2. Main Findings
3. Definitions and Explanations
4. Imputation of the Data
Analysis of financial statements (balance sheets and profit-and-loss statements) is an
important tool for examining a company’s situation, including prospects for growth and
survival, and future growth. Today, this tool is also gaining importance at the levels of
economic activities and the economy at large. Thus, many countries are drawing up
statements to examine their financial situation and behaviour.
The new system of national accounts (SNA93) requires the presentation of financial data of
manufacturing. SNA93 stresses the importance of compiling balance sheets for the economy
and its activities and thereby presenting the economy’s assets and liabilities. This addition of
balance sheets facilitates a more probing analysis of economic development – households’
behaviour, distribution of national wealth, correspondence among economic sectors, earnings,
etc. It also allows analysts to additional tests of the consistency and integrity of the accounts,
thereby making the estimates more accurate.
The questionnaire used in the Manufacturing Survey has always been based on data from the
profit-and-loss statements of manufacturing establishments. In contrast to a profit-and-loss
statement, which expresses the business’s results in a given period of time, the balance sheet
reflects the condition of the firm on a given date. As part of the development plan for the
creation of balance sheets for the economy as a whole, and in cognizance of the importance of
this information in understanding manufacturing data, it was decided to gather balance sheet
statistics for 1995 and subsequent years.1
All of the balance sheets that we received were adjusted to changes in the general purchasing
power of the NIS, on the basis of professional opinions from the Bureau of Certified Public
Accountants in Israel.
In the 2002 survey, the balance sheet data of manufacturing are shown for 2001 and 20022 at
the level of aggregated divisions. These figures complement the data in the profit-and-loss
statements that are issued as part of the Manufacturing Survey.
Additionally, tables of the balance sheet components are shown in percentages. In addition to
the data for 2001 and 2002, they present data for 1999 and 2000. The resulting time series
makes it possible to examine trends and creates an initial infrastructure for financial analysis.
The main financial ratios for 1999-2002 have also been calculated, although analysis by
manufacturing divisions is problematic in the Israeli economy since various establishments,
even within one division, differ in number of employees, extent of sales, exports, profitability,
and other parameters. This, of course, affects the financial ratios and makes it more difficult
to perform a division-level analysis. Nevertheless, the 2002 Survey continues to examine
various financial ratios at the level of aggregated divisions. We intend to continue monitoring
the trends that we found in future years, since only a long-term analysis will allow us to state
that a trend indeed exists.
The industries were aggregated into seven manufacturing divisions. Establishments were
divided into two size groups – those with 5 or more employed persons (5+) and those with 50
or more employed persons (50+). The balance sheet data were examined in view of these two
See Central Bureau of Statistics, Financial Statements of Manufacturing 1995, Current Statistics 12,
For data on the balance sheets of previous years, see: Central Bureau of Statistics, Manufacturing Surveys
2001, Special Publication 1232, Jerusalem 2001.
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Tables 7a and 7b present data that compare companies traded on the stock exchange with
establishments with 50 or more employed persons.
2. Main Findings
2.1 Findings for 2002
Balance Sheet Components:
Assets: Total assets in 2002 of manufacturing establishments employing 5 or more employed
persons totaled approximately NIS 220 billion (no change compared with the previous year).
Establishments with 50 or more employed persons had approximately NIS 178 billion –
which amounted to approximately 81% of the assets of establishments with 5 or more
The assets to employed person ratio was highest in the “Chemicals and Plastics” manufacturing
division and lowest in the “Textiles, Apparel, and Leather” division (see Table C).
Current assets: In both size groups of establishments (5+ and 50+) the highest rate of current
assets was found in the “Electricity and Electronics” divisions (In 1999-2002, the “Electricity
and Electronics” divisions had the highest rate of current assets, which reached more than
60%; compared with the average of total manufacturing, which reached only 50%).
A high rate of current assets was also found in “Metals and Machinery” divisions.
