FINANCIAL ANALYSIS FOR QUOTED COMPANIES: THE BUCHAREST STOCK EXCHANGE CASE

BACHELOR DEGREE PAPER

Coordinator

PhD. Professor Bogdan Dima

Student

Andreea Alexandra Bancu

Timioara 2013

BACHELOR DEGREE PAPER FINANCIAL ANALYSIS FOR QUOTED

COMPANIES: THE BUCHAREST STOCK

EXCHANGE CASE

Coordinator

PhD. Professor Bogdan Dima

Student

Andreea Alexandra Bancu

Timioara 2013

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REFERAT

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TABLE OF CONTENTS

1. Introduction ........................................................................................................................ 1

2. Specialized literature .......................................................................................................... 2

2.1. Financial asset valuation ............................................................................................. 2

2.2. Financial ratios ............................................................................................................ 3

2.2.1. Balance sheet structure analysis ........................................................................... 3

2.2.2. Liquidity and solvency analysis ........................................................................... 6

2.2.3. Financial balance analysis .................................................................................... 7

2.2.4. Asset management analysis ................................................................................. 8

2.2.5. Profitability and return analysis ........................................................................... 8

3. Study case and results ...................................................................................................... 10

3.1. Description of the companies .................................................................................... 10

3.2. Financial ratios analysis ............................................................................................ 11

3.3. Interdependence analysis between operating result and exchange rate .................... 24

3.4. Interdependence analysis between profitability, return and stock price ................... 26

4. Conclusions ...................................................................................................................... 30

5. Bibliography..................................................................................................................... 31

Faculty of Economics and Business Administration 1

FINANCIAL ANALYSIS FOR QUOTED

COMPANIES: THE BUCHAREST STOCK

EXCHANGE CASE

Summary: This paper follows the literature of financial assets valuation and the ratios

describing the financial wealth of the issuers. Our findings suggest that the outcome of

issuers' activity may affect the stocks prices even if the involved linkages are not necessarily

linear ones. Such findings may be related with that literature describing emergent markets'

information relative inefficiency and the presence of some significant frictional factors.

However, our results suggest that even for such markets the financial soundness of the issuers

matters for investors' decisions in choosing the structure of their portfolios.

Key terms: financial analysis, stock exchange, portfolio management

JEL Code: M21 (Business Economics), O16 (Financial Markets; Corporate finance)

1. Introduction

The main theoretical problem in the thesis is that in order to sustain the capital market

development a more restrictive selection procedure is required to allow the presence on the

market only of those companies that displays a healthy financial structure and better economic

performances.

Personal contribution added to this paper regards the collection of all financial data from

financial statements, the analysis of interdependence relations between different elements, and

the final conclusions resulted from each analysis.

The content of the paper is structured in two parts, a theoretical and a practical one.

The theoretical part consists of specialized literature of financial assets valuation which deals

with the connections between financial assets' market values and the ratios describing the

financial wealth of the issuers, and also include a presentation of the most important financial

ratios and financial asset valuation.

In the second part of the paper are analized the most significant financial ratios of the quoted

companies on the Bucharest Stock Exchange market, interdependence analysis relations,

between operating result and exchange rate, between operational revenues profitability and

stock price, between operational expenses profitability and stock price, and between the return

on assets and return on investments and stock prices.

2. Specialized literature

2.1. Financial asset valuation

Economic assets can be classified into real assets and financial assets. The real assets have

intrinsic value generated by their physic-chemical properties and their technological

capabilities. Financial assets are recognized by their intrinsic value generated by the set of

financial services they perform for their owner, not by their physic-chemical properties and

technological capabilities.

Monetary financial assets are a group of special assets that exert a specific set of functions

that they and only they can meet, like medium of exchange, unit of account and store of value,

but without generating any revenue. Non-monetary financial assets are a group of financial

assets held for their ability to generate income in the form of money.

The return of financial assets is the excess of incomes over the expenses related to trading and

holding such assets.

Risk can be defined as the probability that some unfavorable result will occur as a

consequence of an economic reason. The total risk of an investment consists of two

components: diversifiable or unsystematic risk and non-diversifiable or systematic risk.

Systematic risk refers to market risk, interest rate risk or inflation risk, risks caused by factors

affecting all the firms. Unsystematic risk refers to business risk and financial risk, also called

specific risk and its inherent in each investment. This risk represents the fluctuation in return from an investment due to factors which are specific to the particular firm and not the market

as a whole.

The risk of an assets cash flows can be consider on a stand-alone basis or in a portfolio context, in which the investment is combined with other assets and its risk is reduced through

diversification. Diversification of the portfolio gets as a lower return then a single assets

portfolio, which could have a higher return, but diversification of securities aims to minimize

the risk of a security by reducing its variability. Diversification is also a method for an

investor to achieve its objectives and to immunize the portfolio against market risk (by

selecting assets with different elasticitys of indirect risks, comparing to market risks.

Beta coefficient is a measure of risk which measures the risk of one security or portfolio in

relation to market risk. The beta of a portfolio is a weighted average of the betas of the

individual securities in that portfolio.

The Capital Asset Pricing model (CAPM) specifies the relationship between market risk and

the required rate of return, through the concept of beta and investors aversion to risk. CAPM is used to estimate if an asset is undervaluated or overvaluated. Through Security Market Line

this relationship can be visualized, because this market line help one to determine if an asset

being considered for including in portfolio will offer acceptable return to risk ratio.

= () = + (() ) Equation 1


Where:

is the security market line;

() is the expected return of an individual security;

is the risk free return, used for estimation the risk premium;

=(,)

() is the senzitivity of expected excess asset returns to the expected excess

market returns, which is estimated with regression;

is the market return;

() =()

is the excess return for the whole market;

() is the excess return for individual asset.

As risk aversion increases, the risk premium increases as well, and the slope of security

market line. If the average investors aversion to risk is high, then the risk premium for all stocks increases as well as the required rate of return on all stocks.

In modern financial management portfolio theory, Markowitz came first in 1952, introducing

new concept of risk measurement and their application to the selection of portfolios.

The CAPM is an ex-ante model, which means that all of the variables represent expected

values. The beta coefficient used by investors should reflect the relationship between a stocks expected return and the markets return during some future period. (Ehrhardt & Brigham, 2011)

2.2. Financial ratios

Financial ratios are used to compare the risk and return of companies. The principal

advantage of ratios is that they can be used to compare the risk and return relationship of

companies of different sizes. The content of the financial statement analysis included in the

following sub-chapters is:

- Asset and liability structure analysis; - Liquidity and solvency analysis; - Financial balance analysis; - Asset management analysis; - Profitability and return analysis.

Financial balance ratios among with asset management ratios will not be explained in the

following chapters, but this ratios can be seen in the Microsoft Excel electronic document file

attached to the bachelor degree paper.

2.2.1. Balance sheet structure analysis

Structure analysis is a vertical analysis, which takes separately assets and liabilities as well as

the manner in which each of these is structured, and aims to reflect the relationship between

different balance sheet elements and changes that take place in the companys capital and its allocation.

Structure ratios are calculated as a ratio between an asset or liabilities element (or group of

elements) and total assets or liabilities, as well as an asset or liabilities element and the total

amount of the group it is part of.

Factors that affect the balance sheet structure can be: economic and technical factors (for

instance, the life cycle of assets), juridical factors (for instance, the type of the company),

strategic options of the company, the size of the company and the relationship with business

partners.

The liability structure ratios highlights the way the liability are structured in terms of their

provenance and their degree or chargeability. Liability structure analysis aims to assess main

financial strategies and policies regarding formation of financial resources in terms of their

origin (own, borrowed or attracted from operational creditors) and in terms of their

chargeability (short term, medium term and long term). The liability structure ratios reflect

three main aspects related to the funding of a company: financial stability, financial

independence and indebtedness.

Financial stability ratio reflects the proportion of long-term capital in total liabilities. Long-

term capital comprises both equity and long-term bank loans.

=

Equation 2

Financial stability of an enterprise is as high as the value of this ratio closes to 100%. The

minimal accepted value for a manufacturing company is 50%, normal value being around

67%. Dynamically, the ratio should have an increasing trend, an effect of enterprises profit generating activity, increases in shareholders equity and attraction of new long-term bank

loans.

Financial autonomy highlights the extent to which financial sources of an enterprise belong to

its shareholders. There are two types of financial autonomy: global financial autonomy and

long-term financial autonomy.

=

Equation 3

Global financial autonomy ratio is especially important to lending institutions such as banks,

when the company request a new loan. In this case, evaluation of a companys capability of accessing a loan is done in the following manner:

- When the ratio is above 66%, it means that global financial autonomy is high and the enterprise has adequate guarantees for receiving a new long or medium term loan;

- When the ratio is between 30% and 60%, the loan can be obtained by the enterprise, but the risk associated to it are high;

- When the ratio is below 30%, it means that the enterprise does not have enough guarantees to receive a loan.

=

Equation 4


Indebtedness ratio measures the level of a company debts compared to either its total liability

or only long-term capital. Business environment uses two main indebtedness ratios: global

indebtedness ratio and long term indebtedness ratio.

=

Equation 5

=

Equation 6

It is considered a healthy financial structure, that has a low indebtedness risk, when long-term

debt ratio has a value of at least 50%.

The asset structure analysis emphasizes the economic destination of the invested capital, the

liquidity of the invested capital and the ability of the enterprise to modify its assets structure

under the influence of external factors. The most important asset structure ratios are: long-

term asset ratio and current asset ratio.

Long-term asset ratio measures the degree of investment of companys capital and is calculated as a ratio between long term assets and the total assets.

=

Equation 7

The long-term asset ratio is assessed according to companys industry. For a manufacturing company, for instance, the values of this ratio that indicate a normal situation are situated

around the 60% level.

