2017

University American
College Skopje

CREATED BY:
Mark Pintaric
Stefan Tanevski

[FINANCIAL ACCOUNTING]
The project is based on two companies Evropa and Vitaminka. Throughout the project we covered the
marketing side of both companies in order to have a clear picture of their positioning on the market.
Also we did financial analyses of the main financial statements with their changes throughout the years
presented through Horizontal, Vertical Analysis and the most common financial ratios. Lastly, we have
explained the companies sales strategies and delivered a small conclusion for the overall situation.
Contents
BUSINESS PORTFOLIO EVROPA ....................................................................................................... 3
Mission............................................................................................................................................ 3
Vision .............................................................................................................................................. 3
Product Portfolio............................................................................................................................. 3
4PS EVROPA .................................................................................................................................... 4
SWOT Analysis Ad Evropa Skopje .................................................................................................... 6
BUSINESS PORTFOLIO VITAMINKA: ................................................................................................. 7
Mission............................................................................................................................................ 7
Vision .............................................................................................................................................. 7
Product portfolio............................................................................................................................. 7
4P’s VITAMINKA .............................................................................................................................. 8
SWOT analysis VITAMINKA ............................................................................................................. 9
CONSUMERS OVERVIEW EVROPA vs VITAMINKA ......................................................................... 10
COMPETITORS OVERVIEW EVROPA vs VITAMINKA....................................................................... 11
BCGMATRIX: Evropa AD Skopje .................................................................................................... 12
BCG Matrix : Vitaminka AD Skopje ......................................................................................................... 12
Horizontal Analysis........................................................................................................................ 13
VERTICAL ANALYSIS....................................................................................................................... 15
Conclusion from the comparison of the financial statements ....................................................... 21
Sales Strategy (EVROPA & VITAMINKA) ........................................................................................ 22
Analysis of the financial and investing activities for the most recent years: ................................. 24
Analysis of the financial and investing activities for the most recent years:Error! Bookmark not
defined.
Conslusion ..................................................................................................................................... 26
BUSINESS PORTFOLIO EVROPA
Evropa is a company which has left a mark on a great number of generations and holds this recognition
for more than 130 years, which makes it one of the oldest companies in the confectionery industry on
the Balkans. By conveying the experience and taking the quality to the next level throughout many
generations, it became what it is today – a stable industrial company with a production of around 5.000
tons annually and sales on the foreign and domestic market. It started as a small workshop of candies
lokum (also known as Turkish delight) and similar sugary products. Today, it is a contemporary factory
that produces chocolates, wafers and candies, a factory with high achievements. The certificates for
meeting the necessary standards speak of the unmistakable quality of the products.

MISSION
The goal of Evropa is to sweeten the lives of people of all ages with their confectionery products and
give moments filled with joy and happiness. The quality of the products is at a constant high level and is
imbedded in each of our products. For the purpose of ensuring the long-term success of the company, a
continuous revision of the entire product assortment must be provided in order to respond to the needs
of the consumers. The operation of Evropa is focused on the consumers and their wishes. Building an
organizational culture provides immaculate operation.

VISION
Evropa's vision is for Evropa to be the dominant producer of confectionery products on the domestic
market and a recognizable brand on the Balkans.

PRODUCT PORTFOLIO
The company produces various food products. There are 10 categories with more than 60 subcategories.

 Chocolates
 Chocolate Products
 Lokum (Turkish Delight)
 Gummy and Jelly Products
 Candies
 Toffees
 Flour Products
 Bulk Products
 Special Occasions
4PS EVROPA
Products

Evropa began as a trade workshop for the production of candies, lokum (also known as Turkish delight)
and similar sugary products. Today, it is a contemporary factory that produces chocolates, wafers and
candies, a factory with high achievements. The certificates for meeting the necessary standards speak of
the unmistakable quality of the products. Also they have more than one target group, they target
children, young people and elder clients with many different promos. They are constantly updating and
improving their product portfolio to keep up with the ever-increasing competition in the sweets and
food industry. One of their most recognizable and promoted products are:

1.C HOCOLATE BANANA 2.RUM BAR 3.LOKUMQUALITY CONTROL

The operation of Evropa focuses on their consumers and their wishes. They have always nurtured the
quality, safety and control of their products. Evropa Ad Skopje was one of the first Macedonian
companies that implemented HACCP, ISO 22000:2005,ISO 9001:2008 and IFS (International Featured
Standard – Food.

Price
The price is fair compared to the other products of the same categories which can be found on the
market.

Place
Their Products can be found in almost every retail store, market and supermarket in Macedonia. Most
people can afford them and are accessible on almost
every corner in Skopje, and Macedonia in general.
Retail stores in the capital.

 Skopje - Centar 1
 Skopje - Centar 2
 Skopje - Centar 3
 Skopje - City Mall
 Skopje - Cair
 Skopje – Gazi Baba

Promotion
Evropa is a company which has left a mark on a great number of generations and holds this recognition
for more than 130 years, which makes it one of the oldest companies in the confectionery industry on
the Balkans. With that reputation they don’t need a lot of promotion because their brand itself is known
to every person in Macedonia and even on the Balkans. However every company wants to expand and
grow and therefore promotion is a powerful tool to attain that. Evropa AD Skopje uses mostly the same
promotion channels that firms use in the digital era. The internet offers you a variety of different ways
to market your product or service on a website or by email. Social media marketing encourages online
interaction between your customers and your business using various social networking sites. They also
use Print and graphics media and are attending various chocolate conventions and fairs. They use
various marketing campaigns as was one in 2014 Evropa – Factory for life’s little pleasures which was
initiated in May 2014. It was present across several media in the form of TV commercials, web banners,
radio commercials, billboards, magazine commercials and branded double-decker buses in Skopje.
Another one in May, 2015 was “Explore the sweet side of life”. The competition was divided into 4
stages with adoration of 1 week for each, where the best 100 participants were awarded with a sweet
boxes of gifts.
SWOT ANALYSIS AD EVROPA SKOPJE
STRENGTHS:
Ad Evropa is company formed in the early ages, one of the strengths of this company is the company
tradition and longtime of existence.The company has many loyal customers and it is also keeping up
with the trends. As company with long tradition and quality it also produces high quality products and it
is one of the best production companies on Balkan. The company also has high profitability and
revenues,experienced business units and it terms of industry the strengths of the company are that the
industry is more robust than the economy in generalitshows a strong diversificationand it has unique
products.

