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What If the Enterprise Value Doesn't Grow? Evidence from Romanian Steelmaking Companies

Author

Listed:
  • Viorica Mădălina ION

    (The Bucharest University of Economic Studies Council for Doctoral Studies (CSUD))

Abstract

The question investigated in this paper’s is what happens to a company that doesn't grow its value? The analysis focuses on Romanian steelmaking companies in insolvency or incurring losses for many years. The basic methodology used is the analysis of the indicators (working capital, total assets, retained earnings, book value, total liabilities, and net sales) from the corporate income and balance sheet and to measure the Z1-score for predicting bankruptcy and for the financial distress status of privately held manufacturing companies. The major findings include the results for the financial health of a Romanian steelmaking company with tradition such as COS TARGOVISTE S.A., in insolvency, suspended from trading on the Bucharest Stock Exchange in 2013. The key quantitative results show high likelihood of bankruptcy in 2018 and how the company value decreased. The discussion raised is how companies can avoid destroying their value? If the companies fail to increase their value, they should find the ways to avoid destroying it, else they will not be able to resist in the actual competitive environment and go bankrupt. In the conclusion, planning for and acting on emerging technologies and trends is the key for the companies’ survival.

Suggested Citation

  • Viorica Mădălina ION, 2018. "What If the Enterprise Value Doesn't Grow? Evidence from Romanian Steelmaking Companies," Journal of Emerging Trends in Marketing and Management, The Bucharest University of Economic Studies, vol. 1(1), pages 88-93, November.
    • Handle: RePEc:aes:jetimm:v:1:y:2018:i:1:p:88-93
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    References listed on IDEAS

    as
    1. Costin Andrei ISTRATE, 2017. "Comparative analysis of evaluation models in insurance solvency," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(Special), pages 27-36.
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      More about this item

      Keywords

      capital; assets; earnings; enterprise value; Z1-score.;
      All these keywords.

      JEL classification:

      • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
      • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
      • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
      • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory

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