Financial Performance Analysis of Romanian Construction Companies

• Author: Dinca M.S.
• Position: Transilvania University of Brasov
• Pages: 147-156

Bulletin of the Transilvania University of Braşo v

Series V: Economic Sciences • Vol. 11 (60) No. 2 – 2018

FINANCIAL PERFORMANCE ANALYSIS OF

ROMANIAN CONSTRUCTION COMPANIES

Marius Sorin DINCĂ1

Abstract: This paper analyses the financial performances of two Romanian

companies in the construction sector, Astalrom and Aedificia respectively, for

the 2012-2016 period. For these two companies, I have analysed their

financial performances using return on equity (ROE) and capital intensity,

with their influence upon companies’ self-financing capacity and financial

competitiveness. I have found that both companies registered an

unfavourable evolution of ROE 2016/2015 and that this was confirmed by a

deterioration of capital intensity levels for Aedificia. Astalrom registered a

slight improvement in capital intensity levels, yet it did not manage to

transfer that upon ROE. Both companies should improve profitability and

efficiency of new and past investments.

Key words: financial approach, capital intensity, return on equity, financial

performance impact of capital intensity

1. Introduction

In this paper I have analysed the financial performances of two Romanian construction

companies, Astalrom and Aedificia, for the 2012-2016 period.

For these two companies I have analysed their financial performances using two

financial measures, ROE (return on equity) and c apital intensity respectively, with their

influence upon financial competitiveness.

I have connected the economic and financial performance aspects via the capital

intensity measure and its influence upon the company self-financing capacity as

revealed by the comparative analysis of the two Romanian companies. I have used the

DuPont method and the indexes’ method to calculate the influ ences of the independent

variables upon the evolution of ROE from the base year to the final year of analysis and

establish some correction measures the management of the companies can undertake

to improve the levels of profitability measures.

2. Literature Review

Martani, Mulyono and Khairurizka (2009) observed the fact that financial information

has a great importance for investors, facilitating profits and adjusted market return. In

1 Transilvania University of Braşov, marius.dinca@unitbv.ro