Financial analysis of urban transport companies

Abstract

Financial analysis is an important part of financial management. Results of financial analysis serve as a base for decision-making of managers, owners and other external interested parties. It represents a set of activities the aim of which is to find out financial situation of a company or a group of enterprises, and evaluate it in a complex way. The paper is focused on financial analysis of county towns’ urban transport companies within the Czech Republic between 2011–2015. The goal of the paper is to judge financial health of a group of selected enterprises. Financial analysis is realized as an external financial analysis; it proceeds from publicly available sources (annual reports of urban transport companies). Within its framework basic methods of financial analysis (horizontal and vertical analysis of financial statements and ratio analysis) are used above all. Ratio analysis describes important corporate financial health areas. It tracks profitability of doing business (profitability ratios) and activity (activity ratios) as well as short-term and long-term ability to pay for liabilities (liquidity ratios and leverage ratios).