8 7,102,665 18,4 7,237,222 23,1
Crude and refined
oil 3,629,353 4,9 3,431,362 8,9 3,668,958 11,7
Subproducts oil 1,191,573 1,6 603,202 1,6 419,080 1,3
Turnover subsidies 204,085 0,3 203,705 0,5 395,840 1,3
TOTAL 75,500,144 100 38,514,050 100 31,380,379 100

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The following conclusions can be drawn from the analysis:

Turnover is growing in both 2013 and 2014, showing two very good
years for the firm, but a signific ant decline over the past two years, which means that
sales of goods manufactured by the enterprise have fallen, an unfavorable situation for
the enterprise Because it does not gain profit, it also reflects an increase in stocks,
which shows the diminishin g of their capitalization.
Total revenues increased in 2013 and 2014 compared to 2012 with a
positive thing, but in 2015 there is a 52% difference compared to 2014, a considerable
proportion, and a 2016 still decreasing, which means that the production of goods has
diminished In consistent proportions.
Expenditure increases in the years 2013 and 2014 once with the
increase of production being two years with a high demand on the market on which it
operates and with the years 2015 and 2016 with a decrease whi ch means that there was
a decrease of the production achieved as a result of the decrease the demand from
customers, the emergence of competition that is imposed on the local market where
the enterprise operates.
Because S.C. CEREALCOM S.A. recorded losses in 2015 and 2016, it
can be said that in this case there is no tax on profit. If in the years 2013 and 2014 the
company stays very well from all points of view, there is a very large loss starting with
2015 when the company have the expenditures exceed th e revenues, the company
ending in a deadlock.
It is the year 2014 with the highest number of workers and the year
2013 with the highest labor productivity, followed by a considerable decrease of the
labor productivity in 2015 compared to the year of 78% du e to the decrease of the
turnover which is an unfavorable situation for the entity, and on the other hand this
indicator decreases as a result of the reduction of the number of employees and of the
registered losses, an unfavorable situation characterized by a financial imbalance.

2.2. Analysis of the main economic and financial indicators

The main economic and financial indicators used in assessing the efficiency of an
enterprise's business are the following:
a) Liquidity indicators;
b) Financial balance indicators;
c) Management indicators;
d) Profitability indicators.

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SC CEREALCOM S.A through the activity carried out, aims at imposing on the local
market as well as on the regional market the objective achieved through the services rendered
and th e products made available. In order for the performed activity to be characterized by
profitability it is necessary to continuously study and supervise the financial statements
represented by the balance sheet and the profit and loss account and when it is necessary to
take appropriate measures for the anomalies that occur in the economic process. The
enterprise is thus interested in the following:
The size of the financial results;
 The way of purchasing the resources and the most efficeint way to use
them;
 Capacity to honor obligations on maturity;
 Constantly maintaining the financial balance;
 Measures that can increase the quality of products and services
provided with direct influence on the improvement of the economic and financial
results.

2.2.1 . Liquidity indicators

Liquidity indicators – Measures the ability of companies to meet their short -term
obligations. These indicators are of three types:

a) General Liquidity – Reflects the ability of current assets to turn into
short -term liquidity to pay off current debts. The general fluidity is considered
satisfactory for values between 1.2 and 1.9 and good between 2 and 2.5. It can be
calculated using the formula:

LG=𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬
𝐒𝐡𝐨𝐫𝐭 𝐓𝐞𝐫𝐦 𝐃𝐞𝐛𝐭∗𝟏𝟎𝟎

Tabel 2.1
2012 2013 2014 2015 2016
Current
Assrets 49,115,877.00 44,016,568.00 50.563,816.00 42,626,693.00 26,154,358.00
Short -Term
Debt 35,993,631.00 27,170,800.00 27,503,759.00 25,946,999.00 15,019,365.00
Lg 1,36% 1,61% 1,83% 1,79% 1,74%
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned

15
In all five years, a satisfactory result of this indicator is recorded showing that the
entity has liquidity over it in a short time to settle its current liabilities.