If long-term assets are higher than the total assets, the share of long-term assets increases as a

result of long-term assets growing at a greater rate than total assets. Such increasing trend in

asset structure is considered positive only if it triggers an increase in sales at a rate greater

than the growth of long-term assets.

If long-term assets are equal to the total assets, this is a result of long-term assets share

remained unmodified, ant it is considered a convenient situation if sales are at least the same

as previously registered.

If long-term assets are lower than the total assets, of course, the long-term ratio decreases, and

it is considered an advantageous case if the turnover is at least the same as in the comparison

base period.

Intangible asset ratio, fixed asset ratio and long-term financial asset ratio are calculated by

the same rule, by dividing intangible assets, fixed assets and long-term financial investments

over total assets.

Current asset ratio expresses in relative terms the amount of capital invested in companys operations and measures the liquidity degree of a companys assets.

=

Equation 8

Inventory ratio, account receivable ratio, short-term financial investment ratio and cash and

cash equivalents ratio are calculated by the same rule, by dividing inventories, account

receivables, short-term financial investments and cash and cash equivalents over the total

assets.

2.2.2. Liquidity and solvency analysis

Credit reliability analysis of an enterprise aims to reflect its ability to repay its debts,

comprised both of short-term and long-term liabilities and highlights a certain financial

condition of the enterprise in terms of its ability to repay its debts with different chargeability

terms. Credit reliability could be considered as a component of financial balance analysis, and

can be analyzed from two different perspectives: liquidity and solvency. The difference

between them lies in the degree of credit reliability coverage. Thus, liquidity of a firm is

measured by its ability to satisfy its short-term obligations as they come due, whereas

solvency reflects the ability of the company to repay its overall debt. Liquidity is the ability of

assets to move through all the phases of their existance and concert into cash. Also, liquidity

means the ability of a company to pay its short-term debts, refering to the ease with which it

can pay its bills.

Current ratio measures the companys ability to meet its short term obligations. It is calculated as a ratio between current assets and current liabilities.

=

Equation 9

Generally, the higher the current ratio, the more liquid the firm is considered to be. A current

ratio of 2,0 is occasionally cited as accepted, but a values acceptability depends on the industry in which the firm operates. For example, a current ratio of 1,0 would be considered

acceptable for a public utility company but might be unacceptable for a manufacturing firm.

The more predictable a firms cash flows, the lower the acceptable current ratio. Acceptable values of this ratio are the minimum value of 1 and a maximum value of 2. A ratio below 1

usually indicate an insufficient current liquidity, and a ratio that exceeds 2 indicate an

inefficient use of firms current assets.

Quick ratio(acid test) is similar to the current ratio, except that it excludes inventory, which is

generally the least liquid current asset.

=

Equation 10

The generally low liquidity of inventory results from two primary factors: many types of

inventory cannot be easily sold because they are partially completed items, special-purpose

items, and the like; and the inventory is typically sold on credit, which means that it becomes

an account receivable before being converted into cash.

Acceptable values of this ratio are the minimum value of 0.65 and a maximum value of 1. A

ratio below 0.65 usually indicate an insufficient firms quick liquidity, and a ratio that exceeds 1 indicate an inefficient use of firms account receivables and cash and cash equivalents.


Spot ratio assesses the extent to which current liabilities could be covered from cash and cash

equivalents (usually comprised of marketable securities short-term financial investment); spot ratio compares the two most liquid asset elements with current liabilities.

= + &

Equation 11

Acceptable values of this ratio are the minimum value of 0.35 and a maximum value of 0.65.

A ratio below 0.35 usually indicate an insufficient firms spot liquidity, and a ratio that exceeds 0.65 indicate an inefficient use of firms cash and cash equivalents.

Solvency reflects the firms ability to satisfy its overall debt, its ability to provide the required amount of resources to maintain its operations in the long run. Solvency is regarded through

two different ratios: solvency ratio and times earned ratio.

Total assets represent a guarantee for exceptional situation, a bankruptcy is, in which

coverage of debts and other liabilities is accomplished selling all its assets.

Solvency ratio assessed by comparing total assets to total debt of the company.

=

Equation 12

In case of this ratio, the minimal acceptable value is considered to be 1,5, taking into account

the fact that total assets liquidation value is usually smaller that its accounting value; a normal

value for this ratio is 3,0 or higher.

Times interest earned ratio compares net operating profit/loss to the interest incurred due to

existent bank loans. This ratios is calculated as below:

=

Equation 13

For this ratio, the minimal acceptable value is 1,0, which means that the company is capable

of covering bank loan interest from operating profit. As well, the higher is ratios value, the better is the companys solvency.

2.2.3. Financial balance analysis

Financial balance analysis can be approached in two different ways: a static approach, where

financial balance indicators are calculated based upon information from financial balance

sheet and reflect a static image of the manner financial balance sheet is reached and a

dynamic approach, where financial balance of the enterprise is referred to in terms of cash-

flows, so that it analyzes the extent to which incoming cash flows cover outgoing ones

(payments) over a period of time. In order to assess financial balance, financial statement

analysis uses the following specialized indicators, each of them covering a certain segment of

financial balance in terms of time extent: working capital, own working capital, working

capital requirement, net treasury (also called net cash).

2.2.4. Asset management analysis

Asset management ratios measure how effectively a firm is managing its assets. These ratios

include inventory turnover, days sales outstanding, fixed assets turnover, and total assets

turnover.

Working capital requirement management is a result of correlation between inventories and

accounts receivable on the one hand and non-financial short-term liabilities on the other.

2.2.5. Profitability and return analysis

Financial performance represents an efficiency ratio between the effects of companys activity, expressed through indicators of earnings nature, and the financial efforts made by the

company in order to obtain them. Financial performance represents one of the forms of

efficiency, reflecting the most general expressions of companys results. The measure of financial performance is given by a system of efficiency ratios that emphasize economic and

financial features of companies and allow comparisons of operational and commercial

performances of the companies.

Profitability ratios are constructed by dividing a profit value to a value of revenues of

expenses. The fundamental rule for construction of profitability ratios is by use of causally

correlated profit and revenue or expense indicators. This type of correlation ensures the

profitability ratio relevance, indicating to which extent and a revenue or expense indicator is

capable of generated effects in terms of earnings (profits).

Revenue profitability measures the global efficiency of companys activity during a reporting period through the capacity of its revenues to generate profits. Practically, these ratios

measure the ratio between two result indicators, the nominator reflecting a measure of profit

and the denominator a measure of revenue.

Operational revenues profitability expresses the general efficiency of operational activity,

measured by operational profit that corresponds to operational revenues. The level of

operational revenues profitability is the basis for companys strive to achieve its profitability objectives.

=

100 Equation 14

The increase of this ratio takes place whenever the operational income rate of growth is

greater than operational revenues rate of growth. The level of revenue profitability ratios

depends upon factors such as companys industry, company position on its market, cost of borrowed capital, efficiency of used resources.

Operational expense profitability shows the operational profit corresponding to the operation

expenses (that measures the total operational resource consumption). The ratio measures the

capacity of operational resources to generate operational profit through their consumption.


=

100 Equation 15

Expense profitability measures efficiency of companys activity over a reporting period through the use of resource consumption values, expressing the ratio between the effect and

the effort required to obtain it.

Capital return ratios are calculated by dividing obtained net results (economic and financial

effects expressed by earnings) to means engaged in developing out the companys activity (efforts made). In relation to elements used to construct ratios, the study of capital return

ratios implies analysis of two ratios: return on assets and return on investment.

Return on assets measures performance of total companys assets, reflecting it economic performance independently of the structure of funding sources used by the company and

corporate taxation system.

Increasing total assets turnover could be obtained by increase in value of sales or reduction of

total assets value, which implies:

- assets structure optimization; - increase in active fixed asset percentage; - reduction of duration and costs of work-in-progress investments; - reduction in inventories and their turnover duration.

Increasing commercial profitability ratio that could be obtained by:

- increase volume of output; - increase volume of sales; - optimization of output structure by increasing the proportion of products and services

with greater than the average profitability;

- increase in products and services competitiveness by improving their quality and providing after sales services;

- operational expense reduction.

Return on investment expresses the ability of the company to generate net profit using its net

worth (total equity). This is an indicator through which company owners assess the efficiency

of their investment, respectively the opportunity to maintain or discard it.

In order to increase return on financial investment, two main conditions should be satisfied:

the sales rate of growth should exceed net worth rate of growth, ant net profit rate of growth

should be greater than the sales of growth.

3. Study case and results

In below study case are used dates of 13 companies, from 2012 to 2007. These companies are

all listed on Bucharest Stock Exchange, and www.bvb.ro is the source of all financial data of

the companies, among with www.kmarket.ro, from were the stock prices were taken.

In the study case are used the symbols of these companies: BIO for Biofarm, IMP for Impact

Developer&Contractor, RRC for Rompetrol Rafinare, SNP for OMV Petrom, TBM for

Turbomecanica, TGN for Transgaz, FP for Property Fund, BRK for Society of Financial

Investments Broker, SIF1 for Society of Financial Investments Banat Crisana, SIF2 for

Society of Financial Investments Moldova, SIF3 for Society of Financial Investments

Transilvania, SIF4 for Society of Financial Investments Muntenia, SIF5 for Society of

Financial Investments Oltenia.

3.1. Description of the companies

A short description of all companies, taken from each companys website, will follow. One of the first domestic pharmaceutical preparations manufacturers in Romania, for more

than 8 decades, Biofarm S.A. (Societate pe Aciuni, in Romanian, meaning Joint Stock Company) joined in 1991 the Romanian specialists in their efforts to maintain peoples good health. The company has the headquarter from Romania in Bucharest, and is certified in

compliance with the requirements of EN ISO 9001:2000 and it is good manufacturing practice

certified for all the production lines. Its shares are listed on Bucharest Stock Exchange Category I.

