ANALYSIS OF THE CORRELATION BETWEEN FINANCIAL BALANCE AND PROFITABILITY INDICATORS IN COMPANIES IN THE METALLURGICAL INDUSTRY

Camelia-Alexandra Scurtu
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Camelia-Alexandra Scurtu: University of Craiova, Doctoral School of Economics, Faculty of Economics and Business Administration, Economy Craiova, Romania

Annals of University of Craiova - Economic Sciences Series, 2020, vol. 2, issue 48, 156-170

Abstract: Financial balance is a notion that involves knowing the financial situation of the economic agent and how the market works. Companies see a link between ensuring financial balance and their objectives such as: survival, ensuring a satisfactory return for those who brought the necessary resources for economic activity, development and diversification according to market opportunities, etc. The financial balance is that which involves the management of cash and profit flows, so that outstanding debts are covered by current receipts. The aim of the paper is to perform an analysis of the correlation between financial balance and profitability indicators for a sample of 10 companies in the metallurgical industry. The data necessary for the study were collected, both on the BVB website and on the websites of the analyzed companies, data included in the annual reports and in the administrators' reports, the period subject to analysis being between 2016-2019. The essential condition for the survival of the company is the maintenance of financial balance, and its assessment must take into account the concrete conditions of the occurrence of insolvency. The study shows that both changes in the return on assets and changes in the return on equity are influenced in very small proportions by the simulated changes in financial equilibrium indicators in the metallurgical industry.

Keywords: profitability; financial balance; liquidity; solvency; metallurgical industry (search for similar items in EconPapers)
JEL-codes: G32 L11 L21 L22 L25 (search for similar items in EconPapers)
Date: 2020
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