Abstract
Abstract This research paper focuses on the analysis of the financial risk of Lietuvos geležinkeliai, AB (eng. Lithuanian Railways), which activities are passenger and freight transportation by rail. In order to assess the financial risk of the leading company areas of financial risk were identified and are as follows: liquidity risk, credit risk and market risk. However, due to limited access to statistics only financial report of the organisation were analysed and, hence, just liquidity and credit risk were investigated. Consequently, the limitation of the current research is that only two categories of financial risk were analysed. For the purpose of financial risk analysis, the key indicators of liquidity and credit risk were distinguished from the literature. The results showed that the biggest problem of the company is too small short-term assets and the profitability indicators, which were strongly influenced by net profit (loss).
Highlights
All profit-making organisations experience different types of risks
The results showed that the biggest problem of the company is too small short-term assets and the profitability indicators, which were strongly influenced by net profit
Summarizing the liquidity risk assessment of Lietuvos geležinkeliai, it can be argued that the biggest problem of the company is too small short-term assets, which was shown by the current liquidity ratio of the company, which the analysed period never met the recommended values; the networking capital indicator, which was positive only three times during the analysed period
Summary
All profit-making organisations experience different types of risks. One of such threats is a financial risk. It is necessary to analyse the risk in order to manage it correctly. Within the right management, the financial risk could be lowered which, according to Blatt and Gulbin (2018), could increase the liquidity of an organisation. The purpose of the current research is to analyse the financial risk of one of the largest Lithuanian companies – Lietuvos geležinkeliai, AB (eng. Lithuanian Railways) and assess the overall for its financial risk. The aim of the study is to analyse the financial risk of Lietuvos geležinkeliai. It is crucial to research the risks of such companies as it is a big part of the country’s economic activities that have an impact on the overall country’s financial well-being
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