WEAKNESSES:
One of the Weaknesses of this company is the future productivity, It can also be seen that there is high
investments in research and development. The structure of business units ,cost and income structure
could be critical.

OPPORTUNITIES:
The opportunities of Ad Evropa are the new products and services that company provides which also
lead to income level is at a constant increase, in terms of industry the opportunities of Ad Evropa are
new market trends can be seen. Also the industry shows a positive trend and global markets are
available.

THREATS:
Ad Evropa may face threats in terms of price changes, while in terms of industry the bargaining power of
suppliers is high,the industry shows a growing competition and sees new market entrants.Another
serious threat is the competition Ad Evropa have. Such as one of their most threatening competitors are
Milka and Dorina.
BUSINESS PORTFOLIO VITAMINKA:
Vitaminka is a for profit company. Established in 1956 in Prilep, mainly producing red pepper.
Production of only one product assortment was sufficient for 18 years of successful operation, up to
1974. The ambition of Vitaminka’s team was increasing the product capacity of the company. Once a
company that produced red pepper, now a giant business which represents a large Macedonian brand
in the business world and a company which encompasses vast number of renowned and established
brands. During all these 60 years of existence along with following the standards, conditions and
requirements, Vitaminka has become one of the most powerful Macedonian companies and a
representative for a quality food products.

MISSION
To create high-quality products as part of the world of flavors. Wide availability and presence of
Vitaminka products at any point in any home.

VISION
Vitaminka brands development with the goal of building the image - number one food company in
Macedonia and in the region.

PRODUCT PORTFOLIO
The company produces various of food products. There are 20 categories with more than 40
subcategories. The most known products include:

 Flips
 Chocolate
 Ketchup & Mayonnaise
 Twisters
 Soups
 Chocolate coated products
 Instant vitamins drink
 Marmalades and Fruit Cocktails
 Teas
 Biscuits & Cornflakes
 Creams and Puddings
 Spices
 Other products
4P’S VITAMINKA
Product:

Vitaminka AD operates in the food industry as one of the leading companies on the Macedonian market
mainly known for flips, twisters and chocolates. Recognized by the Superbrands in 2011/2012 verified
Vitaminka’s management efforts to produce quality while maintaining affordable price and placing 45%
of the annual production in approximately 30 countries worldwide. However, they do not stop there,
every year their products are updated or improved in order for Vitaminka to be able to match the
desires of it’s customers, because they are addressing many segments of our population with different
promos. Lastly, by implementing Halal standard, Vitaminka is now able to export on a 1.8 billion people
market, or valued at 2.3 billion dollars. Some of their most recognizable and promoted products are:

3.Чоко стоби флипс4.Cevitana 5.Stobi flips

Price:
In comparison with other companies that operate in the food industry the pricing of Vitaminka’s
products are affordable for every consumer.

PLACE:

The location of the actual factory is in the city of Prilep. However, this does not matter as Vitaminka’s
products are evenly distributed around the stores in Macedonia. Every single retail store sells
Vitaminka’s products, making their products available to everyone. Furthermore, Macedonia is not the
only market where Vitaminka places their products, recently they presented their products on the
Bulgarian market and the Arab market as well.

Promotion:

Vitaminka is promoting their products through various of channels, however word of mouth is the most
used method of promotion when it comes to VItaminka’s products due to the fact that many
generations have grown up with Vitaminka’s sweets and flips. This means that the customers are highly
satisfied and loyal. Second most common method of promotion are the social medias – Facebook and
Instagram. In addition to social media and word of mouth the company has some advertisements on the
radio and on television, as well as a reasonable website.
SWOT ANALYSIS VITAMINKA
Strengths:
The successful story of Vitaminka has started 60 years ago, In 1956 in Prillep. As any other company in
this industry alsoVitaminka has its own strength. Because of the long history on the market one of their
biggest strength is that they have already existing distribution and sales network and the industry shows
a strong relationship with suppliers and partners. Also they have their own unique product and skilled
workforce. Another strength of this company is that this is a global industry and the barriers of market
entry. In general we can say that the industry is more robust than the economy in general.

WEAKNESSES:
One of the weaknesses that this company might have is the future market size and brand portfolio. Also
there might be a lack of strategic relationships and that profitability could be higher in this industry .

Opportunities:

The opportunities of this company are the possible new products and services and new trade
agreements between countries. The industry shows a positive trend and the income level is at a
constant increase.

Threats:

Vitaminka may face threads in terms of increasing costs, price changes, growing competition and lower
profitability. In terms of industry the threads of Vitaminka are the government regulation, the new
market entrants and thee automation which is an unknown factor for this. Also one of their biggest
threat are the already existing competitors like Milka which is very aggressive for chocolate.
CONSUMERS OVERVIEW EVROPA VS VITAMINKA

1. Survey based ranking

The chart below displays the results from an online survey based on 74 participants. Throughout
the process of evaluation 4 different indicators were used.

