Financial power and development potential of environmentally responsible medium sized enterprises in the Serbian industrial sector

Đuričin, Sonja and Beraha, Isidora (2018) Financial power and development potential of environmentally responsible medium sized enterprises in the Serbian industrial sector. In: Sustainable growth and development in small open economies. Institute of World Economics; Centre for Economic and Regional Studies of the Hungarian Academy of Sciences, Budapest, pp. 124-142. ISBN 978-963-301-663-3

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Abstract

The aim of the research is to determine the economic and financial power of medium-sized enterprises registered in the Republic of Serbia (RS) in the sector C: Manufacturing and an assessment of the development potential of environmentally responsible enterprises. The focus of the research is on environmentally responsible enterprises i.e. "green enterprises" for there is a need to search for ways to improve the economic sustainability of green business. The subject of the research refers to values of financial performance of enterprises in the period 2011-2015. Economic and financial power of enterprises was assessed by using the method of financial analysis. Financial analysis was carried out based on the information disclosed in the official financial statements of enterprises which are publicly available on the website of the Business Registers Agency. With the application of financial analysis, the yield, asset and financial position of enterprises was determined. In order to assess the yield position of enterprises, an analysis of the structure and arrangement of total revenues, structure and arrangement of gross financial result and profitability was performed. In order to assess the asset position of enterprises, an analysis of the structure and source of assets and of the efficiency of current asset management was performed, and for the purpose of assessing financial position of enterprises an analysis of liquidity, solvency and indebtedness was conducted. The analysis of the reasons medium-sized industrial enterprises are unprofitable is conducted for the purpose of determining their development potential. In order to examine the reasons of unprofitable operation, firstly enterprises which reported net loss in 2014 were identified. The possibility of determining the development potential is analyzed on the sample of five enterprises which reported above the average net loss in 2014, and which are characterized by conducting environmentally responsible business activities. The focus of the research is on "green enterprises" because there is a need to improve the economic sustainability of green business. The results of the research indicate that economic sustainability of environmentally responsible enterprises can be achieved by improving the real capacity utilization rate at current global price parity or by strengthening the global price parity at current real capacity utilization rate.

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