Analysis Of A Company s Capacity To Produce Profit Under Inflation Conditions

Transcription

1 oeedins of the 5th WSEAS International Conferene on Eonomy and Manaement Transformation (Volume I) Analysis Of A Comany s Caaity To odue ofit Under Inflation Conditions PROFESSOR PH.D.CĂRUNTU CONSTANTIN LECTURER PH.D. LĂPĂDUŞI MIHAELA LOREDANA Faulty of Eonomi Siene and Affairs Administration Constantin Brânuşi University Vitoria street, no.24, T-Jiu, Gorj Romania aruntu_tin@zahoo.om, loredana@utjiu.ro Abstrat: The riority iven to ries stability should be a fundamental objetive of the monetary oliy towards romotin a sustainable eonomi rowth, to the extent in whih it does not damae the fulfilment of its fundamental objetive. The lassi atterns of analyzin dynami rates of return (between aountin eriods) met in the seialized literature are built by leavin aside the inflation, and results annot be omared. The information of the rofit and loss aount is reorted at the date when sales and exenses are made. For a better understandin, We will resent IAS 29 Current ost finanial statements, ar. 30 Global inome statement aordin to whih: the statement of the lobal inome to the urrent ost, before retreatment, enerally reorts urrent osts at the date the transations or events eneratin them our. The ost of sales and dereiation are reorded at urrent ost at the time of onsumtion; sales and exenses are reorded at urrent osts at the time of onsumtion; sales and exenses are reorded at money value at that time. This is why all values should be retreated in the unit of measurement existin at the end of the reortin eriod, usin a eneral rie index.[11] We will resent next the methods to analyze sales related rofit and the rates of return under onditions of inflation, usin resent values as omared to rated values. Key-Words: inflation, urrent ost, inomes, rofit, ommerial rofitability, eonomi rofitability, finanial rofitability 1 Introdution Inflation is a major unbalane in the eonomy of any ountry, reresented by a eneralized rie inrease and by simultaneous derease of the urhase ower of the national urreny. Inflation is a final indiator, whih indiates at the end of the fisal year whether monetary, fisal, slative overnmental oliies alon with Central Bank oliies are oordinated and result in onsumtion ries stability. [7] The inflationist roess is haraterized by two major trends, namely: eneralized ries inrease and money urhase ower derease. On a lon term, inflation is resent in any eonomy. The henomenon annot be omletely ontrolled, and at the same time it is not disadvantaeous for everybody. Those who aurately antiiate the evolution of inflation an always find methods to et rih, to the disadvantae of those who annot antiiate it. Under onditions of inflation there is no real rofit at the end of an aountin eriod unless the omany has built its equity aital aain in onstant urreny. From the eonomists oint of view, inflation has muh more imortant effets, even some of them onsider them mainly neative, and others mainly ositive, eseially in the ase of a low inflation rate. Amon the most imortant onsequenes of inflation in eonomy we an ount: dros in sales and therefore of the omany s rofit, resetively the distortion of outomes indiators; inomes and wealth redistribution throuh whih some eonomi ators lose, bein even in the ISSN: ISBN:

2 oeedins of the 5th WSEAS International Conferene on Eonomy and Manaement Transformation (Volume I) osition to reah bankruty, while other ain due to the uneven ries and inomes rises; it determines the risin ressure on the available ative aital; undervaluation of equity aitals, frozen assets, amortization et; aital derease as a result of rofit tax; unreal dividend distribution et; it determines a runaway of ative aital and a trend to lae available ash in non-rodutive durable ommodities. This roess may result in a slowdown or even a stanation of the eonomi rowth. Inflation is one of the most imortant fators that finanial manaers should take into onsideration. ofitability (rofit and rofitability rates), under inflation onditions, alulated based on the nominal values of the Loss and ofit Aount and of the balane sheet is not relevant. We will resent next the methods roosed in order to analyze rofit and rofitability rates if information is resented in onstant monetary units, in omarison to the ase in whih it is resented in nominal values. 1. Analysis of turnover related rofit Of the well-known forms to exress rofit, we think that sales related rofit is relevant for this study. This is determined by followin the relation[6]: (1) For exemlifiation, we will use the followin Pv data: Table no.1 Note: The eneral rie index at 31 st of Deember omared to 31 st of Deember was of 130,3%. The data neessary for establishin the omarable values of are desribed in the followin table: Table no.2 The fator analysis of sales related rofit based on nominal values results in the followin situation: Pv Pv1 Pv (2) 1. Influene of sold rodution volume: Pv I Pv % (3) where: I % (4) 2.Influene of sold rodution struture: ( ) Pv I (5) ( ) % Influene of unit osts: ( ) (6) ( ) Influene of the sellin rie: ( ) (7) For verifiation uroses, I shall use the relation: Pv (8) ( 330) + ( 5.590) The rofit fator analysis based on the values exressed in omarable monetary units is as follows: Pv Pv1 Pv (9) 1.Influene of sold rodution volume: Pv I Pv % ,63 (10) where: I % Influene of sold rodution struture: (11) ( ) Pv I (12) ( ) % 428, Influene of unit osts: ( ) (13) ( ) ISSN: ISBN:

3 oeedins of the 5th WSEAS International Conferene on Eonomy and Manaement Transformation (Volume I) 4.Influene of the sellin rie: ( ) (14) For verifiation uroses, we shall use the relation: Pv (15) , 63 + ( 428, 63) After havin analyzed fators influenes in the two variants, we notie the followin: the influenes of the sold rodution volume and struture are exressed in the reortin monetary unit of the aountin eriod taken as omarison basis unit osts influenes is totally distorted both from the oint of view of meanin and size. In the examle desribed above, based on the nominal values, we notie a rise of osts and a derease of rofit, and based on the exression in omarable monetary units, we notie a derease of osts and an inrease of rofit; the influene of sellin ries is distorted from the oint of view of size, the meanin bein reserved in the two variants. 1. Analysis of the ommerial rofit rate For the fator analysis we will use the followin attern: R 1 (16) (17) R % (18) R , 78% The fator analysis based on nominal values leads to the followin results: R R R , , 78% 1. Influene of the sold rodution struture: R 1 R % 11, ,87% (19) (20) 2. Influene of the sellin rie: R , , 07% 3. Influene of the unit ost: R ,78 25, 2 12, 42% (21) (22) The fator analysis based on the values of omarable monetary units leads to the followin results: (23) R % R (24) , 78% R R R , , 78% 1. Influene of the sold rodution struture: R 1 R % 11, ,87% Influene of the sellin rie: R ,17 11,13 + 1, 04% 3. Influene of the unit ost: R , 79 12,17 + 0, 62% (25) (26) (27) (28) 3. Analysis of resoures rate of return For the urose of its fator analysis, I will use the followin attern: Rr (29) ISSN: ISBN:

4 oeedins of the 5th WSEAS International Conferene on Eonomy and Manaement Transformation (Volume I) R R ,64% (30) (31) ,65% R R R 14, 65 13, , 01% (32) Based on the nominal values we will et the followin results: 1. Influene of the sold rodution struture: Rr Rr (33) ,64 12,52 13,64 1,12% Influene of the unit ost: Rr (34) ( 3, 50) 12, 52 16, 02% 3. Influene of the sellin rie: Rr (35) , 65 3, , 22% ( ) The fator analysis based on the values of onstant monetary units leads to the followin results: 1. Influene of the sold rodution struture: Rr Rr ,64 12,52 13,64 1,12% Influene of the unit ost: Rr , 33 12, ,81% (36) (37) 3. Influene of the sellin rie: 100 Rr , 65 13, , 32% (38) 4. Analysis of the eonomi rate of return In order to analyze the eonomi rate of return, I roose the followin attern: Re 100 (39) At At Ai + A (40) where: At total assets used in the oeration yle; Ai annual averae value of frozen assets; A averae balane of irulatin assets. The two terms of the rate in the ase of usin nominal values are not omarable. Frozen assets are valuated into book values (historial osts), omletely different from the monetary units in whih irulatin assets and turnover related rofit are evaluated. [10] If we use the multiliative attern: CA Re At CA (41) We notie that the asset rate of turnover ( CA At ) is distorted by the undervaluation of total assets and the ommerial rate of return ( ) underoes the CA distortions indiated in oints 1 and Analysis of the finanial rate of return The finanial rate of return established based on the nominal values of net rofit and equity aital does not aurately reflet the reality beause the two terms are evaluated differently. In the ase of assets evaluation at the historial ost, the equity aital is undervalued, and in onditions of inflation, the net rofit is distorted beause one does not take into onsideration the adjustments for maintainin the equity aital (reonstrution of the urhasin ower of the equity aital) and other inomes or losses of the monetary osition. [4] In order to exemlify this statement, we will use the followin data: ISSN: ISBN:

5 oeedins of the 5th WSEAS International Conferene on Eonomy and Manaement Transformation (Volume I) Table no.3 P n R f % (42) K If we onsider inflation, then alulations are the followin: Table no.4 P n R f ,17% K (43) The 25% rate of return of the equity aital is established as if the inflation rate is zero. In onditions of inflation, the numerator dereases and the denominator inreases with the same value (adjustment in order to maintain the finanial aital). 4 Conlusions For the ommerial rate of return and the rate of return of onsummated resoures, if we omare the influenes established based on nominal values and omarable monetary unit values, we et the followin: the influene of sold rodution struture is the same beause all the terms from the alulation formulas are exressed in the values of the same aountin eriod; the influenes of osts and sellin ries are distorted, the exlanations bein the same as in the ase of sales related rofit. The earnin or loss of the net monetary osition is inluded, in onditions of inflation, in the rofit or loss return (aordin to IAS 29 "Finanial Reortin in Hyerinflationist Eonomies", ar. 28) and influenes the finanial rate of return. Durin a eriod of inflation, a omany that reords an exess of monetary debts over monetary assets reords earnins from the net monetary osition and reversely, to the extent in whih monetary assets and debts are not onneted to rie level. Aordin to IAS 29 as well, but ararah 27 the earnin or loss from the net monetary osition an be ahieved as a differene resulted from retreatin non-monetary assets, equity aitals and elements of the lobal return statement and from the adjustment of indexed assets and debts. The earnin or loss an be estimated by alyin the variation of a eneral rie index to the weihted averae of the differene between the monetary assets and debts of that eriod. [11] Referenes: [1]Ahim Monia Violeta, Analiză eonomiofinaniară, Ed. Risorint, Cluj-Naoa, 2010; [2]Avare Ph., G.Leros, L.Ravary, P.Lemonnier, Gestiune şi analiză finaniară, Ed.Eonomiă, Buureşti, 2002; [3]Anhel Ion, Eduard Dinu, Strateia şi analiza eonomio finaniară a firmei, Ed. ASE, Buureşti, 2007; [4]Brezeanu Petre (oordonator), Analiză finaniară, Ed. Meteor ess, Buureşti, 2007; [5]Burja Camelia, Analiză eonomio-finaniară. Asete metodoloie şi aliańii ratie, Ed. Casa CărŃii de ŞtiinŃă, Cluj-Naoa, ; [6]Căruntu Constantin, Analiza eonomiofinanară a firmei. Conete.Metode.AliaŃii, Ed. Universitaria, Craiova, ; [7]Poa Ion Lala, Analiză eonomio-finaniară. Elemente teoretie şi studii de az., Ed. Mirton, Timişoara, ; [8]Poesu Dan Dumitru, Creatin value throuh omany analysis, H'ART Publishin Siene, Buharest, 2007; [9]Vâleanu Gheorhe, Vasile Robu, Niolae Georesu, Analiza eonomio-finaniară, Ed. Eonomiă, Buureşti, [10]Erih A. Helfert, Tehniques of Finanial Analysis - a uide to value reation, Ed. BMT, 2006; [11]*** Standardele InternaŃionale de Raortare Finaniară (IFRS) - norme ofiiale emise la 1 ianuarie, Ed. CECCAR,. ISSN: ISBN: