FIN 701 Assignment 1:

Assignment 1 – Use data of 13 companies from its financial

reports to calculate the ratios in the chart (see index) and then
represent them on the table (excel sheet) and do a descriptive
& comparative analysis of the charts. Comment on the results.
As a result you should have 6 sets of charts:
1) *see file Financial statements of_Ilim Group & competitor
Graph 1: Comparison of sales, profit & net income growth
of Ilim Group and Sokolskiy CBK in 2006-2012
Graph 2: Comparison of asset (ROA), capital (ROE) and
sales (ROS) profitability of Ilim Group and Sokolskiy CBK in
2006-2012
Graph 3: Capital productivity of Ilim Group and Sokolskiy
CBK in 2006-2012
Graph 4: Dynamics of the asset turnover (ОА), debt-to-
equity ratio (F) and current liquidity ratio (L) of Ilim Group
and Sokolskiy CBK in 2006-2012
All further data is in the file Balance & P&E_all companies:
2) Graph 1: Sales, profit & net income growth of Klimov in
2006-2012
Graph 2: Asset (ROA), capital (ROE) and sales (ROS)
profitability of Klimov in 2006-2012
Graph 3: Capital productivity of Klimov in 2006-2012
 Graph 4: Dynamics of the asset turnover (ОА), debt-to-
equity ratio (F) and current liquidity ratio (L) of Klimov in
2006-2012.
3) Graph 1: Comparison of sales, profit & net income growth
of Arsenal & Metallist in 2006-2012
Graph 2: Comparison of asset (ROA), capital (ROE) and
sales (ROS) profitability of Arsenal & Metallist in 2006-
2012
Graph 3: Capital productivity of Arsenal & Metallist in
2006-2012
Graph 4: Dynamics of the asset turnover (ОА), debt-to-
equity ratio (F) and current liquidity ratio (L) of Arsenal &
Metallist in 2006-2012
4) Graph 1: Comparison of sales, profit & net income growth
of Krachin & Klinskie in 2006-2012
Graph 2: Comparison of asset (ROA), capital (ROE) and
sales (ROS) profitability of Krachin & Klinskie in 2006-2012
Graph 3: Capital productivity of Krachin & Klinskie in 2006-
2012
Graph 4: Dynamics of the asset turnover (ОА), debt-to-
equity ratio (F) and current liquidity ratio (L) of Krachin &
Klinskie in 2006-2012
 5) Graph 1: Comparison of sales, profit & net income growth
of Toliatti with Nemazot and Uralkhim in 2006-2012
Graph 2: Comparison of asset (ROA), capital (ROE) and
sales (ROS) profitability of Toliatti with Nemazot and
Uralkhim in 2006-2012
Graph 3: Capital productivity of Toliatti with Nemazot and
Uralkhim in 2006-2012
Graph 4: Dynamics of the asset turnover (ОА), debt-to-
equity ratio (F) and current liquidity ratio (L) of Toliatti
with Nemazot and Uralkhim in 2006-2012
6) Graph 1: Comparison of sales, profit & net income growth
of Volga with Polet and Spark Avia in 2006-2012
Graph 2: Comparison of asset (ROA), capital (ROE) and
sales (ROS) profitability of Volga with Polet and Spark Avia
in 2006-2012
Graph 3: Capital productivity of Volga with Polet and Spark
Avia in 2006-2012
Graph 4: Dynamics of the asset turnover (ОА), debt-to-
equity ratio (F) and current liquidity ratio (L) of Volga with
Polet and Spark Avia in 2006-2012

Due Date : Week 8

The assignment won’t be accepted after July 6th 12AM
and if not finished by the due date is considered as not
done/passed.
Appendix 1. Formulas & Index
Index

∆ Sales Annual change in sales

∆ Profit Share of profit in Sales

∆ Income Share of income in Sales

ROA Asset profitability

ROE Capital profitability

ROS Sales profitability

Capital Pro Capital Productivity

OA Asset turnover

F Debt-to-equity ratio

L Current liquidity ratio

Financial and economic ratios for measuring of the efficiency of the company management prior
and after the hostile takeover

Ratio Formula

Net Income / Total Assets*

Asset profitability, % (ROA)
Equity profitability, % (ROE) Net Income / Average Stockholders Equity
Sales profitability, % (ROS) Operating Result / Sales
Capital productivity, % Sales / Long term Assets
Asset turnover, times Sales / Average Assets
Debt to Equity Ratio, % Total Liabilities / Total Shareholders Equity
Current Ratio Current Assets / Current Liabilities
* - all average values are calculated as arithmetic mean of the figures at the beginning and the end
of the reporting period.
Appendix 2. Formulas in the scheme

ROE

ROA Х Financial leverage

Net income Х Liquidity

Asset
turnover
Financial solvency
Net income ÷ Sales ÷ Assets

Sales
- Expenses Current Fixed capital
+
assets
Cash & cash Land
COGS
equivalents
Accounts receivable
Operations and Buildings
administration
Stock Machines &
Interest
equipment
payable
Liquid funds Intangible
Profit tax
assets
Other assets
Appendix 3. Example of the analysis
Change of Sales, Profit & Income of Kuznetzkie Ferrosplavy in 1998-2003
Mio RUR 2407
2346 2308
2500
1986
2000
1318
1500

1000 720
291 206 239
500 158 180 131
74 96 105 22 16
0
0
1998 1999 2000 2001 2002 2003

Sales Profit Net Income

Up until 2002, when MDM-Group took over Kuznetzkie Ferrosplavy, the plant had a stabile level of
sales. However, the size of the operational and net profit for the last 3 years underwent negative
changes. The volume of the net profit fell down 11 times and affected the profitability of the production:
the ROA dropped 17,8 times and the ROE - 14,8 times. Year 2000 also became a critical point for the
profitability ratio which was gradually growing from 1999 but then fell from 14,6% in 2000 to 5,6% in
2002. The efficiency of the operational and non-current assets impaired which is reflected in the capital
productivity and asset turnover ratios. Heavily increased dependency on external funds (credits) puts on
the alert: debt-to-equity ratio increased threefold in 3 years, as a result the property of the plant for all
intents and purposes is pledged.

One can easily notice the negative change of all indicators in 2003 as compared to 2000
 95%

75%

55%

35%

15%

-5%
1998 1999 2000 2001 2002 2003
Growth of Sales KFER 83,06% 50,68% 18,13% -1,62% 4,29%
Growth of Sales SZFV 99,77% 14,78% 12,75% 4,97%
Share of Profit in Sales of 10,28% 11,99% 14,65% 8,78% 5,68% 9,93%
KFER
Share of Profit in Sales of 24,60% 7,36% 4,08% 7,86% 6,43%
SZFV
Share of Net Income in Sales 0 7,28% 9,06% 4,48% 0,95% 0,66%
KFER
Share of Net Income in Sales 10,47% 4,01% -1,50% 1,89% 1,20%
SZFV

The diagram shows that starting from 2000 the sales growth and profit share in sales of JSC
«Kuznetzkie Ferrosplavy» began to decline against the background of a slight increase of the share of
the operating profit in the sales of JSC «Serovsky zavod ferrosplavov». Thus, the share of the operating
profit in the sales of JSC «Kuznetzkie Ferrosplavy» dropped from 14,65% in 2000 to 5,68% in 2002.
However, the decrease in sales can be explained by the underlying decrease in demand in the industry
because the volume of sales of the competitor -JSC «Serovsky zavod ferrosplavov» was also declining
during 1999-2002.