The analysis of the inflation s influence over the profit corresponding to turnover and profitability ratios

Transcription

1 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES The analysis of the inflation s influene over the rofit orresondin to turnover and rofitability ratios Căruntu Constantin Lăăduşi Mihaela Loredana 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 finanial struture reflets the finanin method throuh own resoures or borrowed. The adotion of a ertain finanial struture reresents an imortant aset of finanial oliy of the omany. The deision of the finanial struture deends on the omany, of its eonomi rowth objetives, on the level of the lanned rofitability and on the risks is reared to assume and also on the shareholders, banks, state, as the eonomi onjunture. The study of the rofitability evolution an be done in absolute hanes throuh rofit and in relative measures throuh rofitability ratios. 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. 3 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.[2] 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. Keywords - ommerial rofitability, urrent ost, eonomi rofitability, finanial rofitability, inomes, inflation, rofit T I. INTRODUCTION he maroeonomi environment, throuh inflation, the interest rate, the exhane ourse, influenes the roess of finanin of a omany. The inflation has always been resent after 99 and its omarison with the nominal rofitability ratios an lead to the idea of real loss of aital. 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, leislative overnmental oliies alon with Central Bank oliies are oordinated and result in onsumtion ries stability. [8] Common fators to the omany, as the weiht of tanible assets in total assets, the dimension of the omany, the rofitability, the instability of the sales, the ororate ontrol et., are taken always into aount by manaers when they need new soures of fundin. From the maroeonomi fators, the inflation and the ylial eonomi develoment have the most imortant relevane in the omosition of the omany s liabilities. There are, also, international fators that inlude overnmental inentives for attratin funds from abroad, rotetionist strateies and the reatriation of aital, but also ultural fators that inlude soial values that onern the distribution of revenues, the develoment stae of the aital markets, the aountin and the fisal system. 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 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; Issue 2, Volume 5, 2 35

2 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES 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. rofitability (rofit and rofitability rates, under inflation onditions, alulated based on the nominal values of the Loss and rofit 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. II. 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 [8]: ( v For exemlifiation, we will use the followin data: Table no. Note: The eneral rie index at 3 st of Deember omared to 3 st of Deember was of 3,3%. 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: The hane of the rofit orresondin to sales (turnover: (2 The measurement of the influene of omonent fators:. The influene of sold rodution volume: I 4.5 % (3 where: (4 I % The influene of sold rodution struture: ( I (5 ( % The influene of unit osts: ( ( (6 4.The influene of the sellin rie: ( (7 4.. The influene of the inflation: ( I , , The influene of the ries exlusively the inflation ( I , ,25 For verifiation uroses, we shall use the relation: ( ( 33 + ( The rofit fator analysis based on the values exressed in omarable monetary units is as follows: The hane of the rofit orresondin to sales (turnover: ( The measurement of the influene of omonent fators:.the influene of sold rodution volume: I 5.863% , 63 (2 where: I % ( The influene of sold rodution struture: ( I (4 ( % 428, The influene of unit osts: ( ( (5 4.The influene of the sellin rie: ( (6 4.. The influene of the inflation: ( I ( , , The influene of the ries exlusively the inflation ( I ( , ,353 For verifiation uroses, we shall use the relation: ( , 63 + ( 428, (8 (9 Issue 2, Volume 5, 2 352

3 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES 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. For a more omlex anylysis we and use the followin model: r (2 where: ( r (2 -the rofit orresondin to turnover; the hysial volume of the rodution sold; the sale rie; r - the averae rofit at leu turnover; rodut ost. The fatorial system of the rofit orresondin to turnover an be reresented shematially: Fiure no. The fatorial system of the rofit orresondin to turnover The dianosis analysis of fatorial tye of the rofit orresondin to sales done on the basis of the nominal values, leads to the followin situation: The hane in the rofit orresondin to sales (turnover: (22 The measurement of the influene of omonent fators:.the influene of turnover: CA ( CA CA r (23 ( ( , The influene of the volume of the rodution sold: (24 ( , The influene of the sale rie : (25 ( , The influene of the inflation: ( I (26 ( , , , The influene of the ries exlusively the inflation ( I (27 ( ,33,2 522,35 2.The influene of the rofit orresondin to turnover: r CA ( r r ( ,277778, The influene of the volume of rodution sold: / CA r r ( , (,287, The influene of the sale rie: CA r r ( , 252, , 85 Issue 2, Volume 5, 2 353

