Procedia of Economics

and Business Administration ISSN: 2392-8166, ISSN-L: 2392-8166

Available online at www.icesba.eu

189

The Effects of 2008 Global Economic Crisis to Financial Statements and to Liquidity Ratio which

one are Cote in BIST Energy Sector

Selcuk KENDIRLI1 Hitit University, FEAS Banking and Finance, Turkey,

E-mail: selcukkendirli@hitit.edu.tr

Abstract: Aim of this study is to compare and analyze whether the 2008 global economic crisis affected the balance of the energy companies which are listed in the İstanbul Stock Exchange and have shown continuity in 2005-2013 period by using a variety of analyzing methods. Companies that demonstrate continuity between the years 2005-2013 were not assessed in this study. Horizontal and vertical analyses were made on the financial statements of the companies which are evaluated and liquidity ratios were assessed. As a result of the analysis the companies have been found to be affected to different degrees by the crisis.

Keywords: Financial Crisis, Balance Sheets, Financial Analysis

JEL classification: E44

Introduction

Etymological origin has based on a Greek word "krisis" named crisis, often used against to “depression” in the social sciences. It is meaning for an unexpected social, seriously shake of normal relations in the face of economic or psychological development in the handling of the problems encountered (Işık, 2011: 3). We saw the greatest crisis beginning of the 20th Century in 1929 named great depression. And we saw another greatest one in USA again in the early 21st century in 2008. It was based on financial mortgage crisis. It is considered as the worst financial crisis since the 1930s.

The 2008 global economic crisis especially effects to USA in priority and then impact to Europe. It has effects to Turkey also. Despite to all negative effects of crisis in Turkey, all of

1 Hitit University, Turkey

190

the Turkish banks have managed to survive. But it is not possible to say o same thing when viewed in terms of the real economy. The rising interest rates, inflationary pressures, exchange rate movements and the contraction demands are all adversely affected to Turkish real sector (Gümüş and Aydemir, 2014:2).

The study aim is to explore to effects of 2008 global economic crisis to on the company's financial statements and liquidity ratios which ones are operated in Istanbul Stock Exchange (BIST) in the energy sector. First we want to try to exhibit to financial statements which of the pre-crisis period of 2005-2008 year, and after that we want to explore to crisis period of 2008-2013. And we compare to these periods in each other. Balance sheet analyzed with ratio analysis, vertical analysis and horizontal analysis techniques.

After the examination of all the energy company we couldn’t identify a common condition. Some of the companies which ones we reviewed have maintained to fiscal discipline and they prefer to choose to balanced growth during the crisis. Some companies have continued to grow and they didn’t give up to depth policy for buying to tangible assets during the crisis. As a result, every company has different strategic insight and different financial infrastructure; it has also been affected by the crisis at different levels.

1. Data Set and Application

1.1. The Companies Are Which Ones Received For Evaluation

We try to take all of the companies which ones are operated in BIST in Energy Sector for evaluation. But we couldn’t reach all the financial statements for all companies. Because of that we have to remove some of firms. We create to data set from financial statements which ones announced by the firms are operated in Energy Sector. Those companies in the study are listed in Table 1.

Table 1: BIST Energy Companies Which Ones Took For Evaluation.

SHARE CODE COMPANY NAME

AKENR AKENERJİ ELECTRICITY GENERATION INC

AKSUE AKSU ENERGY AND TRADE CO

AYEN AYEN ENERGY INC

ZOREN ZORLU ENERGY ELECTRICITY GENERATION INC.

Aksa Energy Inc. (AKSEN), Anel Corp. (ANELE), ODAŞ Electricity Generation Industry and Trade Inc. (ODAS), ORGE Electricity Generation Contracting Inc. (ORK), and Bomonti Electrical Engineering Consultancy, Construction, Tourism and Trade Inc. (BMELK) companies, are excluded from the assessment because they are not traded on the whole of the 2005-2013 period.

For comparing to the pre-crisis and crisis periods and crisis and post-crisis period are separated in two different periods. We took years for first period 2005-2008 and for second period we took years 2008-2013. The balance sheet it is evaluated for every in separately. For every company balance sheets evaluated by horizontal analysis, ratio analysis and vertical analysis of one technique or more used and the results obtained. And results have compared in each other for before crises and after the crises.

191

2.2. Examination to Balance Sheet for each Company

According to common ratio analyses technique it is suitable 200% level for Current Ratio. For high inflation the Current Ratio is suitable that 150%. According to the Quick Ratio it is adequate 100% level, and for Cash Ratio is accepted for 20% level. (http:// www. bilgaz. net/ dosyalar/OranAnalizi.pdf).

Calculation of liquidity ratios are as follows:

Current Ratio % = Current Assets / Short Term Depts.

