Determinants of Financial Performance for the Clothing Industry: A Romanian Approach

Abstract

In the present paper, an experimental study is developed on how asset-liability-equity-employees influence the financial performance of companies in the Romanian garment industry with the aim of identifying the managerial decision-making factors in order to develop businesses in this economic sector. The financial performance was influenced by the independent variables of the patrimonial structure and the human resource: fixed assets, current assets, advance expenses, equity, liabilities and the average number of employees. The results reveal that current assets, advance expenses and total liabilities positively affect financial performance, while fixed assets negatively affect financial performance. The findings show us that companies in the Romanian clothing industry tend to focus on short-term financial performance. A statistically significant impact and positive effect was identified in the case of equity and the average number of employees influencing financial performance (Sales). Two of the six hypotheses based on the analysis model of the financial performance of Romanian clothing companies are confirmed.

Keywords

• financial performance
• ols models
• fixed effects model
• microeconomic indicators
• clothing industry cases