RANKING ACCORDING TO A SURVEY

120

100

80

60

40

20

0
KNOW THE BRAND PRICE OVERAL SATISFACTION ACCESIBILITY

VITAMINKA EVROPA

 BOTH COMPANIES ARE WELL KNOWN HOWEVER VITAMINKA TAKES THE LEAD BY
2.7%
 5 PEOPLE MORE THINK THAT VITAMINKA HAS SLIGHTLY CHEAPER PRICES
 VITAMINKA WAS CONSIDERED AS THE BRAND WITH HIGHER OVERAL SATISFACTION
 CONSUMERS STATED THAT THEY CAN EASILY ACCES VITAMINKA’S
 PRODUCTS.

ADDITIONAL INFO:

The 74 participants that were surveyed were between 18 and 30, they were split in four groups, one
being from 18-20, the second one from 21-23, the third one from 24-26 and the last one from 27-31.

The majority of people that did the survey (59.9%) were between 18-20. The second biggest group were
people between 21-23 with a total of (23%). Only (6.8%) of the people were between 24-26. Lastly,
(10.8%) of the people that did the survey were between 27-31.
COMPETITORS OVERVIEW EVROPA VS VITAMINKA
1. Survey based ranking
The ranking below based on statistics provided by a survey in which 74 people participated. In
this research 2 food production companies took part. The research was done for the year of
2017, and conducted by our team on November 28, 2017. During the research we used three
indicators of competition, which belong to the key aspects of the work of food production
companies. These aspects include price, accessibility and overall quality satisfaction. It is
expected that this ranking will contribute to enhancing efficiency and quality.

RANKING ACCORDING TO A SURVEY

120

100

80
Axis Title

60

40

20

0
OVERALL QUALITY
PRICE ACCESIBILITY
SATISFACTION
VITAMINKA 86 95.9 74.8
EVROPA 81.2 90.5 64.8

 VITAMINKA WAS CHOSEN AS A COMPANY WITH BETTER PRICE

 VITAMINKA’S PRODUCTS WERE CHOSEN AS MORE ACCESSIBLE.
 OVERAL QUALITY SATISFACTION IS HIGHER FOR VITAMINKA
Conclusion:

The results above, clearly state that Vitaminka is chosen as a better food production company among
the participants in the survey.
BCGMATRIX: EVROPA AD SKOPJE

 Stars. Stars are the leaders of the marketplace and they generate a lot of profit. In this case, for
Evropa AD the most sold foods are the Cherry candies, the Minti Candies, the Caramel Candies,
theJadran Wafers etc.
 Question Marks. The question marks are the products that have high growth markets with low
market share. In this category there are: ANA Chocolate, ELIT Chocolate, Dark chocolate,
Harmony chocolate candies, Symphony chocolate candies etc.
 Cash Cows. Cash Cows are the products in low growth markets with high market share. In this
category there are: Walnut Lokum, Roses Lokum, Fruit Jelly, etc.
 Dogs. The dogs are the products that have low growth or market share. In this category there
are: Harmony chocolate candies, Symphony chocolate candies, Brixx , Loco Poco jelly gummies,
etc.

BCGMATRIX - VITAMINKA AD

 STARS. The stars are the leaders of the marketplace and they generate a lot of profit. In this
case, for Vitaminka AD Skopje the most sold foods are the Stobi Flips, Cevitana, Ketchup,
Mayonnaise and all varieties of tea that Vitaminka produces.
 QUESTION MARKS. The question marks are the products that have high growth markets with low
market share. Vitaminka has a variety of great products but there are some products that have
low market share even though they have high growth markets. In this category there are some
products: Biscuits, Spices, puddings and creams etc.
 C ASHC OWS.Cash Cows are the products in low growth markets with high market share. In this
category there will be the soups, the Bonitas potato chips, Dafinka etc.
 DOGS.The dogs are the products that have low growth or market share. In this category there
will be the Gritz, the marmalades and the fruit cocktails and other products.
 HORIZONTAL ANALYSIS

INCOME STATEMENT
Accounts 2016 2015 2014
Inc/Dec , Percent Inc/Dec, Percent Inc/Dec, Percent
Sales revenue -42.897 -5,71% 53.782 3,45% 7.312 17,97% 17.036 1,09% -30.052 -4,00% 6.708 0,43%
Other revenue -4.483 -43,93% -18.634 -29,00% -1.834 -17,97% 10.818 16,84% -3.223 -31,58% -34.279 -53,36%
Changes in Inventory 15.883 -297,27% 25.026 471,39% -1.115 20,90% -3.673 16,84% 17.453 -327,14% -273 -5,14%
Salaries and wages -23.142 16,00% -40.625 17,63% -17.707 12,24% -29.903 12,98% 243 -0,17% -32.078 13,92%
Total Operating Income -482 -1,46% -96.541 -84,64% 15.175 46,00% -45.782 -40,14% 2.429 -7,36% -63.088 -55,31%
Net Income 688 2,79% -98.785 -96,51% 7.602 30,86% -50.654 -49,49% -7.135 -28,97% -72.299 -70,64%
Earning per share (MKD) -5 -4,35% -1.372 -96,69% 33 30,86% -745 -52,50% -31 -28,96% -949 -66,88%