4 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES The influene of the inflation: CA r r I , , , , , 77 ( The influene of the ries exlusively the inflation CA r r I , ,25 45., 252, , The influene of the unit ost: // CA r r (32 (33 45.(,277778, ,999 For verifiation we have the relationshi: CA r ( The fatorial analysis of the rofit based on values exressed on omarable monetary units is realized as : The hane in the rofit orresondin to sales (turnover: (35 The measurement of the influene of the omonent fators:.the influene of turnover: CA ( CA CA r ( ( , , The influene of the volume of rodution sold: ( , , The influene of the sale rie: ( ,25 + 7, 447 (36 (37 ( The influene of the inflation: ( I (39 ( 49.35, , , The influene of the ries exlusively the inflation ( I (4 ( ,33,25.724, The influene of the rofit orresondin to turnover: r CA r r ,279587, , The influene of the volume of rodution sold: / CA r r ,347,25 434, The influene of the sale rie: (4 (42 CA r r , (,275, The influene of the inflation: CA r r I , , ,379622, , 622 (43 ( The influene of the ries exlusively the inflation CA r r I , , ,275, ,3949 (45 Issue 2, Volume 5, 2 354

5 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES.3.The influene of the unit ost: // CA r r ,279587, For verifiation we have the relationshi: CA r (47 + ( , , An inrease of the rofit orresondin to turnover influenes ositively the oerational result, the urrent result, the ross result and the net result of the eriod. The inrease of the rofit orresondin to turnover based on the nominal values with.25 and resetively with 527 based on the values omared, in in omarion with, has been determined by the inrease in turnover based on the nominal values with 9 and resetively with 527 based on the values omared. Also, the rofit orresondin to turnover has been influened neatively by the averae rofit at leu turnover with -392 based on the nominal values and resetively with based on values omared. III. ANALYSIS OF THE COMMERCIAL ROFIT RATE The ommerial rofit rate measures the effiieny of the ommerial ativity, the rofit rate makes the onnetion between the rofit and the turnover. The more the rofit that is obtained at leu turnover is bier the more the ativity of the omany is effiient. This rate is influened by the aountin oliies but also by the aountin raties like: the oliy of onstitutin the rovisions, methods of evaluatin stoks, methods of dereiatin the assets, the methodoloy of determinin the dedutible exenses [7]. The quality of the manaement of the omany is validated throuh the areiation if its roduts on the market, situation hihlihted throuh turnover. The ration between the result obtained and turnover is reresented by the ommerial rofit rate For the fator analysis we will use the followin attern: R (48 CA The fatorial system orresondin to the ommerial rofit rate an be reresented shematially as: Fiure no. 2 The fatorial system orresondin to the ommerial rofit rate The hane in the ommerial rofit rate leads to the followin results: R R % ,78% (49 (5 The fator analysis based on nominal values leads to the followin results: R R R 2, , 78%. The influene of the sold rodution struture: R R %,3 2,87% The influene of the sellin rie: R ,3 + 3,87% 2.. The influene of the inflation: R I , , , 92,3 + 2, 79% (5 (52 (53 (54 Issue 2, Volume 5, 2 355

6 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES 2.2. The influene of the ries exlusively the inflation R I ,33 ( , ,92 6, 92% 3. Influene of the unit ost: R ( ,78 25,2 2, 42% The fator analysis based on the values of omarable monetary units leads to the followin results: (57 R + 2% (58 R + 2, 78% R R R 2, , 78%. Influene of the sold rodution struture: R R %,3 2,87% Influene of the sellin rie: R ,7,3 +, 4% 2.The influene of the inflation: (59 (6 (6 2.. The influene of the ries exlusively the inflation R I ,33 ( , 353 2,7 3,8 9, 63% 3. Influene of the unit ost: R ( , 79 2,7 +, 62% IV. THE ANALYSIS OF THE RATE OF RETURN ON CONSUMED RESOURCES The resoures onsumtion is hihlihted throuh the exenses aounts. The effiieny of these onsumed resoures an be juded aainst the obtained results, based on the rate of return on onsumed resoures, known also as the rate of return on ost. By definition, the rate of return on onsumed resoures reflets the ratio between the result orresondin to turnover and the total osts orresondin to sales. For the urose of its fator analysis, we will use the followin attern: (65 The fatorial system orresondin to the ommerial rofit rate an be reresented shematially as: R I , , ,8,3 + 2, 67% (62 Fiure no. 3 The fatorial system orresondin to rate of return on the resoures onsumed Issue 2, Volume 5, 2 356