Figure2.1
Evolution of General Liquidity

Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.
b) Immediate liquidity – shows the company’s ability to pay its debts. Unlike
the previous indicator, this one shows immediate capacity, rather than s hort-term
capacity. To calculate the indicator, use the formula:

Li=𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭 –𝐒𝐭𝐨𝐜𝐤
𝐒𝐡𝐨𝐫𝐭−𝐓𝐞𝐫𝐦 𝐃𝐞𝐛𝐭∗𝟏𝟎𝟎
Tabel 2.2
2012 2013 2014 2015 2016
Current
Assrets 49,115,877.00 44,016,568.00 50.563,816.00 42,626,693.00 26,154,358.00
Stock 31,134,177 22,882,593 18,063,537 7,535,447 5,807,176
Short -Term
Debt 35,993,631.00 27,170,800.00 27,503,759.00 25,946,999.00 15,019,365.00
Li 0,49% 0,77% 1,18% 1,352% 1,354%
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.
00,511,52Axis TitleGeneral Liquidity
2012
2013
2014
2015
2016

16

In all five years, a satisfactory result of this indicator is recorded indicating that
the entity has liquidity on it to honor its current de bts.

Figure 2.2.
Evolution of immediate liquidity

Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.
c) General Sovability Rate – shows the company's ability to use all its assets so
that it can cover its full debts within the deadlines set by contracts. The calculation
method is represented by the formula:

Rgs=𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬
𝐒𝐡𝐨𝐫𝐭−𝐓𝐞𝐫𝐦 𝐃𝐞𝐛𝐭∗𝟏𝟎𝟎
Tabel 2.3
2012 2013 2014 2015 2016
Total Assets 123,524,158 116,437,284 119,057,269 109,721,465 91,164,282
Short -Term
Debt 35,993,631.00 27,170,800.00 27,503,759.00 25,946,999.00 15,019,365.00
Lg 3,43% 4,28% 4,32% 4,22% 6,06%
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.

00,20,40,60,811,21,4Axis Title
Axis Title2012
2013
2014
2015
2016

17
Exceeding the value of 1.5 that represents the optimal level of this indicator, in all five
years it can be said that the company has a favorable situation determined by owning a
significant share of own resources, the calculated indicator having a growth trend.

Figure 2.3
Evolution of general solvency

Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.

2.2.2. Financial equilibrium indicators

Financial equilibrium indicators – Have the role of highlighting how the enterprise
meets its financial criteria to ensure good functioning.

a) Rate of financial autonomy – shows the share of own sources of financing within
the permanent sources, thus expressing the degree of independence fr om permanent creditors.
To determine it, use the formula:

Raf=𝐄𝐪𝐮𝐢𝐭𝐲
𝐏𝐞𝐫𝐦𝐚𝐧𝐞𝐧𝐭 𝐂𝐚𝐩𝐢𝐭𝐚𝐥∗𝟏𝟎𝟎

The company registred on all five years 0 long -term debt.When we want to
calculate the Permanent capital wich formula is Permanent Capital=Equity +
Long -Term Debt the result will be the equity.
01234567
2012
2013
2014
2015
2016

18
Tabel 2.4
2012 2013 2014 2015 2016
Equity 123,524,158 116,437,284 119,057,269 109,721,465 91,164,282
Permanent
Capital 123,524,158 116,437,284 119,057,269 109,721,465 91,164,282
Raf 1 1 1 1 1
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.
Figure2.4

Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.

b) The debt ratio – is a rate complementary to the precedent and shows the
share of medium and long -term debt in total permanent capital, expr essing the
degree of dependence of the firm on financial creditors.

Formula: Rd=𝐋𝐨𝐧𝐠−𝐓𝐞𝐫𝐦 𝐃𝐞𝐛𝐭
𝐏𝐞𝐫𝐦𝐚𝐧𝐞𝐧𝐭 𝐂𝐚𝐩𝐢𝐭𝐚𝐥∗𝟏𝟎𝟎

00,10,20,30,40,50,60,70,80,91
2012
2013
2014
2015
2016

19
Tabel 2.5
2012 2013 2014 2015 2016
Long -Term
Debt 0 0 0 0 0
Permanent
Capital 123,524,158 116,437,284 119,057,269 109,721,465 91,164,282
Raf Can’t be
calculated Can’t be
calculated Can’t be
calculated Can’t be
calculated Can’t be
calculated
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.

c) Debt rate – shows the extent to which the total asset is financed by debt, both in the
short and long term. It is important for the indicator to have a sub -unitary value, an example
of this need being that if the company goes bankrupt, debts must be paid first and if the value
of the firm is below that of the debts, their payment will not be possible. Calculate with the
formula:
Rd=𝐓𝐨𝐭𝐚𝐥 𝐃𝐞𝐛𝐭𝐬
𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬
Tabel 2.6
2012 2013 2014 2015 2016
Short -Term
Debt 35,993,631.00 27,170,800.00 27,503,759.00 25,946,999.00 15,019,365.00
Long -Term
Debt 0 0 0 0 0
Total Debts 35,993,631.00 27,170,800.00 27,503,759.00 25,946,999.00 15,019,365.00
Total Assets 123,524,158 116,437,284 119,057,269 109,721,465 91,164,282
0,29 0,233 0,231 0,24 0,16
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.

20
Figure 2.6

Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.
d) Stock financing rate – shows the share of the working capital stock in stock
financing. The ratio should generally have values of about 0.66,the working capital to cover
about 2/3 of the value of the stocks. However, with a very efficient management, the working
capital may b e lower and the stocks to be financed from borrowed sources, without the yield
being affected. The determination formula is the following:

Rfs=𝐏𝐞𝐫𝐦𝐚𝐧𝐞𝐧𝐭 𝐂𝐚𝐩𝐢𝐭𝐚𝐥−𝐅𝐢𝐱𝐞𝐝 𝐀𝐬𝐬𝐞𝐭𝐬
𝐒𝐭𝐨𝐜𝐤𝐬

Tabel 2.7
Permanent
Capital 123,524,158 116,437,284 119,057,269 109,721,465 91,164,282
Fixed assets 75,408,281.00 72,420,616.00 69,493,453.00 67,094,771.00 65,009,924.00
Stock 31,134,177 22,882,593 18,063,537 7,535,447 5,807,176
Li 1,54 1,92 2,74 5,65 4,50
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.

00,050,10,150,20,250,3
2012
2013
2014
2015
2016

21
Figure 2.7

Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.
e) Equity Ratio against Fixed Assets – Expresses the ability of a company’s equity to
cover fixed assets. The value of this ratio is close to 1, the more complete the permanent
financing sources from its own resources and therefore temporary sources of temporary
resources. The formula for de termining this rate is as follows:

Rcp/ai=𝐄𝐪𝐮𝐢𝐭𝐲
𝐅𝐢𝐱𝐞𝐝 𝐀𝐬𝐬𝐞𝐭𝐬

Tabel 2 .8
2012 2013 2014 2015 2016
Equity 87,151,463.00 89,382,720.00 91,698,866.00 83,820,614.00 76,176,448.00
Fixed assets 75,408,281.00 72,420,616.00 69,493,453.00 67,094,771.00 65,009,924.00
Raf 1,15 1,23 1,31 1,24 1,17
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.

0123456
2012
2013
2014
2015
2016

22
Figure 2.8

Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.
2.2.3. Management indicators
a) Current Loan Ratio – Expresses the number of days required for current assets to
turn into liquidity. The calculation formulas are:

Current Loan Ratio =𝐅𝐢𝐬𝐜𝐚𝐥 𝐕𝐚𝐥𝐮𝐞
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬;

Rcl=𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬
𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫∗𝟑𝟔𝟎

Tabel 2.9
2012 2013 2014 2015 2016
Current
Assets 49,115,877.00 44,016,568.00 50.563,816.00 42,626,693.00 26,154,358.00
Turnover 51,585,255.00 73,278,240.00 74,500,144.00 38,514,050.00 31,380,380.00
Raf 343 days 216 days 244 days 334 days 300 days
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned.
There is a decrease in this indicator in the years 2013 and 2014 compared
to 2012 and a significant increase in 2015 and 2016 compared to 2014, which
1,051,11,151,21,251,31,35
2012
2013
2014
2015
2016

23
shows that there is an increase in the number of days of conversion of the current
assets in liquidities, due to their inadequate management.
Figure 2.9

Source: Data in the table are taken fr om the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned.

b) Total Asset Rate – Expresses the number of days required for total assets
to convert to cash. The calculation formulas are:

Total asset rotation=𝐅𝐢𝐬𝐜𝐚𝐥 𝐕𝐚𝐥𝐮𝐞
𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬;
TAR=𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬
𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫*360
Tabel 2.10
2012 2013 2014 2015 2016
Total Assets 123,524,158 116,437,284 119,057,269 109,721,465 91,164,282
Turnover 51,585,255.00 73,278,240.00 74,500,144.00 38,514,050.00 31,380,380.00
Raf 826 days 572 days 575 days 1025 days 1045 days
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned.
050100150200250300350
2012
2013
2014
2015
2016

24
The calculations made above result in an increase in this indicator over the
five years, an unfavorable situation for the enterprise, as it increases the number of
days required to convert total assets into liquid capital.
Figure2.10

Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well a s from the profit and loss account for the
years mentioned.
c) The average recovery of claims – for the number of days for the
company to recover claims by. Calculation formulas:

The average recovery of claims =𝐅𝐢𝐬𝐜𝐚𝐥 𝐕𝐚𝐥𝐮𝐞
𝐓𝐨𝐭𝐚𝐥𝐬 𝐂𝐥𝐚𝐢𝐦𝐬;

Arc=𝐓𝐨𝐭𝐚𝐥 𝐂𝐥𝐚𝐢𝐦𝐬
𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫∗𝟑𝟔𝟎

Tabel 2.11
2012 2013 2014 2015 2016
Total Claims 16,524,798.00 18,734,712.00 30,506,556 23,701,324.00 19,631,734.00
Turnover 51,585,255.00 73,278,240.00 74,500,144.00 38,514,050.00 31,380,380.00
Raf 115 days 92 days 147 days 222 days 225 days
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned.
020040060080010001200
Days2012
2013
2014
2015
2016

25
We have a decrease in 2013 compared to 2012, but in the years to come the
increase is considerable leading to an unfavorable situation for the company as it
increases the number of days required to collect the debts held on the clients
Figure 2.11

Source: D ata in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned.

2.2.4. Profitability indicators

Profitability indicators – express quantitatively and synthetically the positive
economic results, by spending the social work done in order to pass the goods obtained from
the sphere of production into the sphere of circulation, in order to complete the process of
social reprodu ction. Profitability is the ability of an economic agent to make a profit.
a) Economic profitability rate – shows the company’s ability to earn profits from its
entire business. The rate must be higher than the inflation rate in order for the company to
maintain its economic substance. The calculation method is:

Rep=𝑵𝒆𝒕 𝑷𝒓𝒐𝒇𝒊𝒕
𝑷𝒆𝒓𝒎𝒂𝒏𝒆𝒏𝒕 𝑪𝒂𝒑𝒊𝒕𝒂𝒍∗𝟏𝟎𝟎

050100150200250
Days2012
2013
2014
2015
2016

26
Tabel 2.12
2012 2013 2014 2015 2016
Net Profit 98,665.00 2,235,762.00 1,976,620.00 -7,870,894.00 -7,632,737
Permanent
Capital 123,524,158 116,437,284 119,057,269 109,721,465 91,164,282
Raf 0,079 1,9 1,55 -7,17 -8,37
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned.

The above calculations result in a decrease in this indicator during 2013
and 2014, while in the years 2015 and 2016, the enterprise suffers a loss, an
unfavorable situation for the enterprise because it does not make any profit.

Figure 2.12

Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned.

b) Financial profitability rate – shows the ability of a company to earn
profit using equity, or, in other words, shows return on equity. It is sensitive to the
-10-8-6-4-202
2012
2013
2014
2015
2016

27
financial structure of the enterprise, its debt position, and must exceed the average
interest rate on the capital market. It is calculated in the following way:
Rf=𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭
𝐄𝐪𝐮𝐢𝐭𝐲∗𝟏𝟎𝟎
Tabel 2 .13
2012 2013 2014 2015 2016
Net Profit 162,386.00 2,235,762.00 1,976,620.00 -7,870,894.00 -7,632,737
Equity 87,151,463.00 89,382,720.00 91,698,866.00 83,820,614.00 76,176,448.00
Raf 0,18% 2,50% 2,15% -9,39% -10,01%
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned.
The previous calculations result in a substantial increase in 2013 compared to 2012 after a
slight decrease in 2014, while in 2015 and 2016 the company suffers a loss, an unfavorable
situation for the enterprise because it no longer gains profit

Figure 2.13

Source: Data in the ta ble are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the years
mentioned.
c) Return Earned Rates Rate – Measures the efficiency of the business
conducted by the firm during a finan cial exercise through resource consumption,
showing their ability to generate gross profit; Or how much profit is achieved at an
expense unit made. To determine it, use the following formula:
-12-10-8-6-4-2024
2012
2013
2014
2015
2016

