The Financial Sustainability of Retail Food SMEs Based on Financial Equilibrium and Financial Performance

Abstract

The aim of this study was to investigate the financial sustainability of retail food SMEs for the 2016–2021 period, in Romania, from the perspective of financial equilibrium and performance. A multivariate analysis was used, including a correlation analysis, a principal component analysis (PCA), and a cluster analysis. The empirical results show a positive link between the financial performance and financial equilibrium indicators. We employed the PCA in order to build a composite financial index using financial equilibrium indicators (ratios of liquidity, solvency, collection, and payment period) and financial performance indicators (Return on Assets and Return on Equity). The results show that financial equilibrium and performance are the two main dimensions which the financial sustainability index (FSI) was constructed on. Taking into account the dimensions of financial sustainability, the analyzed SMEs were clustered in four homogeneous clusters. The research findings clearly demonstrated that the retail food SMEs with a good/acceptable financial sustainability also have a good/acceptable financial balance and performance situation. Furthermore, a significant part of the analyzed SMEs faces difficulties regarding financial sustainability, being characterized by the lowest values of FSI, determined by both an uncertain situation in terms of liquidity, leading to a financial disequilibrium, and a negative financial performance. Therefore, this research emphasizes some specific measures that need to be taken to boost financial sustainability of these businesses in the retail food sector.

The Effect of Supply Chain Sustainability Practices on Romanian SME Performance

“…Therefore, economic sustainability includes both financial and non-financial practices, many of which are addressed in a limited manner or not at all. Investigating the financial sustainability of food businesses, [14] noted that there is a positive link between financial performance and financial balance indicators. The results of his research indicate that undertakings with financial balance and a performance situation are acceptable and enjoy good financial sustainability.…”

“…Thirdly, the study contributes to theoretical and empirical research on sustainable management of supply chains in secondary emerging countries, such as Romania. In recent years, the attention of managers and researchers has generally focused on the economic sustainability of the supply chain and its effect on financial performance [11][12][13][14][15]. This research focuses equally on the three elements of supply chain sustainability and practices that should be improved to cope with future disruptions, as well as to strengthen the performance of enterprises from this system.…”

Ensuring Financial System Sustainability: Combating Hybrid Threats through Anti-Money Laundering and Counter-Terrorist Financing Measures

“…In recent years, also due to the influence of economic and political developments, the issues of hybrid threats in the context of financial systems have started to be discussed, mainly from the point of view of their vulnerability and especially their sustainability. Political and economic developments due to globalization have brought new challenges to which it is necessary to respond at the national and international level; as the research emphasizes, some specific measures should be taken to increase financial sustainability (Herman and Zsido 2023).…”