Financial Risk Study of the Construction Sector SMEs

Abstract

The importance given to the problem of capital structure comes from the influence of debts on return on equity and the financial risk induced by debts. This paper is actually an analysis of the evolution of financial risk on the construction sector during 2001 – 2011 on a sample of 11 enterprises in the Galati County – Romania. To carry out this study were used two methods, rely on breakeven point and leverage effect. The study of aggregate data reveal a low fluctuating trend of financial risk, which shows that by the end of 2008 the effects of the economic and financial crisis still have not felt as much as is shown starting with 2009. The conclusion that emerges in this study is that the world crisis produced major effects on construction sector, but they could be seen a little bit later before the onset of it. The effects are disastrous for economy (lack of work, offs of staff etc.), which is why the government began to seek solutions to relaunch this sector.

Keywords

• Financial risk
• Capital structure
• Breakeven point
• Financial leverage
• Construction sector
• Business risk