Financial Distress of Nonprofit Organizations in Bosnia and Herzegovina

Abstract

Financial health of nonprofit sector, as a third sector of each economy, is the least developed one. Since nonprofit organizations are registered at various country levels in Bosnia and Herzegovina, there is no one central register and it is very difficult to discuss about an organized nonprofit sector. The purpose of this study is to provide an overview of the sector’s financial distress by using financial ratios. The sample includes 215 nonprofit organizations registered with the Ministry of Justice of BiH, which submitted financial statements for 2015, 2016, and 2017. Current, quick, and days of cash on hand ratios were calculated and descriptive analysis was conducted. The results show that there was no significant development in size of organizations throughout the three-year period. They also show large variations between top and bottom 50 organizations through all ratio calculations, meaning that the country has both extremely developed and undeveloped examples. Bottom 50 organizations experienced progress, while top 50 experienced the opposite. Study also portrays distress by organizational size and shows variations in results through the three-year period.

Keywords

• ngo sector
• financial distress
• financial ratios
• bosnia and herzegovina