Quick Ratio % = Liquid Assets (liquid assets + trade receivables + other receivables) / Short Term Depts.

Cash Ratio % = Cash Assets/ Short Term Depts.

In the study four energy companies financial data has been explored during the period 2005-2013 financial in separately for before crises period and after crises.

Table 2: Akenerji Inc. Liquidity Ratio in 2005-2008 Year

AK ENERJİ

RATİOS 2005 2006 2007 2008

Current Ratio % 345 322 297 203

Quick Ratio % 200 251 254 187

Cash Ratio % 173 215 154 91

Ak Enerji Inc. liquidity ratios are shown in Table 2 for covering the years 2005-2008. When looking to the data in Table 2, Ak Enerji Inc. ratios belong to 2005-2008, said that it was good ratio is still above the generally accepted rates but during the crises period year 2008, it can be said it is enough. But during the crises it has seen that large declines.

Table 3: Akenerji Inc. Liquidity Ratio in 2008-2013 Year

AK ENERJİ

RATİOS 2008 2009 2010 2011 2012 2013

Current Ratio % 203 83 40 36 63 104

Quick Ratio % 187 71 37 28 55 90

Cash Ratio % 91 44 9 14 36 64

Ak Enerji's liquidity ratios for 2008-2013 are shown in Table 3. Ak Enerji Inc. ratios are dropped to generally accepted ratio level for the period 2008-2013, and it has continued to decline from 2008 until 2012. It begins to improvement in the end of 2012 but it is still worst until 2013. Just cash rate is eligible for the generally accepted ratio level for this firm.

Table 4: Aksu Energy Inc. Liquidity Ratio in 2005-2008 Year

AKSU ENERJİ

RATİOS 2005 2006 2007 2008

Current Ratio % 20 7.059 1.912 2.968

Quick Ratio % 0 6.229 1.797 2.828

Cash Ratio % 0 5.930 1.647 2.825

When we look to the Aksu Enerji liquidity ratios in Table 4 covering the years 2005-2008, Aksu Energy Inc.'s Quick ratios very low remained for 2005. However, the ratios for the

192

period 2006-2008, is still kept highly above the generally accepted rate level, we can said that the firm placed its short term debt and it worked with high cash position.

Table 5: Aksu Energy Inc. Liquidity Ratio in 2008-2013 Year

AKSU ENERJİ

RATİOS 2008 2009 2010 2011 2012 2013

Current Ratio % 2.968 949 1.275 1.473 3.392 754

Quick Ratio % 2.828 870 1.186 1.354 3.381 741

Cash Ratio % 2.825 108 1.136 1.249 3.357 717

Aksu Enerji's liquidity ratios for 2008-2013 are shown in Table 5. Aksu Enerji Inc. ratios are still higher than generally accepted rate for the period 2008-2013. According to this, we can say that the firm to prefer high cash and cash equivalents position.

Table 6: Ayen Energy Inc. Liquidity Ratio in 2005-2008 Year

AYEN ENERJİ

RATİOS 2005 2006 2007 2008

Current Ratio % 50 76 133 166

Quick Ratio % 44 61 9 60

Cash Ratio % 22 51 1 47

Ayen Energy Inc.'s liquidity ratios covering the years 2005-2008 are shown in Table 6. Ayen Energy Inc.'s current ratio and quick ratio remained below the generally accepted rate level; despite a fluctuating trend, the cash rate has remained above the generally accepted rates level.

Table 7: An Energy Inc. Liquidity Ratio in 2008-2013 Year

AYEN ENERJİ

RATİOS 2008 2009 2010 2011 2012 2013

Current Ratio % 166 108 145 36 72 62

Quick Ratio % 60 36 49 8 38 43

Cash Ratio % 47 14 24 1 24 29

When we look to the Ayen Energy Inc. liquidity ratios in the Table 7 for 2008-2013, the Ayen Energy Inc.'s current ratio and quick ratio remained below the generally accepted rates level and it has continued after the crisis also. Cash ratio has remains fluctuated and it has been over the over generally accepted rate level in last 2 years.

Table 8: Zorlu Energy Inc. Liquidity Ratio in 2005-2008 Year

ZORLU ENERJİ

RATİOS 2005 2006 2007 2008

Current Ratio % 100 30 24 62

Quick Ratio % 78 16 7 29

Cash Ratio % 1 0 2 1

Zorlu Energy Inc.'s liquidity ratios covering the years 2005-2008 are shown in Table 8. In this period; Zorlu Energy Inc.’s all ratios have stayed below the generally accepted rate level. Especially in the cash rate level seems quite low during this period.

