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

Copyright 2013 - Toate drepturile privind lucrarea de fa aparin autorului acesteia i sunt
protejate prin Legea dreptului de autor L8/1996, cu modificrile i completrile ulterioare.
Folosirea coninutului sau a unor pri din acesta fr acordul autorului se pedepsete conform
legilor in vigoare.

REFERAT

DECLARAIE

Subsemnatul, ...........................................................................................................................................,
absolvent al programului de licen...................................................................................., promoia
............ autor al lucrrii de licen cu titlul
....................................................................................................................................................................
....................................................................................................................................................................
...................................................................................................................................................................,
avnd ca ndrumtor tiinific pe Doamna/Domnul Prof./Conf./Lector Dr.
...............................................................................................................................,
pe proprie rspundere i cunoscnd prevederile art. 143 (alin. 4,5) i 310 (alin. 1,2) ale Legii
Educaiei Naionale nr.1/2011, art. 4 (alin. 5) din Ordinul Ministerului Educaiei, Cercetrii i
Sportului, art. 9 din Regulamentul de organizare a examenelor de finalizare a studiilor
universitare de licen din cadrul UVT i ale Procedurii Operaionale a UVT privind frauda
i/sau plagiatul academic n rndul studenilor, declar urmtoarele:
lucrarea de absolvire a fost elaborat de mine, ca rezultat al propriei cercetri i
documentri, nu a mai fost prezentat niciodat la o alt facultate sau instituie de
nvmnt superior, din ar sau strintate;
- toate sursele bibliografice utilizate, inclusive cele de pe Internet, sunt indicate n lucrare;
- toate fragmentele de text reproduse exact, chiar i n traducere din alt limb, sunt
redate ntre ghilimele i dein referina precis a sursei bibliografice;
- reformularea, n cuvinte proprii, a textelor scrise de ctre ali autori indic sursa
bibliografic din care s-a inspirat;
- calculele sunt efectuate de ctre mine, iar comentarea rezultatelor obinute este original;
- reprezentrile grafice i tabelele care nu mi aparin au indicat sursa bibliografic
exact.
Prin prezenta mi asum n totalitate originalitatea lucrrii elaborate.
Timioara,
Data:______________
Nume:______________________
Prenume:___________________________
Semntura

TABLE OF CONTENTS
1.

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

2.

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

3.

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

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

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

Faculty of Economics and Business Administration

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. Longterm 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

Faculty of Economics and Business Administration

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: longterm 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.

Faculty of Economics and Business Administration

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 cashflows, 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.

Faculty of Economics and Business Administration

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.

Faculty of Economics and Business Administration

11

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 20102012 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 20072012 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.

Faculty of Economics and Business Administration

13

Table 1. Financial stability ratios

Co.

Year

Long-term
capital

Index
LTC

Total equity
and liabilities

Index
T E&L

BIO
BIO
BIO
BIO
BIO
BIO
TGN
TGN
TGN
TGN
TGN
TGN
SNP
SNP
SNP
SNP
SNP
SNP
RRC
RRC
RRC
RRC
RRC
RRC
IMP
IMP
IMP
IMP
IMP
IMP
TBM
TBM
TBM
TBM
TBM
TBM
BRK
BRK
BRK
BRK

2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009

164,555,666
154,360,683
146,605,339
136,903,516
130,740,248
152,533,385
3,129,772,500
3,338,025,607
3,150,650,997
2,890,817,515
2,772,894,060
2,175,594,471
24,757,520,212
21,146,120,762
19,682,511,275
16,878,464,550
15,072,693,849
13,213,100,615
2,143,733,843
4,410,920,573
4,410,938,315
2,110,309,257
1,653,853,658
2,249,833,974
361,223,195
361,524,158
414,451,192
408,169,070
421,424,451
439,655,899
73,451,262
91,021,473
107,587,481
121,598,747
102,670,670
122,669,969
80,207,110
75,065,812
93,090,204
91,104,213

106.60%
105.29%
107.09%
104.71%
85.71%

196,930,710
180,908,145
164,865,647
149,194,480
144,812,841
164,193,212
3,473,685,086
3,696,152,801
3,507,828,871
3,227,671,302
3,120,701,683
2,486,758,445
29,772,089,490
25,824,063,494
24,566,625,475
20,439,800,129
18,518,721,219
15,793,126,042
7,099,794,797
11,028,894,441
9,956,622,393
6,101,058,632
4,234,881,759
4,280,646,871
422,897,776
402,088,969
455,349,972
499,307,279
578,072,362
450,931,513
144,501,378
157,583,880
168,398,131
176,827,813
144,060,570
159,272,860
91,932,879
85,507,394
104,147,782
98,508,925

108.86%
109.73%
110.50%
103.03%
88.20%

93.76%
105.95%
108.99%
104.25%
127.45%
117.08%
107.44%
116.61%
111.98%
114.07%
48.60%
100.00%
209.02%
127.60%
73.51%
99.92%
87.23%
101.54%
96.85%
95.85%
80.70%
84.60%
88.48%
118.44%
83.70%
106.85%
80.64%
102.18%
105.14%

93.98%
105.37%
108.68%
103.43%
125.49%
115.29%
105.12%
120.19%
110.37%
117.26%
64.37%
110.77%
163.19%
144.07%
98.93%
105.18%
88.30%
91.20%
86.37%
128.20%
91.70%
93.58%
95.23%
122.75%
90.45%
107.51%
82.10%
105.72%
111.36%

Financial
stability
ratio
83.56%
85.33%
88.92%
91.76%
90.28%
92.90%
90.10%
90.31%
89.82%
89.56%
88.85%
87.49%
83.16%
81.89%
80.12%
82.58%
81.39%
83.66%
30.19%
39.99%
44.30%
34.59%
39.05%
52.56%
85.42%
89.91%
91.02%
81.75%
72.90%
97.50%
50.83%
57.76%
63.89%
68.77%
71.27%
77.02%
87.25%
87.79%
89.38%
92.48%

Co.

