Analysis of the financial performance indicators of forestry companies and the necessity for the application of sustainability reporting
DOI:
https://doi.org/10.54652/rsf.2024.v54.i2.592Abstract
Forestry business systems in modern conditions exist and function in a highly dynamic environment, significantly impacting business results. Evaluating the business performance of a forestry company involves using various financial indicators, which provide valuable information for making business decisions to ensure the company's short-term and long-term stability. These indicators can also be effectively used for benchmarking with other business entities in the same industry, facilitating the improvement of business results in line with best practices. In this paper, the financial reports of two selected forestry companies from Bosnia and Herzegovina were analyzed, and using a comparison method of financial indicators related to profitability, economy, productivity, activity, indebtedness, and liquidity was performed. The results show a positive financial outcomes for both companies, with one company being more successful in terms of profitability, cost-effectiveness and lower debt levels. The other company has better liquidity and activity indicators, i.e. more efficient use of assets, a better collection system and shorter receivables collection periods. However, the paper have also shown that the numerous non-market benefits provided by forests aren`t taken into consideration in the both comapnies, and in that manner the financial reporting alone does not allow for evaluating the sustainability of forest resource management. Due to the specific nature of forestry production, sustainability reporting and the application of sustainability indicators could significantly enhance the ability to find solutions within the economic, ecological, and sociological aspects of forest resource use.
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