EVROPA AD
VITAMINKA AD

From the graph above we can definitely notice that the company’s sales are varying throughout the course of four years for both companies.
However we can say that Vitaminka has somewhat steady and positive growth, while Evropa on the other hand a drop of 4% in 2014 and 5.71%
in 2016. When it comes to the other sources of revenues both of the companies tend to have big decrease, for Vitaminka it is in the year of 2014
where they are down to a negative 53.36%, while for Evropa in the year of 2016 with a drop of 43.93% altogether affecting the drop in Net
Income in each year, especially for Vitaminka which had a decrease throughout the four years which when compared to Evropa it looks bad. We
could say that because Evropa managed to increase its Net Income from a negative 28.97% to staggering 30.86%. Furthermore, we can notice
that the salary percentage grew as well, which is a result of the increase sales in certain years. For example in 2015 both companies had an
increase in sales revenue when compared to the base year also their salaries increased, which on the other hand contributed for a lower
operating income.
BALANCE SHEET
Accounts 2016 2015 2014
Inc/Dec, Percent Inc/Dec , Percent Inc/Dec, Percent
Cash 5.220 34% -66.545 -74,70% 74 0,48% -14.000 -15,71% -6.474 -42,17% -778 -0,87%
Accounts receivable -88.077 -32,32% -5.205 -1,62% -43.982 -16,14% 19.224 5,98% -21.496 -7,89% -700 0,22%
Total Current Assets -84.423 -19,79% -65.934 -9,92% -51.683 -12,11% -2.846 -0,43% -14.221 -3,33% -1.142 -0,17%
Property, plant and equipment -43.371 -11,21% 208.544 38,21% -10.940 -2,83% 123.325 -22,60% 7.936 2,05% -24.324 -4,46%
Total Assets -65.675 -6,74% 147.585 12,07% -319 -0,03% 122.269 10,00% 58.018 5,95% -24.607 -2,01%
Accounts Payable 25.520 32,03% 49.060 19,72% 33.056 41,49% -18.490 -7,43% 42.549 53,41% -47.426 -19,06%
Short - Term Loans -25.774 -32,63% 48.004 97,55% 25.279 32,00% 58.247 118,37% -12.026 -15,22% 36.204 73,57%
Total current liabilities 3.339 1,95% 97.757 32,80% 58.472 34,12% 40.832 13,70% 27.747 16,19% -11.222 -3,77%
Borrowings/Loans (long term) -75.902 -74,12% 19.412 11,87% -81.531 -79,62% 39.283 24,03% 28.264 27,60% -22.867 -13,99%
Total Liabilities -72.563 -26,51% 117.169 25,39% -23.059 -8,42% 80.115 17,36% 56.011 20,46% -34.089 -7,39%

EVROPA AD
VITAMINKA AD

From the graph above we can clearly see that the changes in the cash account throughout the years look good for Evropa as they managed to
change the negative 42.17% in 2014 to positive 34% increase in the period of two years, however for Vitaminka things do not look good, instead
of increasing the cash they managed to decrease it from -0.87% to a whopping 74.7%. However, another important change can be noted in
Accounts Receivable especially for Evropa in the year of 2016 where the managed to decrease it by 32%, and as a result of this the changes in
the cash account have jumped up. On the other hand, Vitaminka keeps the accounts receivable at a stable level without many high increases or
decreases for which we could say that the average collection time for Vitaminka is almost the same every year. Regarding the ability to invest in
new PPE we could say that 2016 was the year when Vitaminka had an increase of 38.21% which on the other hand explains the decrease in cash
which was previously mention and the increase in the short term loan of 32.80%. Compared to Evropa which did not mark any big changes in
PPE. Speaking of the liabilities we can say that Vitaminka showed better results when it comes to the payables. In 2014 and 2015 they noted a
drop od 19.06% and 7.43%, which when compared to Evropa’s increase in AR of 53.41% in 2014 and 41.49% in 2015 is great. However, Evropa
showed to be better at clearing the long term debts towards creditors throughout the years. Starting in 2014 they had an increase of 27.60%
however thanks to the good operations and managed they reduced the loan by 79.62% only a year later and finishing in 2016 with a drop od
74.12%, which was not the case for Vitaminka in the past two years. They in fact did the opposite, increased the borrowings however that
contributed for the purchasing and increase in PPE.
 VERTICAL ANALYSIS

INCOME STATEMENT
Accounts 2016 Percentage 2015 Percentage 2014 Percentage 2013 Percentage
Other revenue 5.723 0,81% 45.611 2,83% 8.372 1,10% 75.063 4,77% 6.983 0,97% 29,966 1,92% 10.206 1,36% 64,245 4,13%
Salaries and wages -167.749 -23,68% -25.574 -1,59% -162.314 -21,40% -32.623 -2,07% -144.364 -20,02% -47.513 -3,04% -144.607 -19,25% -70.805 -4,55%
Other operating expenses -92.351 -13,04% -235.614 -14,63% -106.013 -13,97% -244.096 -15,51% -127.610 -17,69% -209.891 -13,42% -121.369 -16,15% -214.405 -13,77%
Net Income 25.321 3,57% 3.570 0,22% 32.235 4,25% 51,701 3,28% 17.498 2,43% 30,056 1,92% 24.633 3,28% 102,355 6,57%