In the group of establishments employing 5 persons or more, the lowest rate of current assets
was found in the “Chemicals and Plastics” divisions; whereas in the groups of establishments
employing 50 or more, low rates of current assets were found in “Building Products” and in
the “Metals and Machinery” divisions.
Long-term investments and accounts receivable: In 2002 a rise in the rate of long-term
investments and accounts receivables occurred in most divisions, in both size groups of
establishments (5+ and 50+). The highest rate of investments in manufacturing in both size
groups was found in the “Chemicals and Plastics” and “Paper, Printing and Miscellanneous”
divisions. The “Paper, Printing and Miscellanneous” divisions also had the highest rise in the
rate of long-term investments and accounts receivables in 2002, compared with 2001.
The lowest investment rates in the 5+ group were found in the “Electricity and Electronics”
and “Food” divisions; and in the 50+ group the lowest rates were found in the “Electricity and
Electronics” and “Building Products” divisions.
Fixed assets: In 2002, in the group of establishments with 5 or more employed persons, a
drop occurred in the rate of fixed assets in all the divisions, and the the average total for the
entire industry fell from 30% to 27%.
In the group of establishments with 50 or more employed persons a drop occurred in most
divisions, except for the “Food” and “Electricity and Electronics” divisons.
As in previous years, the rate of fixed assets in 2002 was highest in the “Building Products”
divisions. In the group of establishments with 5 or more employed persons, the rate of fixed
assets to total balance sheet reached 39%, compared with an average of 27% in the entire
industry. In the group of establishments with 50 or more employed persons this rate reached
42%, compared with an average of 27% in the entire industry. The lowest rate of fixed assets
was found in the “Electricity and Electronics” divisions.
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The rate of fixed assets per employed person (see Table C) was highest in “Chemicals and
Plastics” and in “Building Products”; whereas the lowest rate was found in “Paper, Printing,
and Miscellaneous” and “Textiles, Apparel, and Leather”. These findings correspond to those
in the Fixed Gross Capital Stock in Manufacturing survey,1 which also indicates that the
“Building Products” division has a high rate of fixed assets per employed person, mainly in
two industries: “Mining of Sand and Minerals and Quarrying of Stone”, and “Non-Metallic
Short-term liabilities: A high rate of finance from short-term liabilities (which are more
expensive than long-term liabilities) was found in “Electricity and Electronics”. This group is
characterized by high rates of current liabilities, above the average of the total industry; in
addition, in 2002 a rise occurred in the rate of short-term liabilities in this group, compared
with 2001. High rates were also found in “Metals and Machinery”. The lowest rates in the
industry were found in “Chemicals and Plastics”. These findings apply to both size groups of
establishments (5+ and 50+).
Long-term liabilities: The rate of long-term liabilities in both size groups of establishments
was highest in “Paper, Printing, and Miscellaneous”.
The lowest long-term liability rates in manufacturing were found in “Food” as well as in
“Electricity and Electronics”.
Equity, funds and surpluses: The rate of equity, funds and surpluses was highest in the
“Chemicals and Plastics” divisions. This was true in both size groups of establishments. An
additional group of establishments characterized by high rates of equity are the “Food”
divisions; although it should be noted that a drop occurred in the equity rate of 2002
compared with 2001, in both size groups of establishments.
In addition, high equity rates were found in the “Textile, Apparel and Leather” divisions, in
the group employing 5+ people.
The rates of equity were lowest in “Paper, Printing, and Miscellaneous”. In these divisions the
rates of equity, in both size groups of establishments, reached 28%, and it is significantly
lower than the rate of the entire industry.
Current ratio: The highest current ratio in the 5+-size group of establishments was found in
“Electricity and Electronics”. This group is characterized by the highest rates of current assets
and current liabilities in the industry; however, the effect of the current assets factor, which is
significantlyh higher than the division average, causes the highest rate of current ratio to be
found in this group. In the group of establishments with 50 or more employed persons, the
highest current ratio was found in “Chemicals and Plastics” and “Electricity and Electronics”.