7 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES The hane of the ommerial rofit rate reords the followin values: ( ,64% 33. ( ,65% , 65 3, 64 +, % (68 Based on the nominal values we will et the followin results:. Influene of the sold rodution struture: ,64 2,52 3,64,2% Influene of the unit ost: , 5 2, 52 6, 2% 3. Influene of the sellin rie: , 65 3, , 22% 3.. The influene of the inflation: I 37.85, , ,55 ( 3,57 25,65 ( 3, ,22% (69 (7 (7 ( The influene of the ries exlusively the inflation I ( , , ,55 4, 65 4, 65 25, 65 + % The fator analysis based on the values of onstant monetary units leads to the followin results:. The influene of the sold rodution struture: ,64 2,52 3,64,2% The influene of the unit ost: ,332, 52 +,8% 3. The influene of the sellin rie: , 65 3, 33 +, 32% 3.. The influene of the inflation : I (74 (75 (76 ( , , ,353 3,33 47,66 3, ,33% Issue 2, Volume 5, 2 357

8 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES 3.2 The influene of the ries exlusively the inflation I , , , 353 4, 65 4, 65 47, 66 33, % (78 On this rate of return, the osts has a double ation, influenin differently the size of the numerator and denominator.in the ase of exeedin the unit osts, the numerator (reresentin the rofit dereases and the denominator (reresentin the total exenses inreases, whih makes that the neative influene of this fator on the rate of return on onsumed resoures to be muh stroner than in the ase of other rates. Aordin to the oinions of the seialty literature, the otimal level of the rate of return on onsumed resoures is between 9% - 5%. V. ANALYSIS OF THE ECONOMIC RATE OF RETURN The advantaes indued by the eonomi rate of return on the analytial field are due to the fat that this rate is indeendent of finanial struture, the fisal oliy of the state used when rofits are taxed, and also the extraordinary. For the analysis of the eonomi rate of return we suest the followin analysis model: Re (79 At At Ai + A (8 where: At total assets used in the oeration yle; Ai annual averae value of frozen assets; A averae balane of irulatin assets. The fatorial dianosis of the eonomi rate of return is realized as follows: The hane in the eonomi rate of return: (8 Re Re Re At At The influene of the omonent elements:. The influene of total assets: At Re At At..The influene of fixed assets: Ai Re Ai + A Ai + A.2.The influene of urrent assets: (82 (83 A Re Ai + A Ai + A 2.The influene of the rofit: (84 r (85 Re At At 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. [] If we use the multiliative attern: CA Re (86 At CA We notie that the asset rate of turnover ( CA is distorted At by the undervaluation of total assets and the ommerial rate of return ( r underoes the distortions indiated in CA oints 2 and 3. For eonomi reasons, the level of the eonomi rate of return has to meet the followin onditions: It has to ensure the maintenane of the eonomi substane of the omany, ondition that is aomlished when the eonomi rate of return is hiher than the inflation rate; It has to assure the remuneration of the invested aital at the level of the minimum rate of return in the eonomy (averae interest rate and to over in the same time the eonomi and finanial risk of the investors; The eonomi rate of return should ensure the usae in a favorable way of the omany s leverae and it is realized only when the eonomi rate of return is hiher than the interest rate. VI. ANALYSIS OF THE FINANCIAL RATE OF RETURN The finanial rate of return exresses the aaity of the equity to rodue benefits. 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] Throuh the omutation method, the finanial rate of return hihlihts the followin onditions: It is influened by the methods of obtainin the aital, this thin makin it more sensible aainst the leverae of the omany; The omutation of the net rofit is influened by the methods of omutin the dereiations and rovisions, and also by the omutation methods of the dedutible and nondedutible exenses from the amount taxed; Issue 2, Volume 5, 2 358

9 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES The finanial rate of return has to be hiher than the averae interest rate in order to determine the attrativeness of the omany s stoks on the market. In order to exemlify this statement, we will use the followin data: Table no.3 n 3.25 (87 R f 25% K 25. If we onsider inflation, then alulations are the followin: Table no.4 n R f 4,7% K (88 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. From those mentioned above reardin the finanial rate of return we an have the followin meanins: It exresses the shareholders interests on short term by ashin in dividends, and on lon term by reinvestin the rofit that assures the inrease of the value of the shares and imliitly the inrease of the ossibilities of rowin dividends in the next eriod; It measures the yield of owner s equity, otherwise said, of the finanial investments of the shareholders aital; It measures the omany s aaity of roduin net rofit throuh owner s aital used in the omany s ativity. The system orresondin to the ommerial rate of return an be reresented shematially as: Fiure no. 4 The fatorial system orresondin to the finanial rate of return where: K emanent aital; n net rofit; i taxed rofit; I tax inome; e oerational rofit; f finanial rofit; ext extrardinary rofit; β -orretions of the tax rofit. If we do a dianosis analysis of fatorial tye of the finanial rate of return, we would take into onsideration the followin influenes [6]: The hane in the finanial rate of return: (89 R f R f R f n n K K The measurement of the influenin fators:.the influene of the owner s equity: n n K R f K K 2.The influene of the net rofit: n n n R f K K from whih: 2..The influene of the taxrofit : i i R f K K i from whih: 2...The influene of the oerational rofit : e e e R f K K (9 (9 (92 (93 where: e Ve re şi Ve T wh ( The influene of the oerational revenues : ( Ve Ve re (95 Ve R f K from whih: 2...The influene of the workload: T T wh re T R f K The influene of the labor rodutivity: T wh wh re wh R f K (96 (97 Issue 2, Volume 5, 2 359

