Econometric Modeling of SME Performance. Case of Romania

Ioan Batrancea, Ioan-Dan Morar, Ema Masca, Sabau Catalin and Liviu Bechis
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Ioan Batrancea: Faculty of Economics and Business Administration, Babeş-Bolyai University, 58-60 Teodor Mihali Str., Cluj-Napoca400591, Romania
Ioan-Dan Morar: Faculty of Economics, University of Oradea, 1-5 Armatei Romane Str., Oradea 410087, Romania
Ema Masca: Faculty of Economics, Juridical and Administrative Sciences, Petru Maior University, 69 Livezeni Str., Targu-Mures 540566, Romania
Sabau Catalin: Faculty of Economics and Business Administration, Babeş-Bolyai University, 58-60 Teodor Mihali Str., Cluj-Napoca400591, Romania
Liviu Bechis: Faculty of Economics, Computer Science and Engineering, “Vasile Goldis” Western University of Arad, 86 Liviu Rebreanu Str., Arad 310414, Romania

Sustainability, 2018, vol. 10, issue 1, 1-15

Abstract: In the present study, we analyzed the financial equilibrium factors that have a major impact on SME financial performance, as this performance is considered to have played a pivotal role in Romania’s recovery from the economic crisis. Thus, we built econometric models based on return on assets and return on sales in five economic sectors, i.e., pharmaceuticals, furniture manufacturing, leather garment factories, software firms and textile factories. We show how the enterprises’ performance was influenced by the independent variables of the equilibrium: fixed assets, current assets, inventory, receivables, equity and liabilities. The results indicate that return on assets is influenced by the current assets ratio and the inventory ratio in all models, as well as by the equity-to-total liabilities ratio in 80% of the models. We also notice that assets ratios have the highest influence on performance evaluation, namely inventory ratio in all models and current assets ratio in 87.5% of the models. In addition, liabilities ratios influence performance as follows: equity-to-total liabilities ratio in 80% of the models and total debt-to-assets ratio in 35% of the models.

Keywords: sales; assets; debt-to-equity; total debt-to-assets (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:10:y:2018:i:1:p:192-:d:127283

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