Firms' financial performances and economic recession: evidence from Macedonian listed companies

• Author: Osmani R., Deari F.
• Pages: 201-210

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 9 (58) No. 1 - 2016

Firms’ financial performances and economic

recession: evidence from Macedonian listed

companies

Rufi OSMANI1, Fitim DEARI2

Abstract: The purpose of this paper is to analyze financial performance of 23 firms listed on

the Macedonian Stock Exchange. Selected firms are non-financial entities. Analyzed period

covers 2011-2015 and is divided into two sub-periods. The first sub-period presents the

period in which positive growth rates have been evidenced in the country’s GDP, whereas

the second one represents the respectively negative growth rate. Results denoted that, on the

overall term, selected financial ratios are, statistically, not significantly different from the

sub-periods perspective. But, whereas liquidity has a positive trend, profitability has a

negative one. During the economic recession period, there is an emphasized decline of

profitability. On the other hand, one year after the recession liquidity significantly increased.

This implies that effects of economic recession were reflected in the respective ratios.

Key-words: financial performance, economic recession, ratios, panel data

1. Introduction and literature review

Financial statements present database for accounting information users. Accounting

information users are divided into two categories: internal and external, or moreover

with direct and indirect interest users. Both of them use information in a decision

making process. For example, creditors evaluate whether a firm is able to pay on

time principal and interest; or managers judge their decisions in the past and what

can there be improved in the future. Of course, there are a lot of business issues that

managers have to solve, but the common ones are the following:

- How to finance assets, via debt or equity?

- Where to invest money?

- What is the time period of financing and investment?

- To sell on cash or on credit?

1 Faculty of Business and Economics, South East European University, Tetovo, Republic of

Macedonia, rufi.osmani@seeu.edu.mk

2 Faculty of Business and Economics, South East European University, Tetovo, Republic of

Macedonia, f.deari@seeu.edu.mk