28
Rerr=𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭
𝐓𝐨𝐭𝐚𝐥 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬*100
Tabel 2.14
2012 2013 2014 2015 2016
Net Profit 162,386.00 2,235,762.00 1,976,620.00 -7,870,894.00 -7,632,737
Total
Expenses 53,795,774.00 70,056,224.00 72,289,155.00 46,331,877.00 35,965,280.00
Raf 0,30% 3,19% 2,73% -16,98% -21,22%
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned.
The previous calculations result in a substantial increase in 2013 compared
to 2012 after a slight decrease i n 2014, while in 2015 and 2016 the company
suffers a loss, an unfavorable situation for the enterprise because it no longer gains
profit

Figure 2.14

Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned.

d)The rate of commercial profitability or sales – shows the efficiency of
product valorisation, pricing and trade policy. It is calculated as follows:
Rcps=𝐍𝐞𝐭 𝐏𝐫𝐨𝐟𝐢𝐭
𝐓𝐮𝐫𝐧𝐨𝐯𝐞𝐫∗𝟏𝟎𝟎
-25-20-15-10-505
2012
2013
2014
2015
2016

29

Tabel 2.15
2012 2013 2014 2015 2016
Net Profit 162,386.00 2,235,762.00 1,976,620.00 -7,870,894.00 -7,632,737
Turnover 51,585,255.00 73,278,240.00 74,500,144.00 38,514,050.00 31,380,380.00
Raf 0,31% 3,05% 2,65% -20,43% -24,32%
Source: Data in the table are taken from the Balance Sheet for the years
2012,2013,2014,2015 and 2016, as well as from the profit and loss account for the
years mentioned

The calculations made above show a high level of this indicator in the
years 2013 an d 2014, with a slightly increase compared to 2012, and in the years
2015 and 2016 it will suffer a loss, an unfavorable situation for the enterprise
because it does not gain profit.
Figure 2.15

Source: Data in the table are taken from the Balance Sheet for the
years 2012,2013,2014,2015 and 2016, as well as from the profit and loss account
for the years mentioned

-25-20-15-10-505
2012
2013
2014
2015
2016

30
Conclusion

For the enterprise to be able to achieve the goals for which it was created it is
necessary to meet the conditions imposed by the profitability of the business.
Like any other company, the main purpose is to get profit. This can only be done with
a good management and with a future perspective, with an ongoing activity object in the best
conditions. The company must gradually dev elop production and supplies services.
From the category of short -term loans we can identify the following types of credits:
commercial credit, loans contracted from financial institutions. These loans are granted after a
complex and detailed analysis of t he financial situation of the enterprise and only if a
favorable situation is found as a result of the analysis and its ability to honor its due
obligations.
Not having long term debt is not necessarily a good thing because it is understood that
the compan y does not want to grow. The purchase of a loan that exceeds one year, having a
higher value, the company could get used to this money Improve their production line or even
expand their business environment, penetrating new financial markets.
Following the analysis of the economic and financial situation achieved through the
indicators at the enterprise S.C. CEREALCOM S.A. I have been able to fully understand
certain fundamental notions of economics, as well as the following:
 SC CEREALCOM S.A It is an enter prise that occupies an
important place on the local market for the cultivation of cereals (except rice),
legumes and seed -growing plants with a rich tradition accumulated from the moment
of its establishment;
 Following the analysis of the main economic and financial
indicators it can be stated that the enterprise has sufficient fixed assets purchased, the
recovery of receivables from third parties is done within the set deadlines, holds
sufficient liquidity to honor the current obligations matured;
 But afte r the good period of 2013 and 2014, there was a decrease in
turnover and expenses that exceeded the company's revenues by registering losses in
the years 2015 and 2016, which directly affect its profitability,as a result of the
activity carried out produce no benefits and that SC CEREALCOM S.A. does not
achieve the fundamental objective of any economic activity;
 The economic crisis affected the company's business by causing
unfavorable, negative results at the end of the financial year.
I believe that this situation of financial imbalance at S.C. CEREALCOM S.A. Must be
remedied in different ways so that these imbalances do not degenerate, leading to liquidation,
followed by the bankruptcy of the firm.

31

Proposals in this regard are the following: Adapting the pricing policy to the
competition so that there is not too much discrepancy, achieving production in line with
customer demand, periodic performance of consumer behavior analysis, better management
of internal sources, attracted and Borrowed for the pu rpose of managing them in a cost –
effective manner, reducing the expenses related to the operating cycle, undertaking a market –
adapted activity, the economic environment so as to have flexibility and adaptability to any of
the systemic shocks in such a way that it is not affected Way negative activity.

32
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