Year

Long-term
capital

BRK
BRK
SIF1
SIF1
SIF1
SIF1
SIF1
SIF1
SIF2
SIF2
SIF2
SIF2
SIF2
SIF2
SIF3
SIF3
SIF3
SIF3
SIF3
SIF3
SIF4
SIF4
SIF4
SIF4
SIF4
SIF4
SIF5
SIF5
SIF5
SIF5
SIF5
SIF5
FP
FP
FP
FP
FP
FP

2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007

86,652,990
157,970,530
874,623,718
642,598,332
538,546,764
505,281,376
449,260,035
467,094,135
630,555,311
566,155,402
498,903,369
456,017,132
388,553,001
340,659,625
842,774,575
769,314,328
699,498,187
658,835,186
578,107,896
639,806,786
767,683,574
1,137,521,392
1,305,115,912
1,349,540,322
1,243,467,003
2,036,278,767
671,463,884
652,841,780
661,847,553
648,684,500
456,464,535
586,401,094
11,836,768,038
11,120,700,702
12,139,275,376
12,197,026,990
10,926,861,000
14,456,612,076

Index
LTC

Total equity
and liabilities

Index
T E&L

54.85%

88,456,885
182,130,138
907,682,700
680,462,252
601,559,119
572,858,554
495,420,516
508,324,299
684,690,888
623,440,332
525,029,674
473,741,610
412,195,051
360,057,232
936,385,331
815,407,050
764,197,755
709,184,921
625,538,838
680,001,684
932,072,668
1,233,142,562
1,399,479,087
1,463,077,302
1,368,010,222
2,131,235,183
799,520,301
757,043,304
760,356,050
717,380,247
516,045,894
639,265,581
11,857,832,216
11,162,857,525
12,208,562,771
12,204,404,626
20,106,314
14,461,504,750

48.57%

136.11%
119.32%
106.58%
112.47%
96.18%
111.37%
113.48%
109.40%
117.36%
114.06%
109.55%
109.98%
106.17%
113.96%
90.36%
67.49%
87.16%
96.71%
108.53%
61.07%
102.85%
98.64%
102.03%
142.11%
77.84%
106.44%
91.61%
99.53%
111.62%
75.58%

133.39%
113.12%
105.01%
115.63%
97.46%
109.82%
118.74%
110.83%
114.93%
114.48%
114.84%
106.70%
107.76%
113.37%
91.99%
75.59%
88.11%
95.65%
106.95%
64.19%
105.61%
99.56%
105.99%
139.01%
80.72%
106.23%
91.43%
100.03%
111.60%
75.62%

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

Financial
stability
ratio
97.96%
86.73%
96.36%
94.44%
89.53%
88.20%
90.68%
91.89%
92.09%
90.81%
95.02%
96.26%
94.26%
94.61%
90.00%
94.35%
91.53%
92.90%
92.42%
94.09%
82.36%
92.25%
93.26%
92.24%
90.90%
95.54%
83.98%
86.24%
87.04%
90.42%
88.45%
91.73%
99.82%
99.62%
99.43%
99.94%
99.92%
99.97%

Faculty of Economics and Business Administration

15

Table 2. Global Financial autonomy ratios

Co.

Year

Shareholders
equity

Index
Equity

Total equity and

liabilities

BIO
BIO
BIO
BIO
BIO
BIO
TGN
TGN
TGN
TGN
TGN
TGN
SNP
SNP
SNP
SNP
SNP
SNP
RRC
RRC
RRC
RRC
RRC
RRC
IMP
IMP
IMP
IMP
IMP
IMP
TBM
TBM
TBM
TBM
TBM
TBM
BRK
BRK
BRK
BRK

2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009

164,539,257
153,957,996
145,761,009
136,052,862
129,713,542
151,023,695
2,987,576,322
3,262,877,964
2,586,426,275
2,363,368,738
2,188,009,344
1,566,931,990
22,911,450,945
18,890,892,162
16,195,075,527
14,056,147,239
13,568,598,447
13,184,118,605
2,143,733,843
4,410,920,573
4,410,920,572
2,109,927,600
1,562,562,987
2,064,121,985
326,121,387
296,828,111
315,930,582
333,512,530
333,718,186
326,702,495
41,377,558
67,520,493
86,931,908
97,479,081
75,765,775
105,678,593
80,164,174
74,982,177
92,572,494
91,060,222

106.87%
105.62%
107.14%
104.89%
85.89%

196,930,710
180,908,145
164,865,647
149,194,480
144,812,841
164,193,212
3,473,685,086
3,696,152,801
3,507,828,871
3,227,671,302
3,120,701,683
2,486,758,445
29,772,089,490
25,824,063,494
24,566,625,475
20,439,800,129
18,518,721,219
15,793,126,042
7,099,794,797
11,028,894,441
9,956,622,393
6,101,058,632
4,234,881,759
4,280,646,871
422,897,776
402,088,969
455,349,972
499,307,279
578,072,362
450,931,513
144,501,378
157,583,880
168,398,131
176,827,813
144,060,570
159,272,860
91,932,879
85,507,394
104,147,782
98,508,925

91.56%
126.15%
109.44%
108.01%
139.64%
121.28%
116.65%
115.22%
103.59%
102.92%
48.60%
100.00%
209.06%
135.03%
75.70%
109.87%
93.95%
94.73%
99.94%
102.15%
61.28%
77.67%
89.18%
128.66%
71.69%
106.91%
81.00%
101.66%
105.27%

Index E&L
108.86%
109.73%
110.50%
103.03%
88.20%
93.98%
105.37%
108.68%
103.43%
125.49%
115.29%
105.12%
120.19%
110.37%
117.26%
64.37%
110.77%
163.19%
144.07%
98.93%
105.18%
88.30%
91.20%
86.37%
128.20%
91.70%
93.58%
95.23%
122.75%
90.45%
107.51%
82.10%
105.72%
111.36%

Financial
Autonomy
Ratio
83.55%
85.10%
88.41%
91.19%
89.57%
91.98%
86.01%
88.28%
73.73%
73.22%
70.11%
63.01%
76.96%
73.15%
65.92%
68.77%
73.27%
83.48%
30.19%
39.99%
44.30%
34.58%
36.90%
48.22%
77.12%
73.82%
69.38%
66.80%
57.73%
72.45%
28.63%
42.85%
51.62%
55.13%
52.59%
66.35%
87.20%
87.69%
88.89%
92.44%

Co.

