What is the Effect of Contemporary Financial Concepts on Business Performances of the Serbian Companies?

  • Ana Vjetrov FEFA, Metropolitan University, Belgrade and German National Tourist Board
  • Lidija Barjaktarovic Singidunum University, Faculty of Business
  • Maja Dimic University Union Nikola Tesla, Faculty for business studies and law
Keywords: Net Profit, Profitability, PP, NPV, Capital Budgeting Techniques, Capital budgeting,


The main focus of this paper is the analysis of the implementation of modern financial concepts such as NPV, IRR etc. in everyday business activities of the Serbian companies. The aim of the paper is establishing the link between the implementation of contemporary financial concepts and profitability of the company, quantified by Net profit, using binary logistic regression. The implementation will be investigated, using the sample of 65 companies and questionnaires sent to the CFOs (chief financial directors) within the period from 2015 till 2018. Two surveys were conveyed within the above-mentioned period 1) Analysis of the responses of 65 financial executives within the period from 2015 to 2018 and 2) Analysis of profitability indicators of the companies in the sample, acquired from relevant documents such as Balance Sheet, Income Statement, Notes to the Financial Statements and Annual Business Reports within the period from 2015 till 2018. The research conveyed confirms that well defined investment policy with implementation of the suitable investment criteria, positively influence on business performance of the companies in Serbia. However, for successful business performances pure technical knowledge is not enough -Flexibility and adaptability of managers is gaining the growing importance within ever changing economic environment.



Andor, G., Mohanty, S., & Toth, T. (2011). Capital budgeting practices: A survey of Central and Eastern European firms. World Bank Review, 1-45.

Barjaktarovic, L, Pindzo, R, Djulic, K., & Vjetrov, A. (2017). Implementation of ERM concept in Serbia: Comparative analysis - real sector and financial sector. Bankarstvo, 46(2), 51-67.

Barjaktarovic, L., Djulic, K., Pindzo, R., & Vjetrov, A. (2016). Analysis of the capital budgeting practices: Serbian case. Management: Journal of Sustainable Business And Management Solutions In Emerging Economies, 21(79), 47-54.

Basu D., & Das, D. (2017). Profitability and investment: evidence from India's organized manufacturing sector. Metroeconomica, 68(1), 47-90.

Bennouna, K., Meredith, G., & Marchant, T. (2010). Improved capital budgeting decision making: evidence from Canada. Management Decision, 48(2), 225-247.

Bozovic, M. (2019). Financial development and growth: Evidence from Serbia. Industrija, 47(1), 77-88.

Brealey, R., Myers, S., & Marcus, A. (2007). Fundamentals of Corporate Finance (5th edition). New York: McGraw-Hill.

Chen, S. (2008). DCF techniques and nonfinancial measures in capital budgeting: A contingency approach analysis. Behavioral Research in Accounting, 20(1), 13–29.

Dayananda, D., Irons, R., Harrison, S., Herbohn, J., & Rowland, P. (2002). Financial Appraisal of Investment Projects. Cambridge: Cambridge University Press.

Djulic, K., Barjaktarovic, L., Pindzo, R., & Vjetrov, A., (2017). Analysis of the capital structure decisions: a survey on Serbian companies. Ekonomika preduzeca, 5-6, 355 – 364.

Gonenc, H., & Haan, D. (2014). Firm internationalization and capital structure in developing countries: The role of financial development. Emerging Markets Finance & Trade, 50(2), 169–189.

Gowthorpe, C. (2009). Management Accounting. Belgrade: Data Status.

Graham, J., & Harvey, C., (2001). The theory and practice of corporate finance: evidence from the field. Journal of Financial Economics, 60, 187-243.

Hornstein, A., & Zhao, M. (2011). Corporate capital budgeting decisions and information sharing. Journal of Economics & Management Strategy, 20(4), pp. 1135–1170.

Jose, M., Lancaster, M., & Stevens J. (1996). Corporate returns and cash conversion cycle. Journal of Economics and Finance, 20(1), 33-46.

Krstic, S., Fedajev, A., & Nikolic, R. (2018). Some aspects of business operations of Serbian economy in 2017. Industrija, 46(4), pp.185-206.

Law on accounting (The Official Gazette of Republic of Serbia no. 62/2013, 30/2018)

Law on auditing (The Official Gazette of Republic of Serbia no. 62/2013, 30/2018)

Luigi P., & Sorin V. (2009). A review of the capital structure theories. Annals of Faculty of Economics, 3(1), 315-320.

Mugurel, P., & Gabriel, S. (2012). Influence of the investment decisions on the return of the company. Annals of the University of Oradea: Economic Science Series, 21(2), 302-307.

Pallant, J. (2017). SPSS priručnik za preživljavanje. Belgrade: Mikroknjiga.

Rosenbaum, J., & Pearl J. (2009). Investment banking: Valuation, leveraged buyouts, and mergers and acquisitions. Hoboken, NJ: John Wiley & Sons.

Rose, P., & Hudgins, S. (2005). Bank management & financial services. Belgrade: Data Status.

Sarwary, Z. (2019). Capital budgeting techniques in SMEs: A literature review. Journal of Accounting and Finance, 19(3), 97-114.

Silvola, H. (2006). Capital Budgeting Methods, Management Control Systems and the R&D Intensity of the Firm. International Journal of Accounting and Finance, 1(2), 168-92.

Toci, V., & Hashi I. (2010). Financing constraints, credit rationing and financing obstacles: evidence from firm level data in South-Eastern Europe. Economic and Business Review, 12(1), 29-60.

Van Horne, J., & Wachowicz J. (2007). Basics of financial management. Belgrade: Data Status.

VineetKaur, H., & Singh, S. (2014). Impact of investment and financing policies on profitability and risk. Advances in Business-Related Scientific Research Journal (ABSRJ), 5(2), 183-197.

Original Scientific Paper