Impact Developer&Contractor S.A. is a privately-owned real estate developer, incorporated in

1991, by public subscription, and has been listed on the Bucharest Stock Exchange since

1996. The company's main activity has been leasing and providing maintenance for luxury

villas in residential and central areas of Bucharest, and in recent years the main activity of the

company is the development of building projects. In 2006, the company had become the first

representative of the real estate and constructions area from Romania.

The Rompetrol Group is one of the oil companies operating in Romania and an important

player in the Black Sea and Mediterranean basins. The group has over 7,000 employees in 12

countries, is primarily active in refining, marketing and trading, with additional operations in

exploration and production, and other oil industry services. In Europe, The Rompetrol Group

owns over 1,000 gas stations in six countries (Romania, Republic of Moldova, Bulgaria,

France, Spain, Georgia, and Ukraine).

S.I.F. Banat Criana (SIF1), S.I.F. Moldova (SIF2), S.I.F. Transilvania (SIF3), S.I.F. Muntenia (SIF4) were founded in 1992, and S.I.F. Oltenia (SIF5) was founded in 1993; these

financial investment companies (SIF) are closed funds held after Mass Privatization Program

and listed on the stock exchange. The main object of activity of these companies is other

financial service activities, except insurance and pension funding.

Broker S.A. from Cluj-Napoca is founding member of the Bucharest Stock Exchange, of the

National Association of Securities Companies, shareholder at the National Clearing, Billing

and Deposit Securities Company, Sibiu Monetary, Financial and Merchandise Stock

Exchange (Sibex), The Romanian Clearing House and Investors' Compensation Fund.

Currently the company has more than 12,000 shareholders, the most important one being

S.I.F. Muntenia, which has 12.514% from the total share capital.


Fondul Proprietatea S.A. is a joint stock company operating as a closed-end investment

company without a set lifetime, incorporated in Bucharest. Founded in 2005 by the Romanian

Government and trading on the Bucharest Stock Exchange since January 2011, Fondul

Proprietatea has shareholders that must be owners dispossessed by the Romanian state in the

Communist period in Romania.

OMV Petrom S.A. is a subsidiary of OMV, the largest gas and oil producer in Eastern Europe

and also the largest corporation in Romania. In 2012, the company had total revenue of 6

billion Euros.

The main field of activity of Turbomecanica S.A. is the manufacture of air and spacecraft,

manufacturing of components (for instance, for Rolls-Royce company) and subassemblies for

turbojets and turbo shafts and overhaul and repair of aero engines and dynamic components

for PUMA helicopters. Turbomecanica become a joint stock company in 1990, but it was

founded in 1975 to produce engines and mechanical assemblies for aircraft equipment.

Currently, the only national distributor of natural gas in Romania, National Gas Transmission

Company Transgaz S.A. was established in 2000 by the Government of Romania, through the

separation with Romgaz, in order to restructure and separate the extraction, transportation,

storage and distribution of natural gas. Ministry of Economy holds 73.51% of the company,

Fondul Proprietatea holds 14.99% and the remaining 11.50% of shares are held by other

shareholders. The main activity of Transgaz is gas transport via pipeline and research and

design in the natural gas field.

3.2. Financial ratios analysis

Financial stability ratio should have an increasing trend, if the company generates profit.

We can see in Table 1 that for companies BIO, RRC, TBM, BRK, SIF2, SIF3, SIF3, SIF4,

SIF5, FP financial stability ratio had a decreasing trend in the period between 2007 and 2012.

The main causes of this decreasing trend are the total equity and liabilities, which are higher

than the long-term capital for these companies.

On the other hand, companies like TGN and SIF1 had an increasing financial stability ratio.

The main causes of this increasing trend are the long-term liabilities, which grow at a grater

rate than the total equity and liabilities.

Also, IMP had a slow increase in this ratio, and SNP had a slow decrease in this ratio, in the

period of analysis.

Financial stability of an enterprise is as high as the value of this ratio closes to 100%. This

means that BIO, TGN, BRK, SIF1-5 were the companies in 2007-2012 with the highest

financial stability. In 2007, IMP had also a significant financial stability ratio of 97.50%.

Global financial autonomy ratio help us to evaluate a companys capability of accessing a loan.

As seen in Table 2, BIO, TGN, SNP, IMP, BRK and SIF1-5, are the companies with an

increasing trend of global financial autonomy ratio in the period 2007-2012, over 66%. This

means that these companies had adequate guarantees for receiving new loans, even for

medium or for long run.

Only RRC and TBM were classified to have the global financial autonomy ratio between 30%

and 60%, these companies could have obtained loans, but with a very high risk associated

with it.

Global indebtedness ratio from Table 3 shows us decreasing trends for majority of the

companies. The main cause is that the debt is growing lower than the total liabilities increase.

Even if the maximum acceptance risk level for this ratio is around 67%, there are two

companies with this ratio over this maximum level: RRC and TBM.

In 2011, TBM had global indebtedness ratio of 71.37%, due to increases in its short-term debt

and long-term debt. Because of the short-term debt increasing in the period of analysis, total

debt increased as well, and by that, the global indebtedness ratio had been affected, and it

presents value over the acceptance risk level.

Current and quick ratios are presented in Table 4. Since this ratio should have normal values

between 1 and 2, we can see that for the companies BIO and SNP, current ratios exceeded

those values. Current ratio for BIO in the period 2007-2012 is over 2, which indicates an

inefficient use of companys current assets. RRC had its current ratio values in 2007-2012 below 1, and these indicate an insufficient current liquidity.

In 2012, in comparison to previous year, TBM had been more liquid, since it had an

increasing trend in current ratio. In the period 2007-2011, TBM had a decreasing trend in

current ratio. TGN also had values of current ratio between 1 and 2. Higher the current ratio,

more liquid the companies are considered to be.

Also from Table 4 we can analyze the quick ratios. We observe that for BIO and TGN the

quick ratio has a value over 1, which reflects an inefficient use of companies accounts receivable and cash and cash equivalents. TBM had in the period of analysis 2008-2012 in

every year a quick ratio of maximum 0.34, which means that the company had insufficient

liquidities. SNP also had weak results in quick ratio, but among with RRC, both companies

had a decreasing trend in this ratio.

Solvency ratios presented in Table 5 can be described as follows: BIO, TGN, SNP, IMP had

values that exceed 3, and by this they reflect the companys ability to satisfy its overall debt and resources to maintain its operations on the long-run.

In 2007 TGN had a value of 1.33 for solvency ratio, but its a value around the minimum acceptance value 1.5.

RRC and TBM had their solvency ratio in the period 2007-2012 between minimum

acceptance level and normal value of 3, or more than 3.

In Tables 6 and 7 is described profitability and return ratios.

Looking at Table 6 we can observe that in the period 2007-2012 BIO had a descending trend

of its operational revenue and expenses profitability.

TGN had an ascending trend of operational revenues profitability in the period 2007-2012 and

an ascending trend of operational expenses profitability in the period 2007-2010, and in 2010-

2012 a descending trend. BRK, TBM and RRC had in the period on analysis 2007-2012

decreasing trends for both operational revenues and expenses profitability. SNP had in 2007-

2012 an increasing trend of operational revenues profitability, in 2007-2009 had a decreasing

trend of operational expenses profitability, 2009-2012 increasing trend of operational

expenses profitability. IMP had a decreasing trend in 2007-2011 for operational revenues

profitability and increasing trend in 2011-20122 for operational expenses profitability.