Year

Shareholders
equity

BRK
BRK
SIF1
SIF1
SIF1
SIF1
SIF1
SIF1
SIF2
SIF2
SIF2
SIF2
SIF2
SIF2
SIF3
SIF3
SIF3
SIF3
SIF3
SIF3
SIF4
SIF4
SIF4
SIF4
SIF4
SIF4
SIF5
SIF5
SIF5
SIF5
SIF5
SIF5
FP
FP
FP
FP
FP
FP

2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007

86,498,877
157,639,590
874,623,718
642,598,332
538,546,764
500,203,266
413,631,925
467,094,135
630,555,311
566,155,402
498,903,369
456,017,132
388,553,001
340,659,625
842,774,575
769,314,328
699,498,187
658,835,186
578,107,896
639,806,786
767,683,574
1,137,521,392
1,305,115,912
1,349,540,322
1,243,467,003
2,036,278,767
671,463,884
652,841,780
661,847,553
648,684,500
456,464,535
586,401,094
11,836,768,038
11,120,700,702
12,139,275,376
12,197,026,990
10,926,861,000
14,456,612,076

Index
Equity

Total equity and

liabilities

54.87%

88,456,885
182,130,138
907,682,700
680,462,252
601,559,119
572,858,554
495,420,516
508,324,299
684,690,888
623,440,332
525,029,674
473,741,610
412,195,051
360,057,232
936,385,331
815,407,050
764,197,755
709,184,921
625,538,838
680,001,684
932,072,668
1,233,142,562
1,399,479,087
1,463,077,302
1,368,010,222
2,131,235,183
799,520,301
757,043,304
760,356,050
717,380,247
516,045,894
639,265,581
11,857,832,216
11,162,857,525
12,208,562,771
12,204,404,626
20,106,314
14,461,504,750

136.11%
119.32%
107.67%
120.93%
88.55%
111.37%
113.48%
109.40%
117.36%
114.06%
109.55%
109.98%
106.17%
113.96%
90.36%
67.49%
87.16%
96.71%
108.53%
61.07%
102.85%
98.64%
102.03%
142.11%
77.84%
106.44%
91.61%
99.53%
111.62%
75.58%

Index E&L
48.57%
133.39%
113.12%
105.01%
115.63%
97.46%
109.82%
118.74%
110.83%
114.93%
114.48%
114.84%
106.70%
107.76%
113.37%
91.99%
75.59%
88.11%
95.65%
106.95%
64.19%
105.61%
99.56%
105.99%
139.01%
80.72%
106.23%
91.43%
100.03%
60699.36%
75.62%

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

Financial
Autonomy
Ratio
97.79%
86.55%
96.36%
94.44%
89.53%
87.32%
83.49%
91.89%
92.09%
90.81%
95.02%
96.26%
94.26%
94.61%
90.00%
94.35%
91.53%
92.90%
92.42%
94.09%
82.36%
92.25%
93.26%
92.24%
90.90%
95.54%
83.98%
86.24%
87.04%
90.42%
88.45%
91.73%
99.82%
99.62%
99.43%
99.94%
99.92%
99.97%

Faculty of Economics and Business Administration

17

Table 3. Global indebtedness ratios

Co.

Year

Total
liabilities

BIO
BIO
BIO
BIO
BIO
BIO
TGN
TGN
TGN
TGN
TGN
TGN
SNP
SNP
SNP
SNP
SNP
SNP
RRC
RRC
RRC
RRC
RRC
RRC
IMP
IMP
IMP
IMP
IMP
IMP
TBM
TBM
TBM
TBM
TBM
TBM
BRK
BRK
BRK
BRK

2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009

32,391,453
26,950,149
19,104,638
13,141,618
15,099,299
13,169,517
486,108,764
433,274,837
921,402,596
864,302,564
932,692,339
919,826,455
6,860,638,545
6,933,171,332
8,371,549,948
6,383,652,890
4,950,122,772
2,609,007,437
4,956,060,954
6,617,973,868
5,545,701,821
3,991,131,032
2,672,318,772
2,216,524,886
96,776,389
105,260,858
139,419,390
165,794,749
244,354,176
124,229,018
103,123,820
90,063,387
81,466,223
79,348,732
68,294,795
53,594,267
11,768,705
10,525,217
11,575,288
7,448,703

Index TL
120.19%
141.07%
145.38%
87.03%
114.65%
112.19%
47.02%
106.61%
92.67%
101.40%
98.95%
82.82%
131.14%
128.96%
189.73%
74.89%
119.34%
138.95%
149.35%
120.56%
91.94%
75.50%
84.09%
67.85%
196.70%
114.50%
110.55%
102.67%
116.19%
127.43%
111.81%
90.93%
155.40%
380.42%

Total equity and

liabilities
196,930,710
180,908,145
164,865,647
149,194,480
144,812,841
164,193,212
3,473,685,086
3,696,152,801
3,507,828,871
3,227,671,302
3,120,701,683
2,486,758,445
29,772,089,490
25,824,063,494
24,566,625,475
20,439,800,129
18,518,721,219
15,793,126,042
7,099,794,797
11,028,894,441
9,956,622,393
6,101,058,632
4,234,881,759
4,280,646,871
422,897,776
402,088,969
455,349,972
499,307,279
578,072,362
450,931,513
144,501,378
157,583,880
168,398,131
176,827,813
144,060,570
159,272,860
91,932,879
85,507,394
104,147,782
98,508,925

