Annals of the University of Oradea: Economic Science (Dec 2021)
ECONOMIC AND FINANCIAL STABILITY FOR WATER and WASTEWATER OPERATORS IN ROMANIA
Abstract
The financial stability of public enterprises in the field of water and sewer must be a vital feature. An economically unstable enterprise, which is threatened by incapacity for payment and bankruptcy, cannot ensure an activity of general public interest. This empirical research is based on the data obtained from the annual financial statements of regional water and sewerage operations in Romania for 2014-2019. Based on these data we calculated working capital, working capital requirements and net treasury. The processed data were grouped by the seven development regions and the average values were calculated. In the research we started from the average values at national level, comparing them with the average values obtained by development regions. Although there are quite large deviations from one development region to another compared to the national average, in all regional water and sewerage operators the net treasury has positive value. We examined whether there is a correlation between the economic performance of a water and sewerage operator and the three variables: working capital, required working capital and net treasury. The result of the statistical analysis is significant and confirms the existence of this correlation. The existing correlation does not determine the direction of the correlation, i.e. whether the net profit has an effect on working capital, working capital requirements and net treasury or vice versa. The research shows that public enterprises in the water and sewerage sector are financially stable in the period 2014-2019. We in the conclusions also presented the possibilities for expanding the research in future periods.