Table 1. Financial stability ratios

Co. Year Long-term

capital Index LTC

Total equity and liabilities

Index T E&L

Financial stability

ratio BIO 2012 164,555,666 106.60% 196,930,710 108.86% 83.56%

BIO 2011 154,360,683 105.29% 180,908,145 109.73% 85.33%

BIO 2010 146,605,339 107.09% 164,865,647 110.50% 88.92%

BIO 2009 136,903,516 104.71% 149,194,480 103.03% 91.76%

BIO 2008 130,740,248 85.71% 144,812,841 88.20% 90.28%

BIO 2007 152,533,385

164,193,212

92.90%

TGN 2012 3,129,772,500 93.76% 3,473,685,086 93.98% 90.10%

TGN 2011 3,338,025,607 105.95% 3,696,152,801 105.37% 90.31%

TGN 2010 3,150,650,997 108.99% 3,507,828,871 108.68% 89.82%

TGN 2009 2,890,817,515 104.25% 3,227,671,302 103.43% 89.56%

TGN 2008 2,772,894,060 127.45% 3,120,701,683 125.49% 88.85%

TGN 2007 2,175,594,471

2,486,758,445

87.49%

SNP 2012 24,757,520,212 117.08% 29,772,089,490 115.29% 83.16%

SNP 2011 21,146,120,762 107.44% 25,824,063,494 105.12% 81.89%

SNP 2010 19,682,511,275 116.61% 24,566,625,475 120.19% 80.12%

SNP 2009 16,878,464,550 111.98% 20,439,800,129 110.37% 82.58%

SNP 2008 15,072,693,849 114.07% 18,518,721,219 117.26% 81.39%

SNP 2007 13,213,100,615

15,793,126,042

83.66%

RRC 2012 2,143,733,843 48.60% 7,099,794,797 64.37% 30.19%

RRC 2011 4,410,920,573 100.00% 11,028,894,441 110.77% 39.99%

RRC 2010 4,410,938,315 209.02% 9,956,622,393 163.19% 44.30%

RRC 2009 2,110,309,257 127.60% 6,101,058,632 144.07% 34.59%

RRC 2008 1,653,853,658 73.51% 4,234,881,759 98.93% 39.05%

RRC 2007 2,249,833,974

4,280,646,871

52.56%

IMP 2012 361,223,195 99.92% 422,897,776 105.18% 85.42%

IMP 2011 361,524,158 87.23% 402,088,969 88.30% 89.91%

IMP 2010 414,451,192 101.54% 455,349,972 91.20% 91.02%

IMP 2009 408,169,070 96.85% 499,307,279 86.37% 81.75%

IMP 2008 421,424,451 95.85% 578,072,362 128.20% 72.90%

IMP 2007 439,655,899

450,931,513

97.50%

TBM 2012 73,451,262 80.70% 144,501,378 91.70% 50.83%

TBM 2011 91,021,473 84.60% 157,583,880 93.58% 57.76%

TBM 2010 107,587,481 88.48% 168,398,131 95.23% 63.89%

TBM 2009 121,598,747 118.44% 176,827,813 122.75% 68.77%

TBM 2008 102,670,670 83.70% 144,060,570 90.45% 71.27%

TBM 2007 122,669,969

159,272,860

77.02%

BRK 2012 80,207,110 106.85% 91,932,879 107.51% 87.25%

BRK 2011 75,065,812 80.64% 85,507,394 82.10% 87.79%

BRK 2010 93,090,204 102.18% 104,147,782 105.72% 89.38%

BRK 2009 91,104,213 105.14% 98,508,925 111.36% 92.48%

Co. Year Long-term

capital Index LTC


Index T E&L

Financial stability

ratio BRK 2008 86,652,990 54.85% 88,456,885 48.57% 97.96%

BRK 2007 157,970,530

182,130,138

86.73%

SIF1 2012 874,623,718 136.11% 907,682,700 133.39% 96.36%

SIF1 2011 642,598,332 119.32% 680,462,252 113.12% 94.44%

SIF1 2010 538,546,764 106.58% 601,559,119 105.01% 89.53%

SIF1 2009 505,281,376 112.47% 572,858,554 115.63% 88.20%

SIF1 2008 449,260,035 96.18% 495,420,516 97.46% 90.68%

SIF1 2007 467,094,135

508,324,299

91.89%

SIF2 2012 630,555,311 111.37% 684,690,888 109.82% 92.09%

SIF2 2011 566,155,402 113.48% 623,440,332 118.74% 90.81%

SIF2 2010 498,903,369 109.40% 525,029,674 110.83% 95.02%

SIF2 2009 456,017,132 117.36% 473,741,610 114.93% 96.26%

SIF2 2008 388,553,001 114.06% 412,195,051 114.48% 94.26%

SIF2 2007 340,659,625

360,057,232

94.61%

SIF3 2012 842,774,575 109.55% 936,385,331 114.84% 90.00%

SIF3 2011 769,314,328 109.98% 815,407,050 106.70% 94.35%

SIF3 2010 699,498,187 106.17% 764,197,755 107.76% 91.53%

SIF3 2009 658,835,186 113.96% 709,184,921 113.37% 92.90%

SIF3 2008 578,107,896 90.36% 625,538,838 91.99% 92.42%

SIF3 2007 639,806,786

680,001,684

94.09%

SIF4 2012 767,683,574 67.49% 932,072,668 75.59% 82.36%

SIF4 2011 1,137,521,392 87.16% 1,233,142,562 88.11% 92.25%

SIF4 2010 1,305,115,912 96.71% 1,399,479,087 95.65% 93.26%

SIF4 2009 1,349,540,322 108.53% 1,463,077,302 106.95% 92.24%

SIF4 2008 1,243,467,003 61.07% 1,368,010,222 64.19% 90.90%

SIF4 2007 2,036,278,767

2,131,235,183

95.54%

SIF5 2012 671,463,884 102.85% 799,520,301 105.61% 83.98%

SIF5 2011 652,841,780 98.64% 757,043,304 99.56% 86.24%

SIF5 2010 661,847,553 102.03% 760,356,050 105.99% 87.04%

SIF5 2009 648,684,500 142.11% 717,380,247 139.01% 90.42%

SIF5 2008 456,464,535 77.84% 516,045,894 80.72% 88.45%

SIF5 2007 586,401,094

639,265,581

91.73%

FP 2012 11,836,768,038 106.44% 11,857,832,216 106.23% 99.82%

FP 2011 11,120,700,702 91.61% 11,162,857,525 91.43% 99.62%

FP 2010 12,139,275,376 99.53% 12,208,562,771 100.03% 99.43%

FP 2009 12,197,026,990 111.62% 12,204,404,626 111.60% 99.94%

FP 2008 10,926,861,000 75.58% 20,106,314 75.62% 99.92%

FP 2007 14,456,612,076

14,461,504,750

99.97%

Source: www.bvb.ro (Bucharest Stock Exchange Web Site)