193

Table 9: Zorlu Energy Inc. Liquidity Ratio in 2008-2013 Year

ZORLU ENERJİ

RATİOS 2008 2009 2010 2011 2012 2013

Current Ratio % 62 48 49 64 39 32

Quick Ratio % 29 37 39 34 35 24

Cash Ratio % 1 6 17 7 13 10

Zorlu Energy Inc.’s liquidity ratios covering the years 2008-2013 are shown in Table9. The ratios of Zorlu Energy Inc. have stayed below the generally accepted rate level also after the crisis. It has not proved recovery after the crises period.

Table 10: Akenerji Inc. 2005-2008 Balance Sheet Changes and Ratios

As shown in Table 10 Ak Enerji consolidated balance sheet has replaced which one prepared with basis on ratio. When it observed current assets share is steadily decreasing from total assets during the period 2005-2008. In 2005, the proportion of current assets is 36%; in 2008 it has dropped to 28%. In same period, there is a largest increase for the total assets. If it consider in same period for terms of borrowing, not only to not increase to short-term borrowing rates but also there is significantly increasing the long-term debt.

194

Table 11: Ak Enerji Inc. 2008-2013 Balance Sheet Changes and Ratios

Table 11 shows that the share of the ratio Ak Enerji Inc’s consolidated balance sheet items. If the table reviewed, the share of the current asset ratio is gradually falling down continuously in period of 2008-2013. The ratio of current assets from 28% in 2008, fell to 12% in 2013. However, the fixed assets increased approximately 4 times against the other in 5 years. Also long term debt is significantly increased in the same period. In years of 2009, 2010 and 2011, the firm went to too large of short term debt policy. However, in the same period the current assets have not gaot any increase. Because of this reason, net working capital went to negative ratio during these periods.

Aksu Energy Inc’s consolidated balance sheet items as shown in Table 12. In Table 12 said that, the share of current assets in total assets fell steadily during the period 2005-2008. In 2005, the ratio of current assets to 100%, decreased to 14% in 2008. During these periods, firm’s fixed assets increased amazingly. In this four years fixed asset investments are increased in a large size. In terms of debt policy, during these period long-term debt increased also. Inspite of the strong equity structure, the ratio of the debt is no problem for the company during these periods.

The shares of the items shown in Table 13 of the Aksu Enerji Inc. are consolidated based on the proportional balance sheet. When the related table reviewed in period 2008-2013, the share of the item of current assets in active investigation have not a big change. But the fixed assets have increased 20% during this time. When the debt of structure is viewed in this period, it felt the effects of the crisis year 2009 and short-term debt increased about 3 times against previous years baut it doesn’t take importance in the total amount. Fixed asset structure is increased to 2 times the next 5 years. We can say that the company is strong equity structure according to these data. However, the company was unable to perform the previous growth after the crisis, and it has shown steady growth.

195

Table 12: Aksu Enerji Inc. 2005-2008 Balance Sheet Changes and Ratios

Table 13: Aksu Enerji Inc. 2008-2013 Balance Sheet Changes and Ratios

196

Table 14: Ayen Enerji Inc. 2005-2008 Balance Sheet Changes and Ratios

There is Ayen Energy Inc.’s consolidated balance sheet in Table 14. When examining the relevant table, item of current assets has increased steadily in terms of the proportionate share of the assets during the period 2005-2008. In 2005, the proportion of assets of 10%, increased to 26% in 2008. There are too large decreases in fixed asset investment in 2007. If we look for the terms of borrowing in the same period, it shows that both short- and long-term debt decreased from the numerical and proportional terms. The Company's net working capital remained at a negative balance in 2005, 2006 and 2007. Current assets are very low level in this period. With the increase of the invest to the current assets, the net working capital has change to pozitif position in 2008.

There is Ayen Enerji Inc’s consolidated balance sheet as a proportional share of rate shown in Table 15. Although there is a reduction in the related table when examining the share of active items of current assets in the period 2008-2011, in contrast to the situation in the following years has seen big gains. Fixed assets do not unchanged in the period 2008-2010 but the largest increase was observed in 2011 and 2013. When we reviewed to the debt structure in the period 2009 and 2010 it was decreased but next year it has increased 3 times. Also the long term liabilities has decreased in same period, but next year it has increased also in high level. When to looking at all the period of 2008-2013 debt ratio increased from 55% to 81%. However the current assets were low level, because of that the net working capital was in negative position during 3 years.

197

Table 15: Aksu Enerji Inc. 2008-2013 Balance Sheet Changes and Ratios

Table 16: Zorlu Enerji Inc. 2005-2008 Balance Sheet Changes and Ratios

Table 16 shows that Zorlu Enerji Inc.’s share of the items of balance sheet as a consolidated. When we examined the relevant table, total assets have increasing steadily each year during the period 2005-2008. In particular, it was observed an increase in high amounts in fixed assets. If we looked to terms of borrowing in the same period, it shows that both short- and long-term debt are increasing in parallel with the fixed assets. The net working capital is in negative position because of the low increase of the company's current assets than short-term debt in 2006, 2007 and 2008 years.