In both size groups, the lowest current ratio was found in “Building Products”(the “Building
Products” divisions are characterized by low rate of current assets and high liability rates).
Equity structure ratio: A high rate of finance provided by foreign debt (financial
leveraging) was observed in the divisions of “Paper, Printing, and Miscellaneous” and
“Metals and Machinery” (due to the high rate of long- and short-term liabilities). This applied
to both size groups.
See Central Bureau of Statistics, Survey of Fixed Gross Capital Stock in Manufacturing, 1.1.1992, Special
Publication No. 1098, Jerusalem, 1999.
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The lowest rates of foreign debt in manufacturing were found in the divisions of “Food” and
“Chemicals and Plastics”.
Assets turnover ratio: The assets turnover ratio was highest in “Food” and “Electricity and
Electronics”, in both size groups.
The lowest assets turnover ratio was found in the divisions of “Metals and Machinery” and
“Chemicals and Plastics”.
In the 50+ size group of establishments, the lowest ratio was found in the “Chemistry and
Plastic” and the “Paper, Printing and Miscellaneous” divisions.
Profitability: The highest operating profit to sales ratio was found in “Building Products”, in
both size groups; whereas the lowest ratio in both size groups was found in the “Textiles,
Apparel, and Leather” division, although in 2002 there was an improvement, compared with
The highest operating profit to capital ratio was found in “Building Products” (these
manufacturing divisions are characterized by low equity rates, which raises the operating
profit to capital ratio).
The operating profit to equity ratio was lowest in the “Textiles, Apparel, and Leather”
divisions, despite the improvement that occurred in 2002 compared with 2001.
The highest operating profit to assets ratio was found in the “Building Products” divisions in
both size groups. By contrast, the lowest operating profit to assets ratio was found in the 5+
size-group “Textiles, Apparel, and Leather” divisions, and in the 50+ size-group in the
“Paper, Printing and Miscellaneous” and “Textile, Apparel and Leather” divisions.
2.2 Comparison with Data on Traded Manufacturing Companies
Tables 7a and 7b compare data on establishments with 50 or more employed persons in our
survey, with data on 206 manufacturing companies traded on the Stock Exchange. The data
on traded companies were taken from the Duke system and processed by the Bank of Israel.
The survey data differ from those of the Bank of Israel for several reasons:
1. This survey has a larger number of establishments and their population is more diverse.
2. In this survey, the data were processed from establishment-level balance sheets,
whereas the Bank of Israel data were processed from consolidated balance
3. Changes may have occurred in the aggregation of industries and the attribution
of establishments to the aggregates.
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3. Definitions and Explanations
3.1 Survey Population
The survey population includes all establishments that were active in 2002 and employed
5 persons or more, according to the Manufacturing Survey sample.
The balance sheets were adjusted for inflation and presented in December 2002 prices.
In the course of the 2002 survey, data were received from 621 manufacturing
establishments, of which 492 employed 50 persons or more. Establishments that
employed 5 or more persons produced 57% of the total output of manufacturing, and
establishments with 50 or more employed persons generated 66% of total manufacturing
output in this size group. Regarding the rest of the establishments, which did not provide
adjusted balance sheets, the data were weighted and imputed (see Chapter 4). Thus, the
data presented in the tables below include imputed figures for establishments that did not
provide adjusted balance sheets.
