Abstract
With increasing competitiveness of companies and business sectors in the domestic markets of Lithuania, economic units are frequently confronted with the lack of methods for more detailed analysis of external factors explaining the variation over time of corporate financial indicators. The analysis or forecasting of financial indicators is usually linked with the development of a stock market or undertaken to estimate the probability of bankruptcy. However, there is a lack of studies aimed at identifying links between macroeconomic factors and financial performance indicators and explaining their variation over time. To serve that purpose, the factors of the macroeconomic environment that are most significant for certain economic activities have been identified and analysed to enable explaining the variation over time patterns of corporate financial indicators. The analysis covers economic performance, i.e. financial performance indicators and their links with macroeconomic factors, in 89 business sectors of Lithuania at a three-digit level of NACE 2 ed. The findings of the research indicate that the unemployment level in the country, the volume of export and import and the GDP are the most important macroeconomic factors that can be used to forecast different profitability, financial leverage, liquidity and other financial performance indicators of individual business sectors or companies. The research has not unfolded any significant differences between business sectors therefore the above factors are considered generic macroeconomic factors enabling to explain financial performance indicators of the 89 business sectors. Hence, special attention has to be paid to identifying and analysing specific factors and assessing the causal link. When established, the set of such factors provides a framework for building of a model to forecast business sector financial indicators.
Highlights
In Lithuania, the financial indicators approach is often used to forecast probability of bankruptcy of Lithuanian com panies
The problem is that so far major attention was paid to the impact of the external environment factors on the stock market and companies operating therein (Tvaronavičienė, Michailova 2006; Boreikis, Plinkus 2009; Danilenko 2009; Plinkus 2010; Žvirblis, Rimkevičiūtė 2012, et al.) and to the researches aimed at the assessment of bankruptcy proba bility on the basis of financial indicators, while efforts to assess the links between macroeconomic factors and finan cial performance indicators of individual economic units
Financial performance indicators are among the most im portant indicators defining business success of an economic unit
Summary
In Lithuania, the financial indicators approach is often used to forecast probability of bankruptcy of Lithuanian com panies. In addition to the above forecasting models intended for as sessment of companies’ situation, it is recommended to apply additional approaches based on the assessment of absolute and relative financial indicators. The analysis of companies’ competitiveness often lacks more detailed factors of external environment, explaining variation over time of corporate financial indicators, taking into conside ration specific character of individual business sectors, and researches based on targeted and comprehensive approach. It is appropriate to identify and examine an exhaustive set of individual external environment factors that are most signi ficant to specific economic activities, as a research object. The purpose of this study is, to identify and analyse individual external environment factors most important for specific economic activities that would allow explaining the variation over time of corporate financial indicators.
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