Table 2. Global Financial autonomy ratios

Co. Year Shareholders

equity Index Equity


Index E&L Financial

Autonomy Ratio

BIO 2012 164,539,257 106.87% 196,930,710 108.86% 83.55%

BIO 2011 153,957,996 105.62% 180,908,145 109.73% 85.10%

BIO 2010 145,761,009 107.14% 164,865,647 110.50% 88.41%

BIO 2009 136,052,862 104.89% 149,194,480 103.03% 91.19%

BIO 2008 129,713,542 85.89% 144,812,841 88.20% 89.57%

BIO 2007 151,023,695

164,193,212

91.98%

TGN 2012 2,987,576,322 91.56% 3,473,685,086 93.98% 86.01%

TGN 2011 3,262,877,964 126.15% 3,696,152,801 105.37% 88.28%

TGN 2010 2,586,426,275 109.44% 3,507,828,871 108.68% 73.73%

TGN 2009 2,363,368,738 108.01% 3,227,671,302 103.43% 73.22%

TGN 2008 2,188,009,344 139.64% 3,120,701,683 125.49% 70.11%

TGN 2007 1,566,931,990

2,486,758,445

63.01%

SNP 2012 22,911,450,945 121.28% 29,772,089,490 115.29% 76.96%

SNP 2011 18,890,892,162 116.65% 25,824,063,494 105.12% 73.15%

SNP 2010 16,195,075,527 115.22% 24,566,625,475 120.19% 65.92%

SNP 2009 14,056,147,239 103.59% 20,439,800,129 110.37% 68.77%

SNP 2008 13,568,598,447 102.92% 18,518,721,219 117.26% 73.27%

SNP 2007 13,184,118,605

15,793,126,042

83.48%

RRC 2012 2,143,733,843 48.60% 7,099,794,797 64.37% 30.19%

RRC 2011 4,410,920,573 100.00% 11,028,894,441 110.77% 39.99%

RRC 2010 4,410,920,572 209.06% 9,956,622,393 163.19% 44.30%

RRC 2009 2,109,927,600 135.03% 6,101,058,632 144.07% 34.58%

RRC 2008 1,562,562,987 75.70% 4,234,881,759 98.93% 36.90%

RRC 2007 2,064,121,985

4,280,646,871

48.22%

IMP 2012 326,121,387 109.87% 422,897,776 105.18% 77.12%

IMP 2011 296,828,111 93.95% 402,088,969 88.30% 73.82%

IMP 2010 315,930,582 94.73% 455,349,972 91.20% 69.38%

IMP 2009 333,512,530 99.94% 499,307,279 86.37% 66.80%

IMP 2008 333,718,186 102.15% 578,072,362 128.20% 57.73%

IMP 2007 326,702,495

450,931,513

72.45%

TBM 2012 41,377,558 61.28% 144,501,378 91.70% 28.63%

TBM 2011 67,520,493 77.67% 157,583,880 93.58% 42.85%

TBM 2010 86,931,908 89.18% 168,398,131 95.23% 51.62%

TBM 2009 97,479,081 128.66% 176,827,813 122.75% 55.13%

TBM 2008 75,765,775 71.69% 144,060,570 90.45% 52.59%

TBM 2007 105,678,593

159,272,860

66.35%

BRK 2012 80,164,174 106.91% 91,932,879 107.51% 87.20%

BRK 2011 74,982,177 81.00% 85,507,394 82.10% 87.69%

BRK 2010 92,572,494 101.66% 104,147,782 105.72% 88.89%

BRK 2009 91,060,222 105.27% 98,508,925 111.36% 92.44%

Co. Year Shareholders

equity Index Equity


Index E&L Financial

Autonomy Ratio

BRK 2008 86,498,877 54.87% 88,456,885 48.57% 97.79%

BRK 2007 157,639,590

182,130,138

86.55%

SIF1 2012 874,623,718 136.11% 907,682,700 133.39% 96.36%

SIF1 2011 642,598,332 119.32% 680,462,252 113.12% 94.44%

SIF1 2010 538,546,764 107.67% 601,559,119 105.01% 89.53%

SIF1 2009 500,203,266 120.93% 572,858,554 115.63% 87.32%

SIF1 2008 413,631,925 88.55% 495,420,516 97.46% 83.49%

SIF1 2007 467,094,135

508,324,299

91.89%

SIF2 2012 630,555,311 111.37% 684,690,888 109.82% 92.09%

SIF2 2011 566,155,402 113.48% 623,440,332 118.74% 90.81%

SIF2 2010 498,903,369 109.40% 525,029,674 110.83% 95.02%

SIF2 2009 456,017,132 117.36% 473,741,610 114.93% 96.26%

SIF2 2008 388,553,001 114.06% 412,195,051 114.48% 94.26%

SIF2 2007 340,659,625

360,057,232

94.61%

SIF3 2012 842,774,575 109.55% 936,385,331 114.84% 90.00%

SIF3 2011 769,314,328 109.98% 815,407,050 106.70% 94.35%

SIF3 2010 699,498,187 106.17% 764,197,755 107.76% 91.53%

SIF3 2009 658,835,186 113.96% 709,184,921 113.37% 92.90%

SIF3 2008 578,107,896 90.36% 625,538,838 91.99% 92.42%

SIF3 2007 639,806,786

680,001,684

94.09%

SIF4 2012 767,683,574 67.49% 932,072,668 75.59% 82.36%

SIF4 2011 1,137,521,392 87.16% 1,233,142,562 88.11% 92.25%

SIF4 2010 1,305,115,912 96.71% 1,399,479,087 95.65% 93.26%

SIF4 2009 1,349,540,322 108.53% 1,463,077,302 106.95% 92.24%

SIF4 2008 1,243,467,003 61.07% 1,368,010,222 64.19% 90.90%

SIF4 2007 2,036,278,767

2,131,235,183

95.54%

SIF5 2012 671,463,884 102.85% 799,520,301 105.61% 83.98%

SIF5 2011 652,841,780 98.64% 757,043,304 99.56% 86.24%

SIF5 2010 661,847,553 102.03% 760,356,050 105.99% 87.04%

SIF5 2009 648,684,500 142.11% 717,380,247 139.01% 90.42%

SIF5 2008 456,464,535 77.84% 516,045,894 80.72% 88.45%

SIF5 2007 586,401,094

639,265,581

91.73%

FP 2012 11,836,768,038 106.44% 11,857,832,216 106.23% 99.82%

FP 2011 11,120,700,702 91.61% 11,162,857,525 91.43% 99.62%

FP 2010 12,139,275,376 99.53% 12,208,562,771 100.03% 99.43%

FP 2009 12,197,026,990 111.62% 12,204,404,626 60699.36% 99.94%

FP 2008 10,926,861,000 75.58% 20,106,314 75.62% 99.92%

FP 2007 14,456,612,076

14,461,504,750

99.97%



Table 3. Global indebtedness ratios

Co. Year Total

liabilities Index TL


Index E&L Global

Indebtedness Ratio

BIO 2012 32,391,453 120.19% 196,930,710 108.86% 16.45%

BIO 2011 26,950,149 141.07% 180,908,145 109.73% 14.90%

BIO 2010 19,104,638 145.38% 164,865,647 110.50% 11.59%

BIO 2009 13,141,618 87.03% 149,194,480 103.03% 8.81%

BIO 2008 15,099,299 114.65% 144,812,841 88.20% 10.43%

BIO 2007 13,169,517

164,193,212

8.02%

TGN 2012 486,108,764 112.19% 3,473,685,086 93.98% 13.99%

TGN 2011 433,274,837 47.02% 3,696,152,801 105.37% 11.72%

TGN 2010 921,402,596 106.61% 3,507,828,871 108.68% 26.27%

TGN 2009 864,302,564 92.67% 3,227,671,302 103.43% 26.78%

TGN 2008 932,692,339 101.40% 3,120,701,683 125.49% 29.89%

TGN 2007 919,826,455

2,486,758,445

36.99%

SNP 2012 6,860,638,545 98.95% 29,772,089,490 115.29% 23.04%

SNP 2011 6,933,171,332 82.82% 25,824,063,494 105.12% 26.85%

SNP 2010 8,371,549,948 131.14% 24,566,625,475 120.19% 34.08%

SNP 2009 6,383,652,890 128.96% 20,439,800,129 110.37% 31.23%

SNP 2008 4,950,122,772 189.73% 18,518,721,219 117.26% 26.73%

SNP 2007 2,609,007,437

15,793,126,042

16.52%

RRC 2012 4,956,060,954 74.89% 7,099,794,797 64.37% 69.81%

RRC 2011 6,617,973,868 119.34% 11,028,894,441 110.77% 60.01%

RRC 2010 5,545,701,821 138.95% 9,956,622,393 163.19% 55.70%

RRC 2009 3,991,131,032 149.35% 6,101,058,632 144.07% 65.42%

RRC 2008 2,672,318,772 120.56% 4,234,881,759 98.93% 63.10%

RRC 2007 2,216,524,886

4,280,646,871

51.78%

IMP 2012 96,776,389 91.94% 422,897,776 105.18% 22.88%

IMP 2011 105,260,858 75.50% 402,088,969 88.30% 26.18%

IMP 2010 139,419,390 84.09% 455,349,972 91.20% 30.62%

IMP 2009 165,794,749 67.85% 499,307,279 86.37% 33.20%

IMP 2008 244,354,176 196.70% 578,072,362 128.20% 42.27%

IMP 2007 124,229,018

450,931,513

27.55%

TBM 2012 103,123,820 114.50% 144,501,378 91.70% 71.37%

TBM 2011 90,063,387 110.55% 157,583,880 93.58% 57.15%

TBM 2010 81,466,223 102.67% 168,398,131 95.23% 48.38%

TBM 2009 79,348,732 116.19% 176,827,813 122.75% 44.87%

TBM 2008 68,294,795 127.43% 144,060,570 90.45% 47.41%

TBM 2007 53,594,267

159,272,860

33.65%

BRK 2012 11,768,705 111.81% 91,932,879 107.51% 12.80%

BRK 2011 10,525,217 90.93% 85,507,394 82.10% 12.31%

BRK 2010 11,575,288 155.40% 104,147,782 105.72% 11.11%

BRK 2009 7,448,703 380.42% 98,508,925 111.36% 7.56%

Co. Year Total

liabilities Index TL


Index E&L Global

Indebtedness Ratio

BRK 2008 1,958,008 7.99% 88,456,885 48.57% 2.21%

BRK 2007 24,490,548

182,130,138

13.45%

SIF1 2012 33,058,982 87.31% 907,682,700 133.39% 3.64%

SIF1 2011 37,863,920 60.09% 680,462,252 113.12% 5.56%

SIF1 2010 63,012,355 86.73% 601,559,119 105.01% 10.47%

SIF1 2009 72,655,288 88.83% 572,858,554 115.63% 12.68%

SIF1 2008 81,788,591 198.37% 495,420,516 97.46% 16.51%

SIF1 2007 41,230,164

508,324,299

8.11%

SIF2 2012 54,135,577 94.50% 684,690,888 109.82% 7.91%