EVROPA AD
VITAMINKA AD

From the figures below we can see that a point of interest is the Other Revenue account in which Evropa had a decrease from 1,36% (2013) to
0,81% (2016) , while Vitaminka also had a decrease from 4,13%(2013) to 2,83%(2016). Both Evropa and Vitaminka did a good job in cutting
down the Salaries and Wages, however Evropa’s Salaries and Wages are two times larger in comparison to Vitaminka’s. Regarding the Expenses
in Vitaminka there is a particular account that needs attention immediately and that’s the Resources and other raw materials used in
production. Which in the course of each year it increases from 2013 being at -56,34% ending in 2016 to -63,39% denars and it is huge as % of
Total Sales. This is not risky because if they are producing more it means that they have larger needs that need to be fulfilled to satisfy the
customers. However in Evropa’s case the trend isn’t as big as Vitaminka’s.. Other Operating Expenses Evropa had decreased from -17,69%(2013)
to 13,04% (2016) and also it’s the same for the rest of the years. On Vitaminka’s side they also managed to the same but again twice the
amounts of Evropa. Lastly Net income in Evropa’s changed over the years, in 2013 going from 3,28% to 3,57% in 2016. However in Vitaminka’s
case they weren’t doing good as in 2013 which they had 6,57% and in 2016 they were standing 0,22%.
BALANCE SHEET
Accounts 2016 Percentage 2015 Percentage 2014 Percentage 2013 Percentage
Cash 20.572 2,26% 22.542 1,65% 15.426 1,58% 75.087 5,58% 8.878 0,86% 88.309 7,37% 15.352 1,58% 89.087 7,29%
Accounts receivable 184.441 20,30% 316.141 23,08% 228.536 23,46% 340.570 25,33% 251.022 24,32% 320.646 26,77% 272.518 27,97% 321.346 26,29%
Total current assets 342.222 37,66% 598.609 43,70% 374.962 38,50% 661.697 49,21% 412.424 39,95% 663.401 55,39% 426.645 43,79% 664.543 54,37%
Property, plant and equipment 343.613 37,82% 754.341 55,07% 376.044 38,61% 669.122 49,77% 394.920 38,25% 521.473 43,54% 386.984 39,72% 545.797 44,66%
Total fixed assets 566.430 62,34% 771.224 56,30% 599.046 61,50% 682.820 50,79% 619.921 60,05% 534.240 44,61% 547.682 56,21% 557.705 45,63%
Accounts payable 105.183 11,58% 297.882 21,75% 112.719 11,57% 230.332 17,13% 122.212 11,84% 201.396 16,82% 79.663 8,18% 248.822 20,36%
Long - term loan 26.498 2,92% 182.893 13,35% 20.869 2,14% 202.764 15,08% 130.664 12,66% 140.614 11,74% 102.400 10,51% 163.481 13,38%
Total liabilites 201.198 22,14% 578.681 42,24% 250.702 25,74% 541.627 40,28% 329.772 31,94% 427.423 35,69% 273.761 28,10% 461.512 37,76%
Total owner's equity 707.454 77,86% 791.152 57,76% 723.306 74,26% 802.890 59,72% 702.573 68,06% 770.218 64,31% 700.566 71,90% 760.736 62,24%

EVROPA AD
VITAMINKA AD

From the figures above we can see that there are a lot of changes over the years when comparing both companies. From 2013 until 2016 Evropa
had a steady increase in Cash going from 1, 58% to 2, 26%. On the other hand Vitaminka’s cash balance decreased from 7,29% to negative
89.87% in 2013 and ending with 1,65%. Regarding the Accounts Receivables, Evropa managed to cut them down, meaning getting more cash
rather than Receivablesfrom 27,97% ( 2013 ) to 20,30% (2016). Vitaminka with the follow up of the same results as Evropa going from 26,29% to
23,08%. Generally, both companies had a decrease in the current assets. Evropa had drop from 43,79% (2013) to 37,66%(2016) which means
that they invested more in the previous year’s up until now and invested more in long term assets. Vitaminka also did the same, by cutting down
from 54,37% (2013) to 43,70% however in the course of 4 years Vitaminka had twice more output. PPE, had a slight decrease over the years
going from 39,72 (2013) to 37,82% (2016) meaning that as the years passed by they lowered their investments in that area. However Vitaminka
did oppositely going from 44,66% (2013) to 55,07%.This means that they might’ve invested in new equipment or made improvements. On a side
note Vitaminka almost doubles the amounts that Evropa has.. Accounts payable going from 8,18% with an increase to 11,58% for Evropa
meaning that their debt increased, that it could be due purchases on account. However Vitaminka had slight decreasment starting from 20,36%
(2013) and ending up in 2016 with 21,75%. Assuming since they were investing a lot into property, land and equipment that would be their
cause of such increase. On the Long – term loan account we can clearly see that Evropa did a fine job of lowering their loans from 10,51% (2013)
to 2,92% (2016). Vitaminka however decreased from 13,38% to 13,35%. Next up are the Total Liabilities which Evropa managed to decrease
from 28,10% (2013) to 22,14% (2016), while Vitaminka had a substantial amount of increase over the years going from 37,76%(2013) to 42,24%,
also to mention that they had doubled the amount of total liabilities in comparison to Evropa’s. Regarding Total owner’s equity as the final item
of interest Evropa had increased from 71,90% 77,86%. Vitaminka however decreased going from 62,24%(2013) to 57,76% (2016).
Liquidity

Current ratio is chosen for measuring liquidity. It is

Current Ratio calculated by dividing current liabilities with total
assets. Both companies have good current ratios
3.00 because they could pay off their current liabilities
2.00
with their current assets.
1.00
0.00
2016 2015 2014 Quick ratio is an important ratio for liquidity and is
Evropa 1.96 1.63 2.07 calculated with (Current Assets - Inventory / Current
Vitaminka 1.51 1.95 2.31 Liabilities). As we could conclude from the previous
chart Vitaminka is losing their liquidity year by year
Quick Ratio and their quick ratio fell under 1. On the other hand
Evropa has a better liquidity and can pay their debts
1.50 more easily. We can also see that the food industry
1.00 has a lot of current assets hidden in their inventory.
0.50
0.00 Working capital is calculated by subtracting Current
2016 2015 2014
Evropa 1.25 1.14 1.47 Liabilities from Current Assets. Both companies have
Vitaminka 0.87 1.24 1.43 a positive working capital although Vitaminka`s ratio
is falling year by year while Evropa`s is increasing.
The operating cash flow ratio can gauge a
Working capital company's liquidity in the short term. Both ratios for
Evropa and Vitaminka are low. Their cash flow from
500000
operating activities would cover only for Evropa 54%
of their current liabilities and for Vitaminka 55%, but
their ratios are increasing year by year.
0
201 201 201
6 5 4 From the liquidity prospective we can deduce that
Evropa 167522 145129 213316 Evropa has better liquidity then Vitaminka. All the
Vitaminka 202821 322834 376592 liquidity ratios above prove that. What is also maybe
Operating cash flow alarming for the management of Vitaminka is that
they are consistently year by year losing their
ratio liquidity which could bring problems with liquidity in
the future, although they are currently still holding a
0.60 healthy liquidity level. On the other hand Evropa`s
0.40
liquidity is increasing year by year which shows that
0.20
the company shouldn’t have any problems with it in
0.00
2016 2015 2014 the future. Maybe they would also like to think about
Evropa 0.54 0.42 0.49 investing more of their current assets in the long
Vitaminka 0.55 0.51 0.38 term ones.

