Capital efficiency analysis of Serbian companies

Abstract

The purpose of this paper is to give some insight into the level of capital adequacy and the efficiency of its use in companies in the Republic of Serbia. As no similar research has yet been conducted in this manner, we believe that certain benchmark in this field is necessary when analysing company’s financial performance. In order to do so, financial statements for 53,996 companies have been examined and the main financial indicators have been calculated. Results indicate that total negative equity of sound companies is double in comparison to those in bankruptcy. General market conditions resulted in significant decrease of Return on Equity (ROE) and total revenue in the last four years (2008-2011). In the same period of time, private companies with small number of owners such as limited liability companies, general partnerships, and limited partnerships overperformed in comparison to other legal forms. In addition, indebted companies create much higher negative results than the sound ones create positive ones.

Citation