Index E&L
108.86%
109.73%
110.50%
103.03%
88.20%
93.98%
105.37%
108.68%
103.43%
125.49%
115.29%
105.12%
120.19%
110.37%
117.26%
64.37%
110.77%
163.19%
144.07%
98.93%
105.18%
88.30%
91.20%
86.37%
128.20%
91.70%
93.58%
95.23%
122.75%
90.45%
107.51%
82.10%
105.72%
111.36%

Global
Indebtedness
Ratio
16.45%
14.90%
11.59%
8.81%
10.43%
8.02%
13.99%
11.72%
26.27%
26.78%
29.89%
36.99%
23.04%
26.85%
34.08%
31.23%
26.73%
16.52%
69.81%
60.01%
55.70%
65.42%
63.10%
51.78%
22.88%
26.18%
30.62%
33.20%
42.27%
27.55%
71.37%
57.15%
48.38%
44.87%
47.41%
33.65%
12.80%
12.31%
11.11%
7.56%

Co.

Year

Total
liabilities

BRK
BRK
SIF1
SIF1
SIF1
SIF1
SIF1
SIF1
SIF2
SIF2
SIF2
SIF2
SIF2
SIF2
SIF3
SIF3
SIF3
SIF3
SIF3
SIF3
SIF4
SIF4
SIF4
SIF4
SIF4
SIF4
SIF5
SIF5
SIF5
SIF5
SIF5
SIF5
FP
FP
FP
FP
FP
FP

2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007

1,958,008
24,490,548
33,058,982
37,863,920
63,012,355
72,655,288
81,788,591
41,230,164
54,135,577
57,284,930
26,126,305
17,724,478
23,642,050
19,397,607
93,610,756
46,092,722
64,699,568
50,349,735
47,430,942
40,194,898
164,389,094
95,621,170
94,363,175
113,536,980
124,543,219
94,956,416
128,056,417
104,201,524
98,508,497
68,695,747
59,581,359
52,864,487
21,064,178
42,156,823
69,287,395
7,377,636
9,179,453
4,892,674

Index TL
7.99%
87.31%
60.09%
86.73%
88.83%
198.37%
94.50%
219.26%
147.40%
74.97%
121.88%
203.09%
71.24%
128.50%
106.15%
118.00%
171.92%
101.33%
83.11%
91.16%
131.16%
122.89%
105.78%
143.40%
115.30%
112.71%
49.97%
60.84%
939.15%
80.37%
187.62%

Total equity and

liabilities
88,456,885
182,130,138
907,682,700
680,462,252
601,559,119
572,858,554
495,420,516
508,324,299
684,690,888
623,440,332
525,029,674
473,741,610
412,195,051
360,057,232
936,385,331
815,407,050
764,197,755
709,184,921
625,538,838
680,001,684
932,072,668
1,233,142,562
1,399,479,087
1,463,077,302
1,368,010,222
2,131,235,183
799,520,301
757,043,304
760,356,050
717,380,247
516,045,894
639,265,581
11,857,832,216
11,162,857,525
12,208,562,771
12,204,404,626
20,106,314
14,461,504,750

Index E&L
48.57%
133.39%
113.12%
105.01%
115.63%
97.46%
109.82%
118.74%
110.83%
114.93%
114.48%
114.84%
106.70%
107.76%
113.37%
91.99%
75.59%
88.11%
95.65%
106.95%
64.19%
105.61%
99.56%
105.99%
139.01%
80.72%
106.23%
91.43%
100.03%
111.60%
75.62%

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

Global
Indebtedness
Ratio
2.21%
13.45%
3.64%
5.56%
10.47%
12.68%
16.51%
8.11%
7.91%
9.19%
4.98%
3.74%
5.74%
5.39%
10.00%
5.65%
8.47%
7.10%
7.58%
5.91%
17.64%
7.75%
6.74%
7.76%
9.10%
4.46%
16.02%
13.76%
12.96%
9.58%
11.55%
8.27%
0.18%
0.38%
0.57%
0.06%
0.08%
0.03%

Faculty of Economics and Business Administration

19

Table 4. Current and quick ratios

Co.
BIO
BIO
BIO
BIO
BIO
BIO
TGN
TGN
TGN
TGN
TGN
TGN
SNP
SNP
SNP
SNP
SNP
SNP
RRC
RRC
RRC
RRC
RRC
RRC
IMP
IMP
IMP
IMP
IMP
IMP
TBM
TBM
TBM
TBM
TBM
TBM
SIF1
SIF1
SIF1
SIF1
SIF1
SIF1

Year Current assets

2012 124,727,284
2011 115,969,010
2010 100,503,352
2009
81,121,037
2008
68,218,208
2007
55,972,987
2012 557,212,189
2011 684,878,301
2010 558,979,824
2009 476,824,992
2008 597,873,208
2007 573,719,841
2012 5,587,991,879
2011 5,135,942,846
2010 5,404,207,035
2009 4,413,732,144
2008 5,575,305,751
2007 4,199,630,998
2012 2,854,454,750
2011 2,261,247,232
2010 2,293,567,467
2009 1,605,779,478
2008 1,840,237,966
2007 2,146,602,363
2012 158,738,542
2011 317,322,814
2010 367,101,178
2009 417,666,568
2008 455,857,563
2007 499,568,834
2012
78,751,713
2011
40,377,827
2010
45,667,261
2009
53,691,636
2008
55,681,704
2007
70,872,845
2012 144,274,300
2011 137,346,746
2010 111,198,228
2009 135,042,190
2008
42,640,670
2007 103,191,364