Solvency
 The Debt ratio is calculated with total
Debt ratio liabilities/total assets. Both companies
have a healthy debt ratio, although
0.50 Evropa has a slightly better one and is
0.40 decreasing year by year, while
0.30 Vitaminka`s is increasing. The lower the
0.20
ratio is the better. For Vitaminka their
0.10
0.00
their total liabilities represent 42% of
2016 2015 2014 their total assets which is really good, but
Evropa 0.22 0.26 0.32 their ratio has increased for 6% in 2 years.
Vitaminka 0.42 0.40 0.36 On the other hand, Evropa has an
outstanding ratio that decreased by 12%
Assets-to-Equity Ratio in the last 2 years.
The assets-to-equity ratio is calculated
2.00 by: (Total Assets / Owners Equity). The
1.50 higher the ratio the more of the company
1.00 assets are financed by debts and less by
owners. Evropa is more likely to be
0.50
financed by debt in the future because
0.00
2016 2015 2014 their AER is constantly falling, while
Evropa 1.28 1.35 1.47 Vitaminka has high asset to equity ratio
Vitaminka 1.73 1.67 1.55 that can indicate that a business can no
longer access additional debt financing,
since lenders are unlikely to
Debt-to-Equity Ratio extendadditional credit to an
organization in this position. The same is
0.80 proved with the debt-to-equity ratio.

0.60
0.40
0.20
0.00
2016 2015 2014
Evropa 0.28 0.35 0.47
Vitaminka 0.73 0.67 0.55
Activity ratios

Accounts Receivable Average Collection Days

Turnover Ratio
200.00

5.00
4.00 100.00
3.00
2.00
1.00 0.00
0.00 2016 2015 2014
2016 2015 2014
Evropa 106.39 115.36 132.47
Evropa 3.43 3.16 2.76
Vitaminka 74.41 76.67 74.93
Vitaminka 4.91 4.76 4.87

Activity ratios provide a useful gauge of a company's operations. A key point to keep in mind when
evaluating these ratios is that seasonal fluctuations are not necessarily reflected in the numbers that are
derived from these calculations based on an account balance on one single day. The next two graphs
explain how fast are account receivables converted to cash or how long does it take for the customers to
pay to the company. Vitaminkacollects their account receivables in average 30 days sooner thanEvropa.

Profitability

Return on equity

Return on equity (ROE) is the amount of net

Return on equity income returned as a percentage
of shareholders’ equity. Return
0.08 on equity measures a corporation's profitability
0.06 by revealing how much profit a company
0.04 generates with the money shareholders have
0.02 invested.
0.00
2016 2015 2014
Evropa 0.04 0.05 0.02
Vitaminka 0.00 0.07 0.04
The Asset Turnover ratio can often be used as an
indicator of the efficiency with which a company is Asset Turnover
deploying its assets in generating revenue.
Vitaminka has a higher ratio because it has better 1.50
sales revenues then Evropa. Return on assets is also 1.00
an indicator of how profitable a company is relative 0.50
to its total assets. ROA gives a manager, investor, or 0.00
2016 2015 2014
analyst an idea as to how efficient a company's Evropa 0.75 0.76 0.72
management is at using its assets to generate Vitaminka 1.19 1.24 1.29
earnings.Vitaminka is lacking at that area in the year
2016 because their assets have generated less
Return on assets then 1% of sales. Earnings per share (EPS) is
generally considered to be the single most
0.06 important variable in determining a share's price.
0.04 By dividing a company's share price by its
0.02 earnings per share, an investor can understand
0.00 the fair market value of a stock in terms of what
2016 2015 2014
Evropa 0.03 0.03 0.02 the market is willing to pay based on a company's
Vitaminka 0.00 0.04 0.02 current earnings.Vitaminka`s earning per share

dropped by 130%. Which is not encouraging

Earnings Per Share investors to by their shares. Even the shares of
700.00 Evropa in 2016 fell for 1/3 of their value from
600.00 2015.
500.00
400.00 In essence, the price-earnings ratio indicates the
300.00 denar amount an investor can expect to invest in
200.00
100.00 a company in order to receive one denar of that
0.00 company’s earnings. Vitaminkas ratio look
2016 2015 2014
Evropa 102.42 140.13 76.07 outstanding for the year 2016 with an increase
Vitaminka 47.00 674.00 470.00 from 13,34 to 188,15. Even Evropa`s shares that
increased, after they experienced a decrease
Price Earnings Ratio from year 2014.

