Aplicability Of Financial Early Warning Indicators For The Main Utility And Petroleum Companies In Romania

Setting up and analysis of financial early warning indicators for public or private companies is a much-debated scientific and practical subject. Theories and experiments, which led to the establishment of a common set of early warning indicators, are quite old, starting from the 1950’s. These indicators came aggressively back into academic study and practice after the current world crisis. In the last years, several methods were tested by academic researchers and also by Banks and Audit agencies. The results seem to be different from one case study to another and seems to be linked with the financial data at the disposal of the researchers. On the other hand, even if the effects of the world financial crisis is diminishing, companies from Romania, especially those operating in field of utility and in the field of petroleum processing or distribution seem to be affected by other factors. These factors are decreasing prices for oil increase in the green energy production, initiation or extension of conflicts in primary production areas for coal, gas and oil such as Ukraine and Middle East. In this context, the current paper analysis the evolution of the early warning indicators for utility and petroleum production and distribution companies from Romania in the period 2011-2014. These elements are important since the selected companies are having a powerful national and regional influence over the economy and in the same time, these companies constitute primary contributors to Romania’s GDP. The selected indicators include both classical liquidity or solvency indicators and financial or economic efficiency indicators. In order to be representative were selected the following indicators: current ratio, acid test, cash ratio, solvency ratio, ROE and ROA. The case study revealed the fact that the six financial indicators, initially considered, can constitute a basis for an financial early warning model, but in order to be successful these indicators must be accompanied by several other types of indicators both financial, macro-economic, sectorial and also non-financial qualitative or quantitative.