Current liability
32,375,044
26,547,462
18,260,308
12,290,964
14,072,593
11,659,827
343,912,586
358,127,194
357,177,874
336,853,787
347,807,623
311,163,974
5,014,569,278
4,677,942,732
4,884,114,200
3,561,335,579
3,446,027,370
2,580,025,427
4,956,060,954
6,617,973,868
5,545,684,078
3,990,749,375
2,581,028,101
2,030,812,897
61,674,581
40,564,811
40,898,780
91,138,209
156,647,911
11,275,614
71,050,116
66,562,407
60,810,650
55,229,066
41,389,900
36,602,891
33,058,982
37,863,920
63,012,355
67,577,178
46,160,481
41,230,164

Current ratio
3.85
4.37
5.50
6.60
4.85
4.80
1.62
1.91
1.56
1.42
1.72
1.84
1.11
1.10
1.11
1.24
1.62
1.63
0.58
0.34
0.41
0.40
0.71
1.06
2.57
7.82
8.98
4.58
2.91
44.31
1.11
0.61
0.75
0.97
1.35
1.94
4.36
3.63
1.76
2.00
0.92
2.50

Inventories
15,619,265
15,231,010
13,553,634
11,283,810
12,668,859
8,553,872
35,827,551
43,247,769
27,654,123
34,955,150
40,326,519
31,320,289
1,763,435,040
1,695,805,503
1,828,696,965
2,097,889,862
2,394,434,361
1,922,375,343
1,167,936,143
906,137,452
902,498,199
636,774,965
499,871,863
628,692,301
114,167,134
258,299,960
280,619,736
311,575,489
277,886,645
235,097,417
70,509,444
31,462,798
39,019,127
42,844,998
41,440,515
39,585,089
3,070
3,278
3,237
3,237
3,237
6,836

Quick ratio
3.37
3.79
4.76
5.68
3.95
4.07
1.52
1.79
1.49
1.31
1.60
1.74
0.76
0.74
0.73
0.65
0.92
0.88
0.34
0.20
0.25
0.24
0.52
0.75
0.72
1.46
2.11
1.16
1.14
23.46
0.12
0.13
0.11
0.20
0.34
0.85
4.36
3.63
1.76
2.00
0.92
2.50

Co.
SIF2
SIF2
SIF2
SIF2
SIF2
SIF2
SIF3
SIF3
SIF3
SIF3
SIF3
SIF3
SIF4
SIF4
SIF4
SIF4
SIF4
SIF4
SIF5
SIF5
SIF5
SIF5
SIF5
SIF5

Year Current assets

2012 109,362,022
2011 139,435,510
2010
81,351,111
2009 149,888,812
2008
62,226,811
2007
44,011,868
2012
51,509,818
2011 137,739,263
2010
75,279,931
2009 102,269,352
2008
50,515,626
2007
81,378,744
2012 242,756,729
2011 185,406,205
2010 176,173,351
2009 108,569,191
2008
85,094,662
2007
62,521,992
2012
42,974,080
2011
83,497,496
2010 166,027,118
2009 195,159,875
2008
10,347,477
2007
41,619,279

Current liability
54,135,577
57,284,930
26,126,305
17,724,478
23,642,050
19,397,607
93,610,756
46,092,722
64,699,568
50,349,735
47,430,942
40,194,898
164,389,094
95,621,170
94,363,175
113,536,980
124,543,219
94,956,416
128,056,417
104,201,524
98,508,497
68,695,747
59,581,359
52,864,487

Current ratio
2.02
2.43
3.11
8.46
2.63
2.27
0.55
2.99
1.16
2.03
1.07
2.02
1.48
1.94
1.87
0.96
0.68
0.66
0.34
0.80
1.69
2.84
0.17
0.79

Inventories
38,032
27,904
33,805
37,899
27,561
23,884
38,004
36,741
30,335
30,739
32,518
30,619
4,788
3,323
4,097
4,776
4,116
8,197
40,653
32,179
33,850
52,442
38,431
13,098

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

Quick ratio
2.02
2.43
3.11
8.45
2.63
2.27
0.55
2.99
1.16
2.03
1.06
2.02
1.48
1.94
1.87
0.96
0.68
0.66
0.34
0.80
1.69
2.84
0.17
0.79

Faculty of Economics and Business Administration

21

Table 5. Solvency ratios

Co.
BIO
BIO
BIO
BIO
BIO
BIO
TGN
TGN
TGN
TGN
TGN
TGN
SNP
SNP
SNP
SNP
SNP
SNP
RRC
RRC
RRC
RRC
RRC
RRC
IMP
IMP
IMP
IMP
IMP
IMP
TBM
TBM
TBM
TBM
TBM
TBM

Year
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007

Total assets
198,510,404
184,918,511
168,232,169
154,080,764
155,231,392
207,308,598
3,906,955,633
4,089,037,220
3,835,591,501
3,434,885,366
3,279,982,409
1,227,083,274
37,410,862,772
33,819,553,700
32,102,076,163
26,713,538,384
25,477,153,093
20,611,326,643
7,366,788,610
6,563,566,885
6,191,746,955
5,175,963,112
6,696,388,393
6,437,030,457
428,869,733
408,155,646
461,659,952
505,676,876
583,952,979
561,589,014
149,129,555
161,529,442
171,017,961
180,207,448
148,241,355
159,661,398

Index TA
107.35%
109.92%
109.18%
99.26%
74.88%
95.55%
106.61%
111.67%
104.72%
267.30%
110.62%
105.35%
120.17%
104.85%
123.61%
112.24%
106.01%
119.63%
77.29%
104.03%
105.08%
88.41%
91.30%
86.60%
103.98%
92.32%
94.45%
94.90%
121.56%
92.85%

Total debt
32,391,453
26,950,149
19,104,638
13,141,618
15,099,299
13,169,517
486,108,764
433,274,837
921,402,596
864,302,564
932,692,339
919,826,455
6,860,638,545
6,933,171,332
8,371,549,948
6,383,652,890
4,950,122,772
2,609,007,437
4,956,060,954
6,617,973,868
5,545,701,821
3,991,131,032
2,672,318,772
2,216,524,886
96,776,389
105,260,858
139,419,390
165,794,749
244,354,176
124,229,018
103,123,820
90,063,387
81,466,223
79,348,732
68,294,795
53,594,267