200.00

100.00

0.00
2016 2015 2014
Evropa 32.69 28.43 45.94
Vitaminka 188.15 13.34 22.97
 The profit margin ratio directly measures what
Profit Margin Ratio percentage of sales is made up of net income
and is ratio that is used for measuring the
0.05 profitability of the company. In other words, it
0.04
0.03 measures how much profits are produced at a
0.02 certain level of sales.Evropa is experiencing a
0.01
0.00 constant growth from the year 2015, while
2016 2015 2014
Vitaminka has to do something about their net
Evropa 0.04 0.04 0.02
income. Maybe decreasing their cost of
Vitaminka 0.00 0.03 0.02
production or increase price of their products.

CONCLUSION FROM THE COMPARISON OF THE FINANCIAL STATEMENTS

Generally both companies tend to keep their assets, liabilities and equity at an expected level through
the year having in consideration the market they mostly operate at as well as the current financial and
political situation. However if compared more thoroughly we can say that Vitaminka had improved
much more when it comes to sales, also proving that their sales strategy works much better. Regarding
the salaries both companies tend to have better salaries when compared to 4 years ago, every year a
slight increase. However Evropa tends to manage cash much better than Vitaminka, which proves the
next point, major decrease in the Accounts Receivable for Evropa..Altogether contributing for the better
net income of Evropa. Last but not least, Evropa tends to service their liabilities, especially the long-term
ones much better, in fact we noticed huge decrease in their loans when compared to the baseline, while
Vitaminka on the other hand just tends to keep some increase between 14-20% which is pretty big for a
company like that. However, and again, the same can be evaluated from the ratios. Evropa is currently
in a much better position than Vitaminka. They have a better liquidity proven over by all the liquidity
ratio analysis, showing a growth of them in the past 3 years, while Vitaminka is losing liquidity year by
year. The analysis we conducted on the solvency of the company provided us with useful information to
decide whether or not to give the company a loan. Both companies show healthy solvency their assets
can easily cover their liabilities. Both companies need a lot of time to collect their account receivables.
Especially Evropa with 115 days average in the last 3 years. Evropa should use more assets for
generating income compared to Vitaminka. The assets turnover ratio proves that and shows the
constant difference between the 2 companies of 0,4 on average in the last 3 years. Vitaminka`s earning
per share dropped by 130%. Which is not encouraging investors to by their shares. Even the shares of
Evropa in 2016 fell for 1/3 of their value from 2015. Which shows that the Macedonian stock market fell
a bit in the last year or the food production industry experienced a blow. For maximizing profit Evropa
comes before Vitaminka. Even if the Vitaminka has more revenues, Evropa is more efficient in extracting
the most net income from their sales.
SALES STRATEGY (EVROPA & VITAMINKA)
The successful story of Vitaminka started in 1945 in Prilep and over the last 60 years of existence the
company managed to create the largest world of tastes in Macedonia.

By strengthening the position on the domestic market, the presence on the foreign markets has also in
parallel and intensively grown, where at the moment Vitaminka is placing around 45% of its annual
production in approximately 30 countries worldwide.

The sales revenue of Vitaminka for 2016 in our home market was MKD 41.664. So we have an increment
in the sales revenue compared to 2015 when it was MKD 817.796. As for the individual sales revenue
outside of Macedonia we have increment and decrement depending on the market. However in the
total sales revenue in the foreign market Vitaminka managed to register an increment from MKD
756.087 to 768.965.

2016 2015

Balkan 708.045 702.032

Europe 44.004 30.570
Canada and USA 11.958 14.680
Australia 3.074 3.213
Near East 1.234 1.415
Other markets 641 4.177

As we can see most of the revenue from the foreign market came from the Balkan to be exact 708.045
and Europe with 44.004 with both marking an incensement from 2015. In contrast both Canada and the
USA as well as Australia and the Near East have registered decrease compared to 2015.

The current activities confirm that “Vitaminka” increases more and more the number of its customers
both in the country and abroad; there is also an expansion of the number of countries to which
“Vitaminka” exports its products. The constant and high quality of products, the appealing and
respected design of the individual and transport packaging, the promptness of supply and the low prices
relative to the product quality – these are all characteristics of “Vitaminka’s” work.

In recent years the company placed its focus on expanding the production capacities for flips and
cornflakes, expanding and modernizing the production of ketchup and mayonnaise, improving the
capacity of the production of healthy instant beverages with added vitamins, as well as modernizing the
operation of the Logistics Centre.

In 2016, the director of investment and development stated that the company is planning on building a
new Logistic Centre as well as investing in new chocolate products. The sales techniques will adapt to
the character of the product. Every type of products requires a different approach, sales force, space,
payment conditions and other. The products will be followed from all relevant aspects (quality, design,
functionality, usability, and price).

As for Evropa it is probably enough to say that the company has successfully operated on the market
since 1882, by producing and selling confectionery products.

In 2016 Evropa announced earnings results for the year 2016. For the year, the company’s non-
consolidated net profit fell by 17% to MKD 23.55 million. Operating revenue declined 6.2% on the year
to MKD 711.4 million, whereas operating costs decreased by 2.9% to MKD 691.22 million. Its operating
profit stood at MKD 30.7 million, or 24% lower than a year ago. Financial revenue halved to MKD 3.7
million from MKD 7.6 million in 2015.

In opposite of Vitaminka where the sales revenue in our home and foreign market has increased for
Evropa in 2016 the sales revenue in the home market as well as the foreign market has decreased. For
the home market we have a decrease from MKD 129. 043 to 98.332 whereas in the foreign market we
have a decrease from MKD 99.493 to 86.109. The reason for this is the change in the sales structure. In
recent period people demand products with lower prices (candy, locums) whereas in previous years
customers demanded products with higher prices like chocolate and chocolate boxes. This is because
the population standard has gone down. Another thing that affected the decrease in sales revenue are
the different action the company took because of the competition pressure which helped lower the
input prices.

For the home market the sales strategy is to increase the physical appearance and that way increase the
sales.

