Factors Affecting the Company's Financial Position in the Timber Industry

Due to the dynamically changing of business environment, the importance of obtaining positive financial results has increased dramatically in the past few years. Effective regulation of the company financial outcomes largely depends on the knowledge of the factors that affect outside and inside company’s environment. The main aim of this work is to improve the financial condition of enterprises by determining the cause-effect relationships between factors and the financial results of the woodworking industry company. To reach this goal, a complete financial analysis based on the annual reports from 2017 to 2019 have been conducted. The analysis confirms the stable, sustainable and solvent condition of the company in 2018, while identifying negative results for a group of indicators in 2019. Then the factor analysis on the basis of chain substitutions have been used to identify the relationships between firm’s profitability, measured through Return on equity, Return on sales and Return on product profitability and its determinants. The results show that the largest negative impact on the overall profitability decrease in 2019 has been made by the high cost of production and the low company's revenue. The outcomes of the factor analysis have been also interpreted in terms of forest industry-specific factors and served as the basis for a list of recommendations. The described measures have to improve the current financial position of the company and increase its attractiveness to investors.