Index Debt
120.19%
141.07%
145.38%
87.03%
114.65%
112.19%
47.02%
106.61%
92.67%
101.40%
98.95%
82.82%
131.14%
128.96%
189.73%
74.89%
119.34%
138.95%
149.35%
120.56%
91.94%
75.50%
84.09%
67.85%
196.70%
114.50%
110.55%
102.67%
116.19%
127.43%

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

Solvency ratio
6.13
6.86
8.81
11.72
10.28
15.74
8.04
9.44
4.16
3.97
3.52
1.33
5.45
4.88
3.83
4.18
5.15
7.90
1.49
0.99
1.12
1.30
2.51
2.90
4.43
3.88
3.31
3.05
2.39
4.52
1.45
1.79
2.10
2.27
2.17
2.98

Table 6. Profitability ratios

Co.
BIO
BIO
BIO
BIO
BIO
BIO
TGN
TGN
TGN
TGN
TGN
TGN
SNP
SNP
SNP
SNP
SNP
SNP
RRC
RRC
RRC
RRC
RRC
RRC
IMP
IMP
IMP
IMP
IMP
IMP
TBM
TBM
TBM
TBM
TBM
TBM
BRK
BRK
BRK
BRK
BRK
BRK

Year
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007

Op. income
16,416,857
15,707,018
16,934,705
13,711,173
14,548,911
15,328,632
364,921,057
442,570,859
443,664,112
345,147,578
280,943,159
271,287,126
5,252,736,107
5,033,585,274
3,201,693,547
1,197,278,464
1,309,233,231
1,964,598,430
-176,403,420
-274,099,425
-156,023,496
-342,984,726
17,159,952
-36,849,736
-67,976,793
-16,608,101
-10,366,497
11,031,322
26,115,243
24,125,645
-6,073,790
-12,455,884
-1,435,544
604,490
-18,998,663
11,531,577
-3,650,124
-8,666,177
-9,042,117
-4,964,986
-9,627,678
5,187,870

Op. revenues
106,086,143
93,652,518
83,571,614
68,743,229
66,351,674
62,691,353
1,365,369,351
1,404,364,126
1,342,933,371
1,220,014,804
1,138,318,102
1,051,656,687
20,328,296,120
17,031,523,630
14,629,238,402
13,206,182,757
17,399,624,687
12,484,946,724
12,623,179,868
10,355,875,579
7,215,033,596
6,332,902,636
8,678,797,265
5,475,364,748
-27,635,812
12,433,515
26,730,406
68,557,322
233,600,410
158,641,682
49,932,099
42,202,789
56,770,301
62,991,866
70,978,059
100,161,268
2,135,827
4,594,753
3,505,754
3,483,572
8,579,886
24,973,822

Op. rev. pr.

15.48%
16.77%
20.26%
19.95%
21.93%
24.45%
26.73%
31.51%
33.04%
28.29%
24.68%
25.80%
25.84%
29.55%
21.89%
9.07%
7.52%
15.74%
-1.40%
-2.65%
-2.16%
-5.42%
0.20%
-0.67%
245.97%
-133.58%
-38.78%
16.09%
11.18%
15.21%
-12.16%
-29.51%
-2.53%
0.96%
-26.77%
11.51%
-170.90%
-188.61%
-257.92%
-142.53%
-112.21%
20.77%

Op. expenses
89,669,286
77,945,500
66,636,909
55,032,056
51,802,763
47,362,721
1,000,448,294
961,793,267
899,269,259
874,867,226
857,374,943
780,369,561
15,075,560,013
11,997,938,356
11,427,544,855
12,008,904,293
16,090,391,456
10,520,348,294
12,799,583,288
10,629,975,004
7,371,057,092
6,675,887,362
8,661,637,313
5,512,214,484
40,340,981
29,041,616
37,096,903
57,526,000
207,485,167
134,516,037
56,005,889
54,658,673
58,205,845
62,387,376
89,976,722
88,629,691
5,785,951
13,260,930
12,547,871
8,448,558
18,207,564
19,785,952

Op. exp. pr.

18.31%
20.15%
25.41%
24.91%
28.09%
32.36%
36.48%
46.02%
49.34%
39.45%
32.77%
34.76%
34.84%
41.95%
28.02%
9.97%
8.14%
18.67%
-1.38%
-2.58%
-2.12%
-5.14%
0.20%
-0.67%
-168.51%
-57.19%
-27.94%
19.18%
12.59%
17.94%
-10.84%
-22.79%
-2.47%
0.97%
-21.12%
13.01%
-63.09%
-65.35%
-72.06%
-58.77%
-52.88%
26.22%

Faculty of Economics and Business Administration

23

Table 7. Return ratios

Co.
BIO
BIO
BIO
BIO
BIO
BIO
TGN
TGN
TGN
TGN
TGN
TGN
SNP
SNP
SNP
SNP
SNP
SNP
RRC
RRC
RRC
RRC
RRC
RRC
IMP
IMP
IMP
IMP
IMP
IMP
TBM
TBM
TBM
TBM
TBM
TBM
BRK
BRK
BRK
BRK
BRK
BRK

Year
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007

Oper. income
16,416,857
15,707,018
16,934,705
13,711,173
14,548,911
15,328,632
364,921,057
442,570,859
443,664,112
345,147,578
280,943,159
271,287,126
5,252,736,107
5,033,585,274
3,201,693,547
1,197,278,464
1,309,233,231
1,964,598,430
-176,403,420
-274,099,425
-156,023,496
-342,984,726
17,159,952
-36,849,736
-67,976,793
-16,608,101
-10,366,497
11,031,322
26,115,243
24,125,645
-6,073,790
-12,455,884
-1,435,544
604,490
-18,998,663
11,531,577
-3,650,124
-8,666,177
-9,042,117
-4,964,986
-9,627,678
5,187,870