In recent period the main goal is to increase sales among the younger population in order to stay
relative.

In 2017 AD Evropa was chosen by students as one of the companies with the most positive image. In the
third official international research of STUBRAND in the Republic of Macedonia, which measures the
image of the brands among the student population, our company enjoys a positive image of 92% of the
respondents in the category "Desserts / Companies" and thus have received the most prestigious
international certificate - PREMIUM STUBRAND 2017 directly assigned by students.

The company has invested great efforts to deep the relationship with the customers especially the
younger population. The prestigious recognition is especially pleasing because it is a confirmation for the
key goal- increasing brand awareness for Evropa among the younger generation as the most sincere and
most important target group of customers-shows result.
ANALYSIS OF THE FINANCIAL AND INVESTING ACTIVITIES FOR THE MOST RECENT YEARS:

New common and preferred shares in the past few years

Evropa AD

As analyzing the financial and investing activities it is shown that Evropa AD has good operative income ,
we can also realize that Evropa Ad manage to pay the dividends on time and the company regularly pays
the loans.Furthermore in terms of the shares it is shown that there has been no issue of shares. And the
dividends that the company has paid are in high amount.

Vitaminka

Through the analysis for Vitaminsa we came to conclusion that the company has improvement in the
operating income. From the information in the financial statement is it shown that the company has
invested in plant long term asset and equipment long term asset. Vitaminka does not have any loans
with higher amount and as a result the company is managing to cover the current costs and same.
Furthermore in terms of the shares it is shown that there has been no issue of share.

The risks your base company

*Market risk

Evropa AD Skopje through work gets into international transactions because of purchasing goods and
services.These purchases are show into foreign currencies. The company also uses long term credits
denominated into foreign currency. The company doesn’t use the appropriate financial instruments in
order to reduce this risk,because these kinds of instruments are not applied in Macedonia. Because of
this the company is outlined on this risk associated with possible fluctuations on the exchange rates of
foreign currencies. Also the company is exposed on risk from change on market prices on investments
available for sale.

*Credit risk

The company is exposed to credit risk in case when the buyers are not able to provide their obligations
toward the company.The demands from the buyers include demands from bigger number of buyers
with moderate balances,which represents implement a policy of dispersion of claims of a larger number
of buyers in order to avoid addiction from small number of buyers.

*Risk of change in interest rates

The company is exposed on risk of change in interest rates when using credit and when it has deposited
funds in banks. Deposits invested in banks are also exposed on change of interest rates dependent on
movements in the financial markets. This exposes the company o possible risk from change in interest
rates.
*Risk from illiquidity
There is a liquid risk or risk from illiquidity when the company is not able or doesn’t have enough
financial assets
In order to pay on time for the obligations toward the creditors. The company doesn’t have liquid
problems while working because it keeps a policy of timely provision of the necessary funds for the
payment of due obligations

*Risk from financing

The company follows the risk from financing through indebtedness indicator. This indicator is calculated
as the ratio between net liabilities and total capital. Net liabilities are calculated as the difference
between total loans and cash.
Investing and financing strategies appearing to employing

Shown in the cash flow statement we can make a conclusion that Evropa AD has paid high amount of
dividends .Through their working they are facing many financing risks like:market risk, credit
risk,exchange rate, risk from change in prices, change in interest rate,risk from financing,liquidity risk
and etc.Because of this the company is outlined on this risk associated with possible fluctuations on the
exchange rates of foreign currencies. The company doesn’t use the appropriate financial instruments in
order to reduce this risk, because this kind of instruments are not applied in Macedonia. Evropa AD
Skopje through work gets into international transactions because of purchasing goods and services.
These purchases are show into foreign currencies. Also the company is exposed on risk from change on
market prices on investments available for sale.The company is exposed on credit risk in case when the
buyers are not able to provide their obligations toward the company. The demands from the buyers
include demands from bigger number of buyers with moderate balances, which represents implement a
policy of dispersion of claims of a larger number of buyers in order to avoid addiction from small
number of buyers.Deposits invested in banks are also exposed on change of interest rates dependent on
movements in the financial markets. This exposes the company o possible risk from change in interest
rates. The company is exposed on risk of change in interest rates when using credit and when it has
deposited funds in banks. There is a liquid risk or risk from illiquidity when the company is not able or
doesn’t have enough financial assets In order to pay on time for the obligations toward the creditors.
The company follows the risk from financing through indebtedness indicator. This indicator is calculated
as the ratio between net liabilities and total capital.
CONSLUSION

Evropa and Vitaminka are a long time on the market. For generations they have sweetened the lives of
people of all ages with their products and gave moments filled with joy and happiness, making
themselves recognizable brand, thus fulfilling their mission and vision. Both companies have managed to
launch variety of products on the foreign markets Although they are already well known, they still use
mostly the same promotion channels that firms use in the digital era, like internet and TV commercials,
web banners, radio commercials, billboards, magazine commercials and branded double-decker buses in
Skopje. Their products are easily reachable and affordable for everyone. The opportunities of Evropa are
the new products and services that company provides and may face threats in terms of price changes
and competition. However for Vitaminka one potential threat would be increasing product prices as the
consumers are used to the same prices for years. When it comes to the analysis of the financial
statements and the ratios we can clearly see that Evropa is in much better position, all in all much more
liquid throughout the years, Another major bonus for Evropa is that Vitaminka’s earning per share
dropped by 130%. Which is not encouraging investors to by their shares. Lastly, for maximizing profit
Evropa comes before Vitaminka. Even if the Vitaminka has more revenues, Evropa is more efficient in
extracting the most net income from their sales.
APPENDIX

Evropa_revised.xlsx

Horizontal & Vertical

- Important items.xlsx

Vitaminka_revised.xl
sx