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Financial analysis

As at 31 December 2016, the balance sheet total increased by 3.5 million PLN, i.e. 0.4% compared to the amount as at 31 December 2015.

The amount of non-current assets decreased by 0.7 million PLN, while current assets recorded a growth by 4.2 million PLN.

The biggest decrease was recorded in the available-for-sale financial assets which (a 6.6 million PLN drop), in the noncurrent assets (a drop by 2.9 million PLN) and the intangible assets (a drop by 1.1 million PLN). The biggest growth in value in this group of assets was in deferred income tax assets (a growth by 9.0 million PLN.

As far as current assets are concerned, the biggest increase was in cash and cash equivalents (a growth by 34.1 million PLN and in inventories (growth by 5.6 million PLN). The biggest decrease in this group of assets was in trade and other receivables (a drop by 36.4 million PLN).

On the equity and liabilities side, the decrease in liabilities by 26.7 million PLN was accompanied by the 30.2 million PLN increase in equity.

The growth of equity is principally attributed to the 28.2 million PLN increase in supplementary capital.
A decrease of 4.7 million PLN was recorded in the capital from valuation of the available-for-sale investments.

The decrease in value of liabilities concerned current
liabilities due to supplies and services and other liabilities (a drop by 71.2 million PLN), amounts due to customers for construction contract works, (a drop by 26.5 million PLN) and loans and borrowings (a drop by 10.9 million PLN). The increase in liabilities was attributed mainly to long-term provisions for other liabilities and other charges (a growth by 38.9 million PLN), short-term provisions for other liabilities and other charges (a growth by 22.5 million PLN) and other non-financial liabilities (a growth by 18.3).

Selected indicators describing the economic and financial position of the Company
Wybrane wskaźniki charakteryzujące sytuację majątkową i finansową Spółki
Selected indicators describing the economic and financial position of the Company
Wskaźniki rentowności
Profitability ratios
Wskaźnik rentowności netto
Net profit margin
5,7% 3,9% 2,7%
Wskaźnik rentowności zysku brutto przed opodatkowaniem
Gross profit margin
6,9% 4,9% 3,5%
Wskaźnik rentowności operacyjnej
Operating profit margin
6,0% 4,9% 3,1%
Wskaźnik rentowności kapitału własnego (ROE)
Return on equity (ROE)
13,0% 12,7% 8,7%
Wskaźnik rentowności majątku (ROA)
Return on assets (ROA)
5,9% 5,2% 3,5%
Wskaźniki płynności
Liquidity ratios
Wskaźnik płynności bieżący
Current ratio
1,5 1,4 1,3
Wskaźnik płynności szybki
Quick ratio
1,4 1,2 1,1
Wskaźniki rotacji
Turnover ratios
Rotacja należności z tytułu dostaw i usług w dniach
Receivables turnover ratio (days)
111 90 85
Rotacja zobowiązań z tytułu dostaw i usług w dniach
Accounts payable turnover ratio (days)
58 62 7,2
Rotacja zapasów w dniach
Inventory turnover (days)
21 15 18
Obrotowość aktywów
Assets turnover
1,0 1,3 1,3
Wskaźniki zadłużenia
Debt ratios
Wskaźnik ogólnego zadłużenia
Debt to equity ratio
52,9% 56,1% 62,0%

File in XLSX formatSelected indicators describing the economic and financial position of the Company file .xlsx12 kB

The presented ratios reflect the level of effectiveness of managing the Company, which is assessed as good.

In 2016 the net profit margin was 5.7%. It increased 1.8 percentage point and 3.0 percentage point compared to 2015 and 2014, respectively.

Gross profit margin for the 12 months ended 31 December 2016 was 6.9%. Compared to the level of this ratio for the 2015 and 2014 it rose by 2.0 percentage point and by 3.4 percentage point, respectively.

The analysis of the sales profitability ratios shows a period-to-period improvement of profit margins.

The return on assets ratio (ROA), which indicates the ability of all assets used by the company to generate net earnings, was 5.9% in the reporting period. It was 0.7 percentage point and 2.4 higher than in the same periods of 2015 and 2014, respectively. The level of ROA suggests that the assets employed were used effectively in the comparative periods.

Return on equity (ROE) ratio was 13% in 2016 and rose on 2015 and on 2014 by 0.3 percentage point and by 4.3 percentage point, respectively. The increase of ROE in the comparative periods means that the scale of growth in net profit was greater than the scale of growth in the equity.

In 2016 current liquidity ratio had the value of 1.5 and rose on the comparative periods by 0.1 percentage point and by 0.2 percentage point, respectively. The quick ratio was 1.4 and rose on 2015 and on 2014 by 0.2 percentage point and by 0.3 percentage point, respectively. The level of liquidity ratios indicates good financial credibility of the Company. Liquidity ratios measure a company’s ability to pay off its debt obligations with current assets.

In 2016 average collection period for trade receivables was 111 days. Compared with the analysed periods it and was 21 days and 26 days longer, respectively.

According to data from accounting, payables are settled within 58 days.

Maturity dates for payables vary from 14 days to 60 days. In the reporting period, accounts payable turnover ratio was 4 days shorter compared to 2015 and by 14 days shorter than in 2014.

The period in which ELEKTROBUDOWA settled its debt was shorter than the period of collecting the receivables, which indicates that the Company more often credits its customers than is credited by its suppliers. The nature of concluded contracts as well as the present regulations determine the length of turnover cycles for receivables and payables.

Inventories turnover period provides information on the length of process of transforming the inventories into finished products sold. In 2016 the inventories turnover period was 21 days long and was longer by 6 days on 2015 and by 3 days on 2014.

The three ratios described above provide an input for
measuring the length of cash conversion cycle in the
Company, which was 74 days, 43 days and 31 days in the comparative periods.

The Company’s activity is assessed by the assets turnover ratio, which measures the ability of assets being at its disposal to generate sales. The assets turnover was 1.0 and dropped by 0.3 on both 2015 and 2014. The ratio informs that each 1 zloty of the Company’s assets earns the revenue of 1 zloty.

Debt to equity ratio indicates how much debt an entity
is using to finance its assets. In the 12 months ended 31 December 2016 the debt-equity ratio was 52.9%; it dropped 3.2 percentage point compared to the 12 months of 2015 and 9.1 on the same period of 2014. The change in the ratio reflects the change in the share of borrowed capital in financing the Company’s assets.

Levels of liquidity ratios, inventories turnover ratio and assets turnover ratio allow a positive appraisal of the financial situation of the Company and of its financial strategy. The levels of assets and equity indicate its appropriate financial condition and lack of risk to pay liabilities; the analysis shows that the Company has maintained its sound financial position.

Presented above key parameters and ratios describing the economic, financial and equity position of the Company have been measured on the basis of information from the financial statements prepared under the going concern assumption.

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