Archive of Journal - Financing
Financing – scientific magazine for economy
ISSUE 2022, No. 1, Article 3, Year of publication: 13, March, 2022
Analysis of profitability factors of companies in the Republic of Srpska
Dragan Janjić, MSc*; Miloš Grujić, PhD**
*S*The University Clinical Centre of the Republic of Srpska, **The Pension Reserve Fund Of Republic of Srpska
Changes in interest rates, public spending, oil prices, exchange rates and other macroeconomic events affect almost all companies and their returns. In this context, we can assess the impact of macroeconomic changes by following the rate of return on the market portfolio. If the market is growing on a given day, then the net impact of macroeconomic changes must be positive. We know that the success of the market reflects only macroeconomic events, because events specific to certain companies, ie non-systemic risk can be eliminated through the process of efficient diversification. The subject of this research is to define and measure the systemic risk of the company, and examine its impact on the cost of capital and the value of the company. As a representative example, we will use the data of subsidiary companies that are part of MH Elektroprivreda Republike Srpske. The systemic risk of the observed companies depends on the exposure to macroeconomic events and as such can be measured as the sensitivity of returns generated by subsidiaries of Elektroprivreda Republike Srpske to fluctuations in returns generated by the economy of Republic of Srpska. Therefore, we are confident that the claims, facts and evidence presented in this paper will benefit both students and academic researchers, theorists and investors.
Keywords: systemic risk, beta coefficient, cost of capital and indebtedness.