SIF2 2011 57,284,930 219.26% 623,440,332 118.74% 9.19%

SIF2 2010 26,126,305 147.40% 525,029,674 110.83% 4.98%

SIF2 2009 17,724,478 74.97% 473,741,610 114.93% 3.74%

SIF2 2008 23,642,050 121.88% 412,195,051 114.48% 5.74%

SIF2 2007 19,397,607

360,057,232

5.39%

SIF3 2012 93,610,756 203.09% 936,385,331 114.84% 10.00%

SIF3 2011 46,092,722 71.24% 815,407,050 106.70% 5.65%

SIF3 2010 64,699,568 128.50% 764,197,755 107.76% 8.47%

SIF3 2009 50,349,735 106.15% 709,184,921 113.37% 7.10%

SIF3 2008 47,430,942 118.00% 625,538,838 91.99% 7.58%

SIF3 2007 40,194,898

680,001,684

5.91%

SIF4 2012 164,389,094 171.92% 932,072,668 75.59% 17.64%

SIF4 2011 95,621,170 101.33% 1,233,142,562 88.11% 7.75%

SIF4 2010 94,363,175 83.11% 1,399,479,087 95.65% 6.74%

SIF4 2009 113,536,980 91.16% 1,463,077,302 106.95% 7.76%

SIF4 2008 124,543,219 131.16% 1,368,010,222 64.19% 9.10%

SIF4 2007 94,956,416

2,131,235,183

4.46%

SIF5 2012 128,056,417 122.89% 799,520,301 105.61% 16.02%

SIF5 2011 104,201,524 105.78% 757,043,304 99.56% 13.76%

SIF5 2010 98,508,497 143.40% 760,356,050 105.99% 12.96%

SIF5 2009 68,695,747 115.30% 717,380,247 139.01% 9.58%

SIF5 2008 59,581,359 112.71% 516,045,894 80.72% 11.55%

SIF5 2007 52,864,487

639,265,581

8.27%

FP 2012 21,064,178 49.97% 11,857,832,216 106.23% 0.18%

FP 2011 42,156,823 60.84% 11,162,857,525 91.43% 0.38%

FP 2010 69,287,395 939.15% 12,208,562,771 100.03% 0.57%

FP 2009 7,377,636 80.37% 12,204,404,626 111.60% 0.06%

FP 2008 9,179,453 187.62% 20,106,314 75.62% 0.08%

FP 2007 4,892,674

14,461,504,750

0.03%



Table 4. Current and quick ratios

Co. Year Current assets Current liability Current ratio Inventories Quick ratio

BIO 2012 124,727,284 32,375,044 3.85 15,619,265 3.37

BIO 2011 115,969,010 26,547,462 4.37 15,231,010 3.79

BIO 2010 100,503,352 18,260,308 5.50 13,553,634 4.76

BIO 2009 81,121,037 12,290,964 6.60 11,283,810 5.68

BIO 2008 68,218,208 14,072,593 4.85 12,668,859 3.95

BIO 2007 55,972,987 11,659,827 4.80 8,553,872 4.07

TGN 2012 557,212,189 343,912,586 1.62 35,827,551 1.52

TGN 2011 684,878,301 358,127,194 1.91 43,247,769 1.79

TGN 2010 558,979,824 357,177,874 1.56 27,654,123 1.49

TGN 2009 476,824,992 336,853,787 1.42 34,955,150 1.31

TGN 2008 597,873,208 347,807,623 1.72 40,326,519 1.60

TGN 2007 573,719,841 311,163,974 1.84 31,320,289 1.74

SNP 2012 5,587,991,879 5,014,569,278 1.11 1,763,435,040 0.76

SNP 2011 5,135,942,846 4,677,942,732 1.10 1,695,805,503 0.74

SNP 2010 5,404,207,035 4,884,114,200 1.11 1,828,696,965 0.73

SNP 2009 4,413,732,144 3,561,335,579 1.24 2,097,889,862 0.65

SNP 2008 5,575,305,751 3,446,027,370 1.62 2,394,434,361 0.92

SNP 2007 4,199,630,998 2,580,025,427 1.63 1,922,375,343 0.88

RRC 2012 2,854,454,750 4,956,060,954 0.58 1,167,936,143 0.34

RRC 2011 2,261,247,232 6,617,973,868 0.34 906,137,452 0.20

RRC 2010 2,293,567,467 5,545,684,078 0.41 902,498,199 0.25

RRC 2009 1,605,779,478 3,990,749,375 0.40 636,774,965 0.24

RRC 2008 1,840,237,966 2,581,028,101 0.71 499,871,863 0.52

RRC 2007 2,146,602,363 2,030,812,897 1.06 628,692,301 0.75

IMP 2012 158,738,542 61,674,581 2.57 114,167,134 0.72

IMP 2011 317,322,814 40,564,811 7.82 258,299,960 1.46

IMP 2010 367,101,178 40,898,780 8.98 280,619,736 2.11

IMP 2009 417,666,568 91,138,209 4.58 311,575,489 1.16

IMP 2008 455,857,563 156,647,911 2.91 277,886,645 1.14

IMP 2007 499,568,834 11,275,614 44.31 235,097,417 23.46

TBM 2012 78,751,713 71,050,116 1.11 70,509,444 0.12

TBM 2011 40,377,827 66,562,407 0.61 31,462,798 0.13

TBM 2010 45,667,261 60,810,650 0.75 39,019,127 0.11

TBM 2009 53,691,636 55,229,066 0.97 42,844,998 0.20

TBM 2008 55,681,704 41,389,900 1.35 41,440,515 0.34

TBM 2007 70,872,845 36,602,891 1.94 39,585,089 0.85

SIF1 2012 144,274,300 33,058,982 4.36 3,070 4.36

SIF1 2011 137,346,746 37,863,920 3.63 3,278 3.63

SIF1 2010 111,198,228 63,012,355 1.76 3,237 1.76

SIF1 2009 135,042,190 67,577,178 2.00 3,237 2.00

SIF1 2008 42,640,670 46,160,481 0.92 3,237 0.92

SIF1 2007 103,191,364 41,230,164 2.50 6,836 2.50

Co. Year Current assets Current liability Current ratio Inventories Quick ratio

SIF2 2012 109,362,022 54,135,577 2.02 38,032 2.02

SIF2 2011 139,435,510 57,284,930 2.43 27,904 2.43

SIF2 2010 81,351,111 26,126,305 3.11 33,805 3.11

SIF2 2009 149,888,812 17,724,478 8.46 37,899 8.45

SIF2 2008 62,226,811 23,642,050 2.63 27,561 2.63

SIF2 2007 44,011,868 19,397,607 2.27 23,884 2.27

SIF3 2012 51,509,818 93,610,756 0.55 38,004 0.55

SIF3 2011 137,739,263 46,092,722 2.99 36,741 2.99

SIF3 2010 75,279,931 64,699,568 1.16 30,335 1.16

SIF3 2009 102,269,352 50,349,735 2.03 30,739 2.03

SIF3 2008 50,515,626 47,430,942 1.07 32,518 1.06

SIF3 2007 81,378,744 40,194,898 2.02 30,619 2.02

SIF4 2012 242,756,729 164,389,094 1.48 4,788 1.48

SIF4 2011 185,406,205 95,621,170 1.94 3,323 1.94

SIF4 2010 176,173,351 94,363,175 1.87 4,097 1.87

SIF4 2009 108,569,191 113,536,980 0.96 4,776 0.96

SIF4 2008 85,094,662 124,543,219 0.68 4,116 0.68

SIF4 2007 62,521,992 94,956,416 0.66 8,197 0.66

SIF5 2012 42,974,080 128,056,417 0.34 40,653 0.34

SIF5 2011 83,497,496 104,201,524 0.80 32,179 0.80

SIF5 2010 166,027,118 98,508,497 1.69 33,850 1.69

SIF5 2009 195,159,875 68,695,747 2.84 52,442 2.84

SIF5 2008 10,347,477 59,581,359 0.17 38,431 0.17

SIF5 2007 41,619,279 52,864,487 0.79 13,098 0.79



Table 5. Solvency ratios

Co. Year Total assets Index TA Total debt Index Debt Solvency ratio

BIO 2012 198,510,404 107.35% 32,391,453 120.19% 6.13

BIO 2011 184,918,511 109.92% 26,950,149 141.07% 6.86

BIO 2010 168,232,169 109.18% 19,104,638 145.38% 8.81

BIO 2009 154,080,764 99.26% 13,141,618 87.03% 11.72

BIO 2008 155,231,392 74.88% 15,099,299 114.65% 10.28

BIO 2007 207,308,598

13,169,517

15.74

TGN 2012 3,906,955,633 95.55% 486,108,764 112.19% 8.04

TGN 2011 4,089,037,220 106.61% 433,274,837 47.02% 9.44

TGN 2010 3,835,591,501 111.67% 921,402,596 106.61% 4.16

TGN 2009 3,434,885,366 104.72% 864,302,564 92.67% 3.97

TGN 2008 3,279,982,409 267.30% 932,692,339 101.40% 3.52

TGN 2007 1,227,083,274

919,826,455

1.33

SNP 2012 37,410,862,772 110.62% 6,860,638,545 98.95% 5.45

SNP 2011 33,819,553,700 105.35% 6,933,171,332 82.82% 4.88

SNP 2010 32,102,076,163 120.17% 8,371,549,948 131.14% 3.83

SNP 2009 26,713,538,384 104.85% 6,383,652,890 128.96% 4.18

SNP 2008 25,477,153,093 123.61% 4,950,122,772 189.73% 5.15

SNP 2007 20,611,326,643

2,609,007,437

7.90

RRC 2012 7,366,788,610 112.24% 4,956,060,954 74.89% 1.49

RRC 2011 6,563,566,885 106.01% 6,617,973,868 119.34% 0.99

RRC 2010 6,191,746,955 119.63% 5,545,701,821 138.95% 1.12

RRC 2009 5,175,963,112 77.29% 3,991,131,032 149.35% 1.30

RRC 2008 6,696,388,393 104.03% 2,672,318,772 120.56% 2.51

RRC 2007 6,437,030,457

2,216,524,886

2.90

IMP 2012 428,869,733 105.08% 96,776,389 91.94% 4.43

IMP 2011 408,155,646 88.41% 105,260,858 75.50% 3.88

IMP 2010 461,659,952 91.30% 139,419,390 84.09% 3.31

IMP 2009 505,676,876 86.60% 165,794,749 67.85% 3.05

IMP 2008 583,952,979 103.98% 244,354,176 196.70% 2.39

IMP 2007 561,589,014

124,229,018

4.52

TBM 2012 149,129,555 92.32% 103,123,820 114.50% 1.45

TBM 2011 161,529,442 94.45% 90,063,387 110.55% 1.79

TBM 2010 171,017,961 94.90% 81,466,223 102.67% 2.10

TBM 2009 180,207,448 121.56% 79,348,732 116.19% 2.27

TBM 2008 148,241,355 92.85% 68,294,795 127.43% 2.17

TBM 2007 159,661,398

53,594,267

2.98


Table 6. Profitability ratios

Co. Year Op. income Op. revenues Op. rev. pr. Op. expenses Op. exp. pr.

