Nurgalieva G.K., Aytbaeva K.B.

 

Al-Farabi Kazakh National University

 

Features of the financial analysis in construction organization on the example of LLP "Shugyla"

 


The current global crisis led to negative changes in domestic housing and construction market. Currently the majority of construction companies forced to reduce the volume of the projects, to take measures of the following nature: the decline of volume of new housing, the suspension of the construction of new facilities, the sale of previously purchased for construction sites, the expansion of the scope and terms of construction works.

It should also be noted that there is a significant lack of funding for construction. The situation leads to loss of the sector's enterprises, a significant reduction of the level of profitability of each organization.

For these reasons in the construction industry particularly popular in recent years is gaining analysis and evaluation of financial-economic condition of the company (for the purposes of lending, finding measures for the removal of problematic aspects of the operation, making major administrative decisions, etc.).

Similarly to business enterprises other sectors in the construction to acquire relevant information corresponding to the request and the current financial situation required the selection, evaluation, analysis and compiling the reporting information. Repeatedly applied mainly the method of deduction (from General concepts and numeric values to concrete situations) to build in a logical sequence data.

Appropriate and relevant requirements management ratios have particular importance, which calculated on the basis of reliable data on cash flow, confirmed in the financial statements.   

The peculiarities of assessing of the financial condition of enterprises in the construction industry should include the goals and objectives. The objectives of financial analysis include: the calculation of profit and profitability according to the results of construction work; analysis of the relation of own circulating assets and sources of their support, the study of altered factors; assessment of the presence and structure of working capital in construction companies; the study of the performance disciplines of mutual settlements with suppliers, control of receivables and payables; assessment of the turnover of circulating resources, the definition of ways of its acceleration. [1]

As a source of information for construction organizations and enterprises other industries are the balance sheet, statement of profit and loss, i.e. the form of financial statements.

One of the sections to study the financial performance of construction companies is the analysis of financial results, profitability of projects, the enterprise as a whole.

There is researching of the profitability of carried out by contract organization of the works. The analysis consists in correlation of the amount of profit (difference between contract price and actual cost of works) construction and installation organizations and revenue as part of the implementation of these works. These indicators are profit included in the statement of financial performance.

For purposes of detail, the profitability analysis is carried out for each of the delivered construction and installation of facilities; recalculation of financial indicators such as contract price, cost, profit, etc.

In the construction we should study the data for each type of operations, including a thorough analysis of services and financial auxiliary industries, selling prices.

The financial situation of construction companies is analyzed through the following indicators:

-the proportion of non-current assets in the capital;

-the share of net assets in the value of the property;

-the operating system of the enterprise in the total value of assets;

-the coefficient of wear and tear, upgrades, Disposals. [2, p. 124-126]

In the dynamics of these parameters can only be compared in comparable prices, taking into account inflation.

The structure should be assessed from the position of construction and installation works. While adequate for building your organization's situation will be the excess of the rate of collection over the setting of retirement: a gradual increase of prices over time overestimates the actual arrival. Thus, before the process of formulating valid conclusions about the financial status, should verify the stability of the accounting policy, the inflation factor for comparison with previous years.

To the peculiarities of the financial status of construction enterprises include low capital intensity: small and medium-sized construction enterprises mainly rent or purchase a leased equipment at large organizations, departments of mechanization. [3, p.26] 
        The main parameters for assessing solvency include the following factors: maneuverability, SC; current, quick and absolute liquidity; the availability of funding sources; financial independence.

Indicators of solvency, LLP "Shugyla" for 2013-2014

¹

indexes

 

on 31.12.2013

on 31.12.2014

 

The absolute liquidity ratio

0,02

0,19

 

The quick ratio

0,35

0,38

 

The current ratio

1,50

1,27

 

The financial independence ratio

0,34

0,21

 

The ratio of security with own sources of funding

0,33

0,17

                                             

According to the above parameters, LLP "Shugyla" refers to categories of business risk that virtually insolvent or approaching to this class. However, the fact also shows the need for further more detailed consideration of the economic situation in the company "Shugyla" because the totality of the nuances in the functioning of the organizations of the construction sector may lead to reduced the importance of traditionally calculated liquidity indicators for each specific company. It is recommended that individual research approach. 

Indicators of business activity and profitability of LLP "Shugyla" for 2013-2014

¹

 

In 2013 RUB

In 2014, RUB

1

The total turnover ratio

3,63

0,41

2

The turnover ratio of stocks

28,67

1,15

3

The turnover ratio of own funds

10,69

1,98

4

The margin of use of capital

0,07

0,02

5

The utilization ratio of own funds

0,21

0,11

6

Profitability ratio sales

0,02

0,05

7

The benefit / cost ratio at current costs

0,02

0,06

 

Business activity the organization is characterized from a financial point of view parameters of turnover of various types. The parameters for turnover of LLP "Shugyla" in table 2 say about the relative prosperity of the enterprise: the overall rate in 2013 is greater than 0.8, in 2014 reduced to 0.41; the ratio of inventory turnover in 2013 is significantly above its normative value, for 2014 is reduced by moving the state of Society at risk; turnover of own funds both in 2013 and in 2014 meets the regulatory criteria. The profitability of  LLP "Shugyla" in dynamics for 2013-2014 indicates a risky financial state: only the utilization ratio of own funds reflects a positive situation, other indicators reflect negative FSO. Thus, the analysis of the financial condition of the construction organization is recommended to implement a complex, to explore a set of parameters of economic enterprises; of particular importance for the formation of the findings are indicators of profitability and business activity.

 

 

 

References:

1.     Korolev S. A. the economy of the construction enterprise. // Under the editorship of S. A. Korolev, A. V. M. Krikunova: 2012;

2.     2. Sheremet, A. D. financial analysis Methodology/ A. D. Sheremet, E. V. Negashev. — M.: INFRA-M, 2012. — 420 p.

3.     Abramov A. E. framework for the analysis of financial, economic and investment activity of the enterprise: Part 1. — M.: akdi "Economy and life", 2012. — 95 p.;