Indústrias Romi: A Look at Their Financial Statements

Indústrias Romi S.A. is a prominent Brazilian company known for its manufacturing of machine tools, plastic injection molding machines, and cast iron and machined parts. Understanding their financial performance requires careful analysis of their published financial statements, which provide insights into their profitability, solvency, and overall financial health.

The core financial statements to examine include:

• Balance Sheet (Balanço Patrimonial): This statement provides a snapshot of Romi’s assets, liabilities, and equity at a specific point in time. Assets represent what the company owns (e.g., cash, accounts receivable, inventory, property, plant, and equipment). Liabilities represent what the company owes to others (e.g., accounts payable, loans). Equity represents the owners’ stake in the company. Analyzing trends in these components reveals Romi’s liquidity, debt levels, and capital structure. For example, a growing inventory alongside stagnant sales might indicate potential issues with demand or obsolescence.
• Income Statement (Demonstração do Resultado do Exercício – DRE): Also known as the profit and loss statement, the DRE summarizes Romi’s revenues, expenses, and profit or loss over a specific period (e.g., a quarter or a year). Key metrics include net revenue, cost of goods sold (COGS), gross profit, operating expenses (selling, general, and administrative), operating income, and net income. A declining gross profit margin could signal increased raw material costs or pricing pressures. Increased operating expenses might indicate investments in research and development or sales & marketing activities.
• Cash Flow Statement (Demonstração do Fluxo de Caixa – DFC): This statement tracks the movement of cash both into and out of Romi. It categorizes cash flows into three activities: operating, investing, and financing. Operating activities relate to the core business (e.g., cash received from customers, cash paid to suppliers and employees). Investing activities involve the purchase and sale of long-term assets (e.g., property, plant, and equipment). Financing activities relate to how the company is funded (e.g., borrowing money, issuing stock, paying dividends). A positive cash flow from operating activities is generally a good sign, indicating the company is generating cash from its core business.
• Statement of Changes in Equity (Demonstração das Mutações do Patrimônio Líquido – DMPL): This statement details changes in Romi’s equity over a period, resulting from items such as net income, dividends paid, stock issuances, and treasury stock transactions. It provides further insights into how the company manages its capital.

When analyzing Romi’s financial statements, it’s crucial to consider several key factors. These include:

• Industry Context: Compare Romi’s performance to its competitors and understand the overall industry trends. Factors such as technological advancements, economic conditions, and government regulations can significantly impact Romi’s business.
• Management Discussion and Analysis (MD&A): This section of the annual report provides management’s perspective on the company’s performance, strategies, and risks. It offers valuable context to the numbers presented in the financial statements.
• Notes to the Financial Statements: These notes provide detailed explanations of the accounting policies used by Romi, as well as additional information on specific items in the financial statements. They are essential for a complete understanding of the company’s financial performance.

By carefully examining these financial statements and considering the relevant context, investors and stakeholders can gain a deeper understanding of Indústrias Romi’s financial health and future prospects.