BIO 2012 16,416,857 106,086,143 15.48% 89,669,286 18.31%

BIO 2011 15,707,018 93,652,518 16.77% 77,945,500 20.15%

BIO 2010 16,934,705 83,571,614 20.26% 66,636,909 25.41%

BIO 2009 13,711,173 68,743,229 19.95% 55,032,056 24.91%

BIO 2008 14,548,911 66,351,674 21.93% 51,802,763 28.09%

BIO 2007 15,328,632 62,691,353 24.45% 47,362,721 32.36%

TGN 2012 364,921,057 1,365,369,351 26.73% 1,000,448,294 36.48%

TGN 2011 442,570,859 1,404,364,126 31.51% 961,793,267 46.02%

TGN 2010 443,664,112 1,342,933,371 33.04% 899,269,259 49.34%

TGN 2009 345,147,578 1,220,014,804 28.29% 874,867,226 39.45%

TGN 2008 280,943,159 1,138,318,102 24.68% 857,374,943 32.77%

TGN 2007 271,287,126 1,051,656,687 25.80% 780,369,561 34.76%

SNP 2012 5,252,736,107 20,328,296,120 25.84% 15,075,560,013 34.84%

SNP 2011 5,033,585,274 17,031,523,630 29.55% 11,997,938,356 41.95%

SNP 2010 3,201,693,547 14,629,238,402 21.89% 11,427,544,855 28.02%

SNP 2009 1,197,278,464 13,206,182,757 9.07% 12,008,904,293 9.97%

SNP 2008 1,309,233,231 17,399,624,687 7.52% 16,090,391,456 8.14%

SNP 2007 1,964,598,430 12,484,946,724 15.74% 10,520,348,294 18.67%

RRC 2012 -176,403,420 12,623,179,868 -1.40% 12,799,583,288 -1.38%

RRC 2011 -274,099,425 10,355,875,579 -2.65% 10,629,975,004 -2.58%

RRC 2010 -156,023,496 7,215,033,596 -2.16% 7,371,057,092 -2.12%

RRC 2009 -342,984,726 6,332,902,636 -5.42% 6,675,887,362 -5.14%

RRC 2008 17,159,952 8,678,797,265 0.20% 8,661,637,313 0.20%

RRC 2007 -36,849,736 5,475,364,748 -0.67% 5,512,214,484 -0.67%

IMP 2012 -67,976,793 -27,635,812 245.97% 40,340,981 -168.51%

IMP 2011 -16,608,101 12,433,515 -133.58% 29,041,616 -57.19%

IMP 2010 -10,366,497 26,730,406 -38.78% 37,096,903 -27.94%

IMP 2009 11,031,322 68,557,322 16.09% 57,526,000 19.18%

IMP 2008 26,115,243 233,600,410 11.18% 207,485,167 12.59%

IMP 2007 24,125,645 158,641,682 15.21% 134,516,037 17.94%

TBM 2012 -6,073,790 49,932,099 -12.16% 56,005,889 -10.84%

TBM 2011 -12,455,884 42,202,789 -29.51% 54,658,673 -22.79%

TBM 2010 -1,435,544 56,770,301 -2.53% 58,205,845 -2.47%

TBM 2009 604,490 62,991,866 0.96% 62,387,376 0.97%

TBM 2008 -18,998,663 70,978,059 -26.77% 89,976,722 -21.12%

TBM 2007 11,531,577 100,161,268 11.51% 88,629,691 13.01%

BRK 2012 -3,650,124 2,135,827 -170.90% 5,785,951 -63.09%

BRK 2011 -8,666,177 4,594,753 -188.61% 13,260,930 -65.35%

BRK 2010 -9,042,117 3,505,754 -257.92% 12,547,871 -72.06%

BRK 2009 -4,964,986 3,483,572 -142.53% 8,448,558 -58.77%

BRK 2008 -9,627,678 8,579,886 -112.21% 18,207,564 -52.88%

BRK 2007 5,187,870 24,973,822 20.77% 19,785,952 26.22%


Table 7. Return ratios

Co. Year Oper. income Total assets Net income ROA ROI

BIO 2012 16,416,857 198,510,404 20,658,857 8.27% 12.56%

BIO 2011 15,707,018 184,918,511 14,220,788 8.49% 9.24%

BIO 2010 16,934,705 168,232,169 14,414,793 10.07% 9.89%

BIO 2009 13,711,173 154,080,764 19,636,090 8.90% 14.43%

BIO 2008 14,548,911 155,231,392 -21,310,153 9.37% -16.43%

BIO 2007 15,328,632 207,308,598 13,514,213 7.39% 8.95%

TGN 2012 364,921,057 3,906,955,633 329,305,243 9.34% 11.02%

TGN 2011 442,570,859 4,089,037,220 379,571,465 10.82% 11.63%

TGN 2010 443,664,112 3,835,591,501 376,352,986 11.57% 14.55%

TGN 2009 345,147,578 3,434,885,366 62,649,964 10.05% 2.65%

TGN 2008 280,943,159 3,279,982,409 239,007,090 8.57% 10.92%

TGN 2007 271,287,126 1,227,083,274 224,006,454 22.11% 14.30%

SNP 2012 5,252,736,107 37,410,862,772 3,850,620,876 14.04% 16.81%

SNP 2011 5,033,585,274 33,819,553,700 3,685,607,226 14.88% 19.51%

SNP 2010 3,201,693,547 32,102,076,163 1,799,154,602 9.97% 11.11%

SNP 2009 1,197,278,464 26,713,538,384 1,368,127,631 4.48% 9.73%

SNP 2008 1,309,233,231 25,477,153,093 1,022,387,463 5.14% 7.53%

SNP 2007 1,964,598,430 20,611,326,643 1,778,042,301 9.53% 13.49%

RRC 2012 -176,403,420 7,366,788,610 -297,653,500 -2.39% -13.88%

RRC 2011 -274,099,425 6,563,566,885 -735,847,584 -4.18% -16.68%

RRC 2010 -156,023,496 6,191,746,955 -669,762,488 -2.52% -15.18%

RRC 2009 -342,984,726 5,175,963,112 -474,087,418 -6.63% -22.47%

RRC 2008 17,159,952 6,696,388,393 -465,013,141 0.26% -29.76%

RRC 2007 -36,849,736 6,437,030,457 -314,323,203 -0.57% -15.23%

IMP 2012 -67,976,793 428,869,733 -74,892,467 -15.85% -22.96%

IMP 2011 -16,608,101 408,155,646 22,261,046 -4.07% 7.50%

IMP 2010 -10,366,497 461,659,952 17,524,665 -2.25% 5.55%

IMP 2009 11,031,322 505,676,876 -17,532,511 2.18% -5.26%

IMP 2008 26,115,243 583,952,979 8,258,687 4.47% 2.47%

IMP 2007 24,125,645 561,589,014 7,401,076 4.30% 2.27%

TBM 2012 -6,073,790 149,129,555 -13,707,000 -4.07% -33.13%

TBM 2011 -12,455,884 161,529,442 -19,411,417 -7.71% -28.75%

TBM 2010 -1,435,544 171,017,961 -10,547,173 -0.84% -12.13%

TBM 2009 604,490 180,207,448 -7,776,517 0.34% -7.98%

TBM 2008 -18,998,663 148,241,355 -28,935,141 -12.82% -38.19%

TBM 2007 11,531,577 159,661,398 7,994,923 7.22% 7.57%

BRK 2012 -3,650,124 99,368,711 5,181,446 -3.67% 6.46%

BRK 2011 -8,666,177 93,063,006 -15,599,615 -9.31% -20.80%

BRK 2010 -9,042,117 106,628,887 6,651,811 -8.48% 7.19%

BRK 2009 -4,964,986 98,461,332 4,202,102 -5.04% 4.61%

BRK 2008 -9,627,678 88,256,482 -70,629,294 -10.91% -81.65%

BRK 2007 5,187,870 182,136,890 38,359,069 2.85% 24.33%

3.3. Interdependence analysis between operating result and exchange rate

In order to make a comparative analysis of the financial results obtained by the companies

between 2007 and 2012, and the evolution of exchange rates in the same period, we use:

- the exchange rates at the end of each year (see in Table 8); - the yield calculated as logarithm from the exchange rate in year t minus the exchange

rate in pervious year, t-1, multipled by 100 (see in Table 8);

- index of operating results, calculated as the operating result from current year t over the operating result from previous year, multipled by 100 (see in Table 9);

- Correl function from Excel, which returns the correlation coefficient between two data sets.

More specifically, if the companies have good results, these results are reflected by the

evolution of the exchange rate in the next year.

Table 8. Exchange rates

12.2012 12.2011 12.2010 12.2009 12.2008 12.2007

Exchange rate RON / 1EUR

4.4287 4.3197 4.2848 4.2028 3.9852 3.6102

log(et/et-1)*100 108.23% 35.23% 83.92% 230.89% 429.19% -


By analyzing these data, we can see that the operating result had an downward trend for some

companies (RRC, IMP, TBM, BRK), and the specific levels of the correlation coefficients

between the dynamics of the exchange rate and the other indicators, also shows that their

evolution is weak correlated with the evolution of the market value of the company reflected

by its trend.

We can notice from the same table, and from Picture1, that the operating result recorded an

upward trend for the other companies, a trend reflected by the exchange rate dynamics.

Instead, specific levels of the correlation coefficients between the dynamics of the exchange

rate and the other indicators, shows that their evolution is weak correlated with the evolution

of the market value of the company reflected by its trend.

The inverse correlation between operating result and exchange rate for companies can be seen

in Picture 1. The highest and the single positive value of the correlation between the two

variables is 0.0591, for TGN, and the lowest negative value of -0.8996 is for BRK.

Picture 1. The correlation between operating result and exchange rate for companies


Table 9. Operating results

Company Year Operating result Absolute change Index

BIO 2012 16,416,857 709,839 104.5%

BIO 2011 15,707,018 -1,227,687 92.8%

BIO 2010 16,934,705 3,223,532 123.5%

BIO 2009 13,711,173 -837,738 94.2%

BIO 2008 14,548,911 -779,721 94.9%

BIO 2007 15,328,632 - -

TGN 2012 364,921,057 -77,649,802 82.5%

TGN 2011 442,570,859 -1,093,253 99.8%

TGN 2010 443,664,112 98,516,534 128.5%

TGN 2009 345,147,578 64,204,419 122.9%

TGN 2008 280,943,159 9,656,033 103.6%

TGN 2007 271,287,126 - -

SNP 2012 5,252,736,107 219,150,833 104.4%

SNP 2011 5,033,585,274 1,831,891,727 157.2%

SNP 2010 3,201,693,547 2,004,415,083 267.4%

SNP 2009 1,197,278,464 -111,954,767 91.4%

SNP 2008 1,309,233,231 -655,365,199 66.6%

SNP 2007 1,964,598,430 - -

RRC 2012 -176,403,420 97,696,005 64.4%

RRC 2011 -274,099,425 -118,075,929 175.7%

RRC 2010 -156,023,496 186,961,230 45.5%

RRC 2009 -342,984,726 -360,144,678 -1998.8%

RRC 2008 17,159,952 54,009,688 -46.6%

RRC 2007 -36,849,736 - -

IMP 2012 -67,976,793 -51,368,692 409.3%

IMP 2011 -16,608,101 -6,241,604 160.2%

IMP 2010 -10,366,497 -21,397,819 -94.0%

IMP 2009 11,031,322 -15,083,921 42.2%

IMP 2008 26,115,243 1,989,598 108.2%

IMP 2007 24,125,645 - -

TBM 2012 -6,073,790 6,382,094 48.8%

TBM 2011 -12,455,884 -11,020,340 867.7%

TBM 2010 -1,435,544 -2,040,034 -237.5%

TBM 2009 604,490 19,603,153 -3.2%

TBM 2008 -18,998,663 -30,530,240 -164.8%

TBM 2007 11,531,577 - -

BRK 2012 -3,650,124 5,016,053 42.1%

BRK 2011 -8,666,177 375,940 95.8%

BRK 2010 -9,042,117 -4,077,131 182.1%

BRK 2009 -4,964,986 4,662,692 51.6%

BRK 2008 -9,627,678 -14,815,548 -185.6%

BRK 2007 5,187,870 - -

3.4. Interdependence analysis between profitability, return and stock price

Another correlation analysis can be done between the stock price of the companies and the

operational revenues and expenses profitability, and between the stock price of the companies

and the return on assets or the return on investments.

In order to make a comparative analysis between the operational profitability (revenues and

expenses) or returns, obtained by the companies in the period 2007 and 2012, and the

evolution of exchange rates in the same period, we use:

- stock prices and the end of each year, and their relative change (see Table 10); - relative changes of operational revenues, expenses, return on assets and return on

investments, calculated as the current period t minus previous period t-1, and the

difference divided by the previous period t-1 (see Table 11);

- Correl function from Excel, which returns the correlation coefficient between two data sets.

