 HUNGARIAN AND ROMANIAN COMPANIES FINANCIAL AND LIQUIDITY SITUATION IN THE LIGHT OF ECONOMIC CRISISKinga Emese Zsido ()
Annals of Faculty of Economics, 2014, vol. 1, issue 1, 966-978 Abstract: The behavior of the companies has changed in the last 5-6 years: they became cautious and suspicious about partners and other economic actors. This is a direct consequence of the large number of insolvent and liquidated companies, and other effects of the economic and financial crisis. The impaired financing options, the sharp fall of sales caused difficulties for companies. In general, the financial and liquidity situation of the companies is getting worse, so new financial policies are needed. To make the financial activities efficient, it is indispensable that the policy makers are aware of the real financial and liquidity situation of their own companies. But, in order to conduct successful business relationships, enterprises need to be aware of the financial situation of their partners as well. Intensified trade relations between the EU member states will require these companies to learn more about financial and liquidity situations. This present paper examines two countries, namely, a Hungarian and a Romanian region's commercial companies financial and liquidity situations of the 2010-2012 periods. The article presents the subject both from theoretical and practical data aspects too. Based on the available e-data reports, the investigation starts with the net working capital's examination. The working capital management has a crucial role in their financing policies. The size of the net working capital affects the degree of financial policy's flexibility. The negative net working capital calls the attention for financial problems. The study continues with the calculation of traditional liquidity ratios, which may also reflect the liquidity situation of the companies. It is recommended not to accept the results of these indicators without calculating any other liquidity ratios. These indicators show an actual situation, so they can distort reality (positive or negative). Other indicators and methods are needed to assess the real situation. The study was completed with the analysis of indebtedness and profitability as well. These indicators can play a big role in the financial and liquidity situation of the companies. The indebtedness ratio shows the presence of large foreign capital, which can help in difficult liquidity moments. But the large amount of foreign capital also presents a risk for the company. The effectiveness level of the company shows the company's profitability, which is essential for the long-term viability. This comparative analysis paper studies three key years of the economic and financial mondial crisis. The results, the trends of the indicators values hopefully will lead to an increase in trust between the partners. Keywords: liquidity; risk; working capital; indebtedness; Hungarian companies; Romanian companies (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ora:journl:v:1:y:2014:i:1:p:966-978 Access Statistics for this article More articles in Annals of Faculty of Economics from University of Oradea, Faculty of Economics Contact information at EDIRC. |
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