10 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES The influene of the oerational averae rofit at leu oerational revenues: (98 ( Ve re re re R f K 2..2.The influene of the finanial rofit: f f R f K K f 2..3 The influene of the extraordinary rofit: ext ext ext R f K K (99 ( 2..4.The influene of the fator β orrests the taxed rofit aordint to the law( add or dro: ( i ( i ± ( β β ( β R f K 2.2.The influene of the tax rofit: ( I I I R f K (2 In this situation the entral zone of dianosis an be foused on the oerational rofit, otherwise there an be examined the auses onernin the β fator, meanin the inreases in exenses that are suorted from the results, the investments in rofit, with the followin onsequenes.we do not exlude the examination of the finanial and the extraordinary rofit throuh the liht of the revenues and of the omany exenses takin into onsideration also the inflation. VII. CONCLUSIONS 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 nonmonetary 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. [2] The inflation influenes everythin: the ountry s eonomy, the ororate ativity, the oulation and even the aountin by distortin the finanial- aountin information reorted. In suh irumstanes, the entities an take the rioht deisions and resist to the inflationist imat, an assure the redibility of the aountin information rovided by the finanial reorts. By influenin the revenues and the exenses, the inflation influenes diretly the finanial result reorted by the omany. The inflation influenes all the eonomi elements, under evaluatin their value in the finanial reorts. But some eonomi elements (assets in exeution, finished roduts, the osts of roduts, the merhandise sold, revenues obtained by dereasin the lanned revenues et. are under evaluated even in the moment of reordin them in the aountin so, distortin sinifiantly the aountin information reorded in the Balane Sheet and in the rofit and Loss Aount. This, at its turn, ontributes at determinin mistaken eonomi and finanial indiators. Referenes: []Ahim Monia Violeta, Analiză eonomio-finaniară, Ed. Risorint, Cluj-Naoa, 2; [2]Avare h., G.Leros, L.Ravary,.Lemonnier, Gestiune şi analiză finaniară, Ed.Eonomiă, Buureşti, 22; [3]Anhel Ion, Eduard Dinu, Strateia şi analiza eonomio finaniară a firmei, Ed. ASE, Buureşti, 27; [4]Boardman A.E., Greenber D.H., Vinin A.R., Weimer D.L., Analiza ost - benefiiu, onete şi ratiă, Ed. Ar, edińia a doua, Chişinău, 24; [5]Brezeanu etre (oordonator, Analiză finaniară, Ed. Meteor ress, Buureşti, 27; [6]Bulea Alexandru, oa Ion Lala, Analiză eonomiofinaniară, Ed. Mirton, Timişoara, ; [7]Burja Camelia, Analiză eonomio-finaniară. Asete metodoloie şi aliańii ratie, Ed. Casa CărŃii de ŞtiinŃă, Cluj-Naoa, ; [8]Căruntu Constantin, Analiza eonomio-finanară a firmei. Conete.Metode.AliaŃii, Ed. Universitaria, Craiova, ; [9] ăvăloaia Willi, ăvăloaia Daniel, Analiza eonomiofinaniară, Ed. Eonomia, Ed. Tehnoress, Iaşi, ; []etu Monia, Analiza eonomio-finaniară a întrerinderii, EdiŃia a doua, Ed. Eonomiă, Buureşti, ; []etresu Silvia, Analiză şi dianosti finaniar-ontabil, Ed. CECCAR, Buureşti, 2; [2]oa Ion Lala, Analiză eonomio-finaniară. Elemente teoretie şi studii de az., Ed. Mirton, Timişoara, ; [3]oesu Dan Dumitru, Creatin value throuh omany analysis, H'ART ublishin Siene, Buharest, 27; Issue 2, Volume 5, 2 36

11 INTERNATIONAL JOURNAL OF MATHEMATICAL MODELS AND METHODS IN ALIED SCIENCES [4]Vâleanu Gheorhe, Vasile Robu, Niolae Georesu, Analiza eonomio-finaniară, Ed. Eonomiă, Buureşti, 25. [5]Erih A. Helfert, Tehniques of Finanial Analysis - a uide to value reation, Ed. BMT, 26; [6]*** Standardele InternaŃionale de Raortare Finaniară (IFRS - norme ofiiale emise la ianuarie, Ed. CECCAR,. [7] ; [8] ; [9] ; [2] ; [2] Issue 2, Volume 5, 2 36