Through diversification an investor aims to reduce the risk of a security by reducing

interactive risk of two or more securities in the same portfolio. For inclusion in its diversified

portfolio it is recommend to choose those actions poorly correlated with the market.

From Picture 2 we can see that RRC, IMP and TBM are the only companies with a low

degree of correlation between their stock prices and operational revenues or expenses. Also,

on one hand, IMP has a higher correlation degree between operational expenses profitability

and the stock price, than between operational revenues profitability and stock price, and on

the other, RRC has the same degree of correlation. Thus, the investor should choose to

include in his portfolio RRC and IMP.

Picture 2. The correlation between operational expenses and revenues profitability, and stock

price

Picture 3 leads us to the same conclusion as previous, since the correlation degree between the

return on asset, the return on investment and the stock price has low degree of correlation for

both RRC and IMP.


Picture 3. The correlation between return on assets and return on investments, and stock price

Table 10. Stock prices at the end of the year

Stock Price / end of year 2012 2011 2010 2009 2008 2007

BIO 0.2085 0.1929 0.205 0.201 0.078 0.5579

relative change 0.08 -0.06 0.02 1.58 -0.86

TGN 218 223.35 280 157 122 192

relative change -0.02 -0.20 0.78 0.29 -0.36

SNP 0.4281 0.29 0.335 0.249 0.181 0.497

relative change 0.48 -0.13 0.35 0.38 -0.64

RRC 0.0315 0.0383 0.0575 0.0635 0.0186 0.1109

relative change -0.18 -0.33 -0.09 2.41 -0.83

IMP 0.115 0.182 0.4701 0.705 1.3645 21.727

relative change -0.37 -0.61 -0.33 -0.48 -0.94

TBM 0.0297 0.0466 0.0945 0.086 0.0712 0.66

relative change -0.36 -0.51 0.10 0.21 -0.89

BRK 0.1139 0.1069 0.2229 0.1545 0.07 1.0528

relative change 0.07 -0.52 0.44 1.21 -0.93

FP 0.5495 0.427 1.1124

relative change 0.29 -0.62

SIF1 1.213 0.903 1.014 1.13 0.545 3.55

relative change 0.34 -0.11 -0.10 1.07 -0.85

SIF2 1.45 1.08 1.162 1.14 0.53 3.48

relative change 0.34 -0.07 0.02 1.15 -0.85

SIF3 0.7115 0.567 0.5435 0.68 0.272 2.32

relative change 0.25 0.04 -0.20 1.50 -0.88

SIF4 0.77 0.571 0.644 0.71 0.625 2.41

relative change 0.35 -0.11 -0.09 0.14 -0.74

SIF5 1.403 1.057 1.26 1.27 0.585 4.34

relative change 0.33 -0.16 -0.01 1.17 -0.87

Source: www.kmarket.ro (Capital Market Web Site)

Table 11. Relative changes of operational revenues, expenses, return on assets, return on

investments

Co. Year Op. rev. prof.

Rel. change Op. Rev.

Op. exp. prof.

Rel. change Op.ex.

ROA Rel.

change ROA

ROI Rel. change

ROI

BIO 2012 15.48% -0.077 18.31% -0.091 8.27% -0.026 0.126 0.359

BIO 2011 16.77% -0.172 20.15% -0.207 8.49% -0.156 0.092 -0.066

BIO 2010 20.26% 0.016 25.41% 0.020 10.07% 0.131 0.099 -0.315

BIO 2009 19.95% -0.090 24.91% -0.113 8.90% -0.051 0.144 -1.879

BIO 2008 21.93% -0.103 28.09% -0.132 9.37% 0.268 -0.164 -2.836

BIO 2007 24.45% - 32.36% - 7.39% - 0.089 -

TGN 2012 26.73% -0.152 36.48% -0.207 9.34% -0.137 0.110 -0.052

TGN 2011 31.51% -0.046 46.02% -0.067 10.82% -0.064 0.116 -0.201

TGN 2010 33.04% 0.168 49.34% 0.251 11.57% 0.151 0.146 4.489

TGN 2009 28.29% 0.146 39.45% 0.204 10.05% 0.173 0.027 -0.757

TGN 2008 24.68% -0.043 32.77% -0.057 8.57% -0.613 0.109 -0.236

TGN 2007 25.80% - 34.76% - 22.11% - 0.143 -

SNP 2012 25.84% -0.126 34.84% -0.169 14.04% -0.057 0.168 -0.139

SNP 2011 29.55% 0.350 41.95% 0.497 14.88% 0.492 0.195 0.756

SNP 2010 21.89% 1.414 28.02% 1.810 9.97% 1.225 0.111 0.141

SNP 2009 9.07% 0.205 9.97% 0.225 4.48% -0.128 0.097 0.292

SNP 2008 7.52% -0.522 8.14% -0.564 5.14% -0.461 0.075 -0.441

SNP 2007 15.74% - 18.67%

9.53% - 0.135 -

RRC 2012 -1.40% -0.472 -1.38% -0.466 -2.39% -0.427 -0.139 -0.168

RRC 2011 -2.65% 0.224 -2.58% 0.218 -4.18% 0.657 -0.167 0.099

RRC 2010 -2.16% -0.601 -2.12% -0.588 -2.52% -0.620 -0.152 -0.324

RRC 2009 -5.42% -28.391 -5.14% -26.933 -6.63% -26.859 -0.225 -0.245

RRC 2008 0.20% -1.294 0.20% -1.296 0.26% -1.448 -0.298 0.954

RRC 2007 -0.67% - -0.67% - -0.57% - -0.152 -

IMP 2012 245.97% -2.841 -168.51% 1.947 -15.85% 2.895 -0.230 -4.062

IMP 2011 -133.58% 2.444 -57.19% 1.046 -4.07% 0.812 0.075 0.352

IMP 2010 -38.78% -3.410 -27.94% -2.457 -2.25% -2.029 0.055 -2.055

IMP 2009 16.09% 0.439 19.18% 0.524 2.18% -0.512 -0.053 -3.124

IMP 2008 11.18% -0.265 12.59% -0.298 4.47% 0.041 0.025 0.092

IMP 2007 15.21% - 17.94% - 4.30% - 0.023 -

TBM 2012 -12.16% -0.588 -10.84% -0.524 -4.07% -0.472 -0.331 0.152

TBM 2011 -29.51% 10.672 -22.79% 8.240 -7.71% 8.186 -0.287 1.370

TBM 2010 -2.53% -3.635 -2.47% -3.545 -0.84% -3.502 -0.121 0.521

TBM 2009 0.96% -1.036 0.97% -1.046 0.34% -1.026 -0.080 -0.791

TBM 2008 -26.77% -3.325 -21.12% -2.623 -12.82% -2.774 -0.382 -6.048

TBM 2007 11.51% - 13.01% - 7.22% - 0.076 -

BRK 2012 -170.90% -0.094 -63.09% -0.035 -3.67% -0.606 0.065 -1.311

BRK 2011 -188.61% -0.269 -65.35% -0.093 -9.31% 0.098 -0.208 -3.895

BRK 2010 -257.92% 0.810 -72.06% 0.226 -8.48% 0.682 0.072 0.557


Co. Year Op. rev. prof.

Rel. change Op. Rev.

Op. exp. prof.

Rel. change Op.ex.

ROA Rel.

change ROA

ROI Rel. change

ROI

BRK 2009 -142.53% 0.270 -58.77% 0.111 -5.04% -0.538 0.046 -1.057

BRK 2008 -112.21% -6.402 -52.88% -3.017 -10.91% -4.830 -0.817 -4.356

BRK 2007 20.77% - 26.22% - 2.85% - 0.243 -


4. Conclusions

This paper follows the literature of financial assets valuation which deals with the connections

between financial assets' market values and the ratios describing the financial wealth of the

issuers. We seek to contribute to this literature by considering the case of an emergent capital

market such as the Romanian one.

Our findings suggest that the outcome of issuers' activity may affect the stocks prices even if

the involved linkages are not necessarily linear ones. Such findings may be related with that

literature describing emergent markets' information relative inefficiency and the presence of

some significant frictional factors. However, our results suggest that even for such markets

the financial soundness of the issuers matters for investors' decisions in choosing the structure

of their portfolios.

There are several limits of the proposed analysis. For instance, we are considering only a

small number of financial assets (even these are substantially contributing to Bucharest Stock

Exchange market capitalization). Also, from a methodological point of view, an approach

based on the correlations studies can only provide a limited view of the implied associations.

Finally, an extended set of financial ratios is required. Hence, in order to extend our results:

- a broader taxonomy of the financial assets should be considered; - more emergent markets should be considered as well as more financial ratios; - a co-integration analysis may be involved.

The main policy implication of our findings consists in the thesis that in order to sustain the

capital market development a more restrictive selection procedure is required in order to allow

the presence on the market only of those companies that displays a sound financial structure

and better economic performances.

Since the emergent markets are characterized by important structural and functional

specificity, the analysis of financial assets valuation should be extended in order to deal with

imperfect information, positional asymmetries and frictional factors.


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1. Introduction2. Specialized literature2.1. Financial asset valuation2.2. Financial ratios2.2.1. Balance sheet structure analysis2.2.2. Liquidity and solvency analysis2.2.3. Financial balance analysis2.2.4. Asset management analysis2.2.5. Profitability and return analysis

3. Study case and results3.1. Description of the companies3.2. Financial ratios analysis3.3. Interdependence analysis between operating result and exchange rate3.4. Interdependence analysis between profitability, return and stock price

4. Conclusions5. Bibliography

Documents

FINANCIAL ANALYSIS FOR QUOTED COMPANIES: THE BUCHAREST STOCK EXCHANGE CASE