Table A. Output of establishments for which a statement was received,
by aggregated division
Establishments – total Establishments with 50 or
Aggregated (N=621) more employed persons –
Division Percent of the Distribution Percent of the Distribution
division’s of output division’s of output
Total 57 100 66 100
Food manufacturing 74 19 86 19
manufacturing 49 4 65 4
Paper, printing and
miscellaneous 47 6 65 5
manufacturing 49 6 61 6
manufacturing 91 32 87 33
manufacturing 43 11 60 10
manufacturing 39 22 45 23
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Table B. Data on Employment, Labour Cost, Income, Profits(1), and Total Balance
Sheet in Establishments with 5 or More Employed Persons, by Aggregated Division
Aggregated Employed Employees Labour cost Total Total
division persons (thousands) (annual manufacturing balance
(thousands) average per income(2) sheet (NIS
employee (NIS millions) millions)
Total 323.6 321.7 136,597 196,546 22,290 220,491
manufacturing 52.9 52.3 100,342 29,146 2,828 26,889
manufacturing 26.6 26.3 79,328 9,208 872 10,333
miscellaneous 34.7 34.4 99,898 13,790 1,380 14,933
manufacturing 24.6 24.3 117,632 13,735 2,166 16,645
manufacturing 43.6 43.6 142,590 45,459 6,426 58,599
manufacturing 61.2 60.8 116,596 26,972 2,754 35,123
manufacturing 80.0 80.0 213,395 58,236 5,864 57,969
(1) Data are based on findings of the 2002 Manufacturing Survey, which are presented in this publication.
(2) In December 2002 prices.
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Table C. Data on Income per Employed Person, Profit and Return on Equity
per Employed Person, Assets per Employed Person, and Fixed Assets
per Employed Person(1), by Aggregated Division
Total Profit(2) and Total assets Fixed assets
manufacturing return on equity
Aggregated division income(2)
Average per employed person in NIS
Total 607,373 62,353 617,599 182,579
Food manufacturing 550,964 55,253 493,065 189,368
manufacturing 346,165 20,873 336,566 113,973
Paper, printing and
miscellaneous 397,406 42,391 389,770 102,443
manufacturing 558,333 78,954 686,969 292,835
manufacturing 1,042,638 103,719 1,181,064 399,953
manufacturing 440,719 44,665 484,090 120,097
manufacturing 727,950 76,756 681,953 139,718
(1) Data are based on findings of the 2002 Manufacturing Survey and the balance sheet data.
(2) In December 2002 prices.
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3.2 Explanations – Structure and Components of the Balance sheet and Financial
a. Structure of the balance sheet
The most frequent items on the balance sheet are the following:
On the assets side – current assets (cash and cash equivalents, short-term investments,
accounts receivable and debitory balances, and inventory), long-term investments and
accounts receivable, fixed assets, other assets and deferred charges.
On the liabilities and equity side – short-term liabilities, long-term liabilities, and equity.
This item includes assets that presumably will become cash within the coming year, cash
and cash equivalents, short-term investments, accounts receivable, debitory balances, and
Long-Term Investments and Accounts Receivable
The long-term investments and accounts receivable item includes investments of more
than a one-year term – investments in subsidiaries and affiliated companies, long-term
investments in securities (shares and bonds), excess earmarking of reserves, long-term
Other Assets and Deferred Charges
This item includes intangible assets such as goodwill, patents, and copyrights, as well as
deferred charges – miscellaneous expenses spread over several years, such as
incorporation expenses, expenses of share and bond issues, etc.
Since this component constitutes a small percentage of the total assets, it was combined
with long-term investments and accounts receivable.
This item includes physical assets such as land, buildings, machinery, motor vehicles, and
equipment. Fixed assets are shown at cost, adjusted for inflation and net of accumulated
Liabilities and Owner’s Equity
Current liabilities are those due within one year of the balance sheet date. They include
short-term loans, suppliers and other accounts payable, notes and checks due, expenses
payable, income received in advance, customer payments received in advance, current
maturities of long-term loans, etc.
Long-term liabilities are those due more than one year after the balance sheet date. They
include loans from various sources such as banks, subsidiaries and affiliated companies,
bonds issued by the company, owner’s loans and reserves.
