Financial analysis of a company Linet spol. s.r.o.

Diana Šafaříková

Bachelor's thesis

Abstract:

Based on publicly accessible financial data an examination of the financial situation of Linet spol. s.r.o. was conducted. Consequently, I came to the following findings:The calculation of the Horizontal analysis revealed an increasing trend of Total assets, especially Fixed assets which prove the growth of the company and its plants as with an increase of 99% and a nominal value of 1,5bil. CZK in five years. Growth of Fixed assets is mainly driven by an increase of shares in subsidiaries and heavy investments to Tangible assets. Horizontal analysis of an Income and loss account showed overall increasing Total revenue. The company reports record sales apart from the year 2016/2017 when Total revenue decreased by about 10% (332mil. CZK). However, the fiscal years 2015/2016 was the year with the historically highest Total revenue. This year was also proportionally the least profitable as Operating profit was for only 219mil. CZK (decrease of 53%).The Vertical analysis reported radical changes since fiscal years 2015/2016 when happened dramatic change in the capital structure of the company. This change influenced the amount of Equity that decreased to 13% (from the previous 49%) of its share on Total liabilities. It influenced also Other sources that increased to value 3,4bil. CZK which account for 88% of Total liabilities.Analysis of ratio indicators reveals a weakness of the company in the form of values of all liquidity ratios since the fiscal years 2015/2016. The Cash ratio reported low values in almost all years as referential value (0,2-0,5) was reached only once in 2014/2015. On the other hand, profitability ratios show uncommonly good results during the first two years even in comparison with the industrial average when all indicators exceeded the values of the baseline.Graphs of Spider analysis displayed, besides low liquidity and high results of Return on Equity, an alarming result of Fixed Assets to Equity and Debt to Equity that were at its highest over 400% (for Fixed assets to Equity in 2016/2017) and Debt to Equity almost 650% (2015/2016) higher than the industrial average.

Keywords

financial analysis, horizontal analysis, vertical analysis, ratio indicators, profitability, liquidity, Linet spol. s.r.o., rentability, spider analysis

Language used: English

Date on which the thesis was submitted / produced: 24. 3. 2020

Thesis defence

• Supervisor: Ing. Jiří Mach, Ph.D.

Czech University of Life Sciences Prague

Faculty of Economics and Management

Bachelor programme / field:
Economics and Management / Economics and Management