Total assets
198,510,404
184,918,511
168,232,169
154,080,764
155,231,392
207,308,598
3,906,955,633
4,089,037,220
3,835,591,501
3,434,885,366
3,279,982,409
1,227,083,274
37,410,862,772
33,819,553,700
32,102,076,163
26,713,538,384
25,477,153,093
20,611,326,643
7,366,788,610
6,563,566,885
6,191,746,955
5,175,963,112
6,696,388,393
6,437,030,457
428,869,733
408,155,646
461,659,952
505,676,876
583,952,979
561,589,014
149,129,555
161,529,442
171,017,961
180,207,448
148,241,355
159,661,398
99,368,711
93,063,006
106,628,887
98,461,332
88,256,482
182,136,890

Net income
20,658,857
14,220,788
14,414,793
19,636,090
-21,310,153
13,514,213
329,305,243
379,571,465
376,352,986
62,649,964
239,007,090
224,006,454
3,850,620,876
3,685,607,226
1,799,154,602
1,368,127,631
1,022,387,463
1,778,042,301
-297,653,500
-735,847,584
-669,762,488
-474,087,418
-465,013,141
-314,323,203
-74,892,467
22,261,046
17,524,665
-17,532,511
8,258,687
7,401,076
-13,707,000
-19,411,417
-10,547,173
-7,776,517
-28,935,141
7,994,923
5,181,446
-15,599,615
6,651,811
4,202,102
-70,629,294
38,359,069

ROA
8.27%
8.49%
10.07%
8.90%
9.37%
7.39%
9.34%
10.82%
11.57%
10.05%
8.57%
22.11%
14.04%
14.88%
9.97%
4.48%
5.14%
9.53%
-2.39%
-4.18%
-2.52%
-6.63%
0.26%
-0.57%
-15.85%
-4.07%
-2.25%
2.18%
4.47%
4.30%
-4.07%
-7.71%
-0.84%
0.34%
-12.82%
7.22%
-3.67%
-9.31%
-8.48%
-5.04%
-10.91%
2.85%

ROI
12.56%
9.24%
9.89%
14.43%
-16.43%
8.95%
11.02%
11.63%
14.55%
2.65%
10.92%
14.30%
16.81%
19.51%
11.11%
9.73%
7.53%
13.49%
-13.88%
-16.68%
-15.18%
-22.47%
-29.76%
-15.23%
-22.96%
7.50%
5.55%
-5.26%
2.47%
2.27%
-33.13%
-28.75%
-12.13%
-7.98%
-38.19%
7.57%
6.46%
-20.80%
7.19%
4.61%
-81.65%
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
Exchange rate
RON / 1EUR
log(et/et-1)*100

12.2012
4.4287

12.2011
4.3197

12.2010
4.2848

12.2009
4.2028

12.2008
3.9852

12.2007
3.6102

108.23%

35.23%

83.92%

230.89%

429.19%

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

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

Faculty of Economics and Business Administration

25

Table 9. Operating results

Company
BIO
BIO
BIO
BIO
BIO
BIO
TGN
TGN
TGN
TGN
TGN
TGN
SNP
SNP
SNP
SNP
SNP
SNP
RRC
RRC
RRC
RRC
RRC
RRC
IMP
IMP
IMP
IMP
IMP
IMP
TBM
TBM
TBM
TBM
TBM
TBM
BRK
BRK
BRK
BRK
BRK
BRK

Year
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007

Operating result
16,416,857
15,707,018
16,934,705
13,711,173
14,548,911
15,328,632
364,921,057
442,570,859
443,664,112
345,147,578
280,943,159
271,287,126
5,252,736,107
5,033,585,274
3,201,693,547
1,197,278,464
1,309,233,231
1,964,598,430
-176,403,420
-274,099,425
-156,023,496
-342,984,726
17,159,952
-36,849,736
-67,976,793
-16,608,101
-10,366,497
11,031,322
26,115,243
24,125,645
-6,073,790
-12,455,884
-1,435,544
604,490
-18,998,663
11,531,577
-3,650,124
-8,666,177
-9,042,117
-4,964,986
-9,627,678
5,187,870

Absolute change
709,839
-1,227,687
3,223,532
-837,738
-779,721
-77,649,802
-1,093,253
98,516,534
64,204,419
9,656,033
219,150,833
1,831,891,727
2,004,415,083
-111,954,767
-655,365,199
97,696,005
-118,075,929
186,961,230
-360,144,678
54,009,688
-51,368,692
-6,241,604
-21,397,819
-15,083,921
1,989,598
6,382,094
-11,020,340
-2,040,034
19,603,153
-30,530,240
5,016,053
375,940
-4,077,131
4,662,692
-14,815,548
-

Index
104.5%
92.8%
123.5%
94.2%
94.9%
82.5%
99.8%
128.5%
122.9%
103.6%
104.4%
157.2%
267.4%
91.4%
66.6%
64.4%
175.7%
45.5%
-1998.8%
-46.6%
409.3%
160.2%
-94.0%
42.2%
108.2%
48.8%
867.7%
-237.5%
-3.2%
-164.8%
42.1%
95.8%
182.1%
51.6%
-185.6%
-

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.