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This item includes the company’s equity (paid-up share equity) and equity reserved for
various purposes or unforeseen circumstances. The equity item also includes surpluses,
i.e., net undistributed profit.
b. Financial Ratios
The analysis of financial ratios included four types of ratios: liquidity, equity structure,
operating efficiency and ratios measuring earnings.
Liquidity ratios examine the company’s ability to meet its liabilities in the short-term.
Our analysis included one ratio – the current ratio.
Equity-structure ratios examine the establishments’ sources of finance. We examined
three ratios: debt to the total assets (financial leverage), the ratio complementary to it –
owner’s equity to the total assets (financial strength) and debt to owner’s equity.
Operating Efficiency Ratios
This ratio examines how effectively the various establishments utilized the various assets
available to them. One ratio was examined: the assets turnover ratio. The higher the sales
turnover relative to assets, the greater the efficiency.
We examined three ratios that measure profits: operating profit to sales examines the
marginal profit from each sheqel of sales; operating profit to owner’s equity examines
profit on investments of owner’s equity; and operating profit to assets examines the rate
of profit obtained by the establishments from all funding sources – i.e., owner’s equity as
well as foreign debt.
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3.3 Definitions and Formulas
Total current assets
1) Current ratio = -------------------------
1) Debt to total Assets = ------------------
2) Owner’s equity to total assets (complementary ratio to 1) = -----------------------
3) Debt to owner’s equity = ------------------
Operating Efficiency Ratios
Assets-turnover ratio = --------
1) Operating profit to sales = --------------------
2) Operating profit to owner’s equity = --------------------
3) Operating profit to assets = --------------------
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Sales are calculated from a profit-and-loss statement, and include income from industrial
activity (sales to the domestic market, exports, jobs and repairs and production of fixed
assets for own use). Other activity is not included.
Operating profit is derived from a profit-and-loss statement of manufacturing
establishments and is computed as the difference between total income and total expenses
of the establishment (before financing expenses are subtracted). This figure also includes
return on equity.
3.4 Aggregation of Manufacturing Divisions
Economic activities are classified according to the Standard Industrial Classification of
all Economic Activities 19931. The divisions are aggregated as follows:
1) Food manufacturing includes: food products, beverages, and tobacco products
(Divisions14, 15, 16).
2) Textiles, Apparel, and Leather manufacturing includes: textiles, apparel and
footwear products, and leather and leather products (Divisions 17, 18, 19).
3) Paper, Printing, and Manufacturing n.e.c. includes: paper and paper products,
publishing and printing, jewellery, goldsmiths’ and silversmiths’ articles, and
manufacturing n.e.c. (Divisions 21, 22, 38, 39).
4) Building manufacturing include: mining of minerals, quarrying of stone and sand,
wood and wood products and furniture and non-metallic mineral products (Divisions
13, 20, 26, 36).
5) Chemicals and Plastics manufacturing include: chemicals and their products, refined
petroleum, and plastic and rubber products (Divisions 23, 24, 25).
6) Metals and Machinery manufacturing include: basic metal, metal products,
machinery and equipment, and office machinery (Divisions 27, 28, 29, 30).
7) Electricity and Electronics manufacturing include: electric motors and electric
distribution apparatus, electronic components, and transport equipment (Divisions
31, 32, 33, 34, 35).
4. Imputation of the Data
To impute the data for missing establishments, we divided the missing establishments
into groups according to size group of employed persons and economic activities.
Since each establishment provided a sales figure in the course of the Manufacturing
Survey, we multiplied sales by the sales-to-assets ratio for the group of establishments
that submitted balance sheets. Thus we computed the value of assets for each size group
in each aggregated manufacture. After total assets were estimated, we calculated the other
balance sheet components by applying the proportions found in the establishment-level
data that we received.
See Central Bureau of Statistics, Standard Industrial Classification of all Economic Activities, 1993, Second
Edition, (Technical Publication No. 63), Jerusalem 2003.
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