Faculty of Economics and Business Administration

27

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
BIO
relative change
TGN
relative change
SNP
relative change
RRC
relative change
IMP
relative change
TBM
relative change
BRK
relative change
FP
relative change
SIF1
relative change
SIF2
relative change
SIF3
relative change
SIF4
relative change
SIF5
relative change

2012
0.2085
0.08
218
-0.02
0.4281
0.48
0.0315
-0.18
0.115
-0.37
0.0297
-0.36
0.1139
0.07
0.5495
0.29
1.213
0.34
1.45
0.34
0.7115
0.25
0.77
0.35
1.403
0.33

2011
0.1929
-0.06
223.35
-0.20
0.29
-0.13
0.0383
-0.33
0.182
-0.61
0.0466
-0.51
0.1069
-0.52
0.427
-0.62
0.903
-0.11
1.08
-0.07
0.567
0.04
0.571
-0.11
1.057
-0.16

2010
0.205
0.02
280
0.78
0.335
0.35
0.0575
-0.09
0.4701
-0.33
0.0945
0.10
0.2229
0.44
1.1124

2009
0.201
1.58
157
0.29
0.249
0.38
0.0635
2.41
0.705
-0.48
0.086
0.21
0.1545
1.21

2008
0.078
-0.86
122
-0.36
0.181
-0.64
0.0186
-0.83
1.3645
-0.94
0.0712
-0.89
0.07
-0.93

2007
0.5579

1.014
-0.10
1.162
0.02
0.5435
-0.20
0.644
-0.09
1.26
-0.01

1.13
1.07
1.14
1.15
0.68
1.50
0.71
0.14
1.27
1.17

0.545
-0.85
0.53
-0.85
0.272
-0.88
0.625
-0.74
0.585
-0.87

3.55

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

192
0.497
0.1109
21.727
0.66
1.0528

3.48
2.32
2.41
4.34

Table 11. Relative changes of operational revenues, expenses, return on assets, return on
investments
Op. rev.
Co. Year
prof.
BIO
BIO
BIO
BIO
BIO
BIO
TGN
TGN
TGN
TGN
TGN
TGN
SNP
SNP
SNP
SNP
SNP
SNP
RRC
RRC
RRC
RRC
RRC
RRC
IMP
IMP
IMP
IMP
IMP
IMP
TBM
TBM
TBM
TBM
TBM
TBM
BRK
BRK
BRK

2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010
2009
2008
2007
2012
2011
2010

15.48%
16.77%
20.26%
19.95%
21.93%
24.45%
26.73%
31.51%
33.04%
28.29%
24.68%
25.80%
25.84%
29.55%
21.89%
9.07%
7.52%
15.74%
-1.40%
-2.65%
-2.16%
-5.42%
0.20%
-0.67%
245.97%
-133.58%
-38.78%
16.09%
11.18%
15.21%
-12.16%
-29.51%
-2.53%
0.96%
-26.77%
11.51%
-170.90%
-188.61%
-257.92%

Rel. change Op. exp.

Op. Rev.
prof.
-0.077
-0.172
0.016
-0.090
-0.103
-0.152
-0.046
0.168
0.146
-0.043
-0.126
0.350
1.414
0.205
-0.522
-0.472
0.224
-0.601
-28.391
-1.294
-2.841
2.444
-3.410
0.439
-0.265
-0.588
10.672
-3.635
-1.036
-3.325
-0.094
-0.269
0.810

18.31%
20.15%
25.41%
24.91%
28.09%
32.36%
36.48%
46.02%
49.34%
39.45%
32.77%
34.76%
34.84%
41.95%
28.02%
9.97%
8.14%
18.67%
-1.38%
-2.58%
-2.12%
-5.14%
0.20%
-0.67%
-168.51%
-57.19%
-27.94%
19.18%
12.59%
17.94%
-10.84%
-22.79%
-2.47%
0.97%
-21.12%
13.01%
-63.09%
-65.35%
-72.06%

Rel.
change
Op.ex.
-0.091
-0.207
0.020
-0.113
-0.132
-0.207
-0.067
0.251
0.204
-0.057
-0.169
0.497
1.810
0.225
-0.564

Rel.
ROA
change
ROA
8.27%
-0.026
8.49%
-0.156
10.07%
0.131
8.90%
-0.051
9.37%
0.268
7.39%
9.34%
-0.137
10.82% -0.064
11.57%
0.151
10.05%
0.173
8.57%
-0.613
22.11%
14.04% -0.057
14.88%
0.492
9.97%
1.225
4.48%
-0.128
5.14%
-0.461
9.53%
-0.466 -2.39%
-0.427
0.218
-4.18%
0.657
-0.588 -2.52%
-0.620
-26.933 -6.63% -26.859
-1.296
0.26%
-1.448
-0.57%
1.947 -15.85% 2.895
1.046
-4.07%
0.812
-2.457 -2.25%
-2.029
0.524
2.18%
-0.512
-0.298
4.47%
0.041
4.30%
-0.524 -4.07%
-0.472
8.240
-7.71%
8.186
-3.545 -0.84%
-3.502
-1.046
0.34%
-1.026
-2.623 -12.82% -2.774
7.22%
-0.035 -3.67%
-0.606
-0.093 -9.31%
0.098
0.226
-8.48%
0.682

ROI

Rel. change
ROI

0.126
0.092
0.099
0.144
-0.164
0.089
0.110
0.116
0.146
0.027
0.109
0.143
0.168
0.195
0.111
0.097
0.075
0.135
-0.139
-0.167
-0.152
-0.225
-0.298
-0.152
-0.230
0.075
0.055
-0.053
0.025
0.023
-0.331
-0.287
-0.121
-0.080
-0.382
0.076
0.065
-0.208
0.072

0.359
-0.066
-0.315
-1.879
-2.836
-0.052
-0.201
4.489
-0.757
-0.236
-0.139
0.756
0.141
0.292
-0.441
-0.168
0.099
-0.324
-0.245
0.954
-4.062
0.352
-2.055
-3.124
0.092
0.152
1.370
0.521
-0.791
-6.048
-1.311
-3.895
0.557

Faculty of Economics and Business Administration

Op. rev.
Co. Year
prof.
BRK 2009 -142.53%
BRK 2008 -112.21%
BRK 2007
20.77%

Rel. change Op. exp.

Op. Rev.
prof.
0.270
-6.402
-

-58.77%
-52.88%
26.22%

Rel.
change
Op.ex.
0.111
-3.017
-

29

ROA
-5.04%
-10.91%
2.85%

Rel.
change
ROA
-0.538
-4.830
-

ROI

Rel. change
ROI

0.046
-0.817
0.243

-1.057
-4.356
-

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

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.

Faculty of Economics and Business Administration

31

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