198

Table 17: Zorlu Enerji Inc. 2008-2013 Balance Sheet Changes and Ratios

It can be seen the share of ratio of balance sheet items in Tablo 17’de Zorlu Enerji INC as consolidated. When the relevant table reviwed we can see that the share af current assets o not have more change in total assets during period of 2008-2010. But in 2011 year it has changed and takes a very high increasing. In next two years, it increased in volatility. The fixed assets item doesn’t change too much during 2008-2010 period, but in next years it has increased in large position. If we looked to liabilities position during this period, the short term liabilities increased year by year. Long term debt has decreased in 2009 and 2010 years but it has a great increase in 2011 year. The debt position decreased in 2012 year but it has increased in 2013 year also again. In 2013 year debt has 61% share in total sources. During these 5 years, net working capital settled in negative position because of high increase of short term liabilities.

Conclusions and Recommendations

The global economic crisis 2008 initially showed all its influence in the world, including the US and Europe. The crisis has increased the need for external financing, especially in developing countries. Developing countries are able to usually finance their foreign trade deficit with short-term foreign funds; because of they do not have sufficient savings. This is why these countries effecting from negative financial developments in the financial markets. Also Turkey is located in developing countries because of this it has effected from global crisis in 2008. The exchange rate, inflation and interest rates have fluctuations during these periods.

In this study, we try to exemine to effects of 2008 global economic crisis on the financial statements and liquidity ratios of companies which ones are operating in BIST in the energy sector. In the study, we separate to the pre-crisis period as 2005-2008 and post crisis period to 2008-2013 for compare to effects of global crisis on the firm balance

199

sheets. Balance sheets are analyzed with ratio analysis, vertical and horizontal analysis techniques.

Accordingly, the analysis is carried out:

When the Ak Enerji's balance sheet analyzed with horizontal and vertical analysis; we can see that the liabilities has growth too much after crises. Because of this reason net working capital position is negative for Ak Energy Inc. Because of this the company can face to the risk of a shortage of cash in the short term the company. The company's liquidity ratios are ower from the generally accepted ratio before crisis. After the crisis of these proportions were below to standard. All of these data we can say that the Ak Enerji Inc. effected in negatively by the crisis.

Aksu Enerji's total sale is lower than the other companies. But it has keept the fiscal discipline, because of this reason its liquidity ratios are good during the crises. And it doesn’t Cary to short term fiscak risk. The company's strong capital structure and its net working capital is positive. This is why can be said the company doesn’t affected by the crisis.

Ayenn Energy Inc. is not affected by the crisis when we analyse the financial statements. It is seen from the vertical and horizontal analysis of the balance sheets. The company's balance sheet leverage ratio has increased notable during the crises. The companie’s liquidity ratio has increased before and after crisis. Because of this, we can say that, the company has got the signals of crisis. In the following years, by decreasing the effects of crisis, the company's liquidity ratio with reducing the effect seems to be in decline.

Zorlu Energy Inc., went to the acquisition of fixed assets during the crisis years. It has financed these investments by both short and long-term debt. This trend has gone on acquisition of tangible fixed assets with a huge debt after crisis periods. In this period the company worked with negative net working capital, and this position has increased every year. Therefore, the risk of short-term cash is increasing year by year. The company prefers growth during crisis period, because of this reason; company’s debt is increasing considerably. The ratio of debt level 75% in the total sources before crisis. After crisis period, debt level increased to 107%. Because of low liquidity ratios, we can say that the company has effected negatively by the crisis.

Ülke hükümetleri de bu alanda teşvikler sağlayıp hem enerji sektörünün gelişimine katkı sağlamalı hem de enerjide dışa bağımlılığı azaltma yönünde politikaları arttırmalıdır.

We can take a result from this study that the companies surveyed different policy during the crisis period. Because of this reason; the crisis has also been demonstrated in a variety of strategies in different ways to every company. Proceeding from this data we can say that, the 2008 crisis didn’t effect to negatively for all the companies working in energy sector in Turkey. We can examine that 2 of 4 companies have effected negatevely from 2008 global economic crisis. When we looked to result of analyse, we can say that the Turkish energy companies attend to growth policy during the crisis period.

After all these evaluations we can recommend to the energy companies, they have to take the fiscal discipline in a central focus. It is important for Turkish energy sector also. We can offer to the companies to invest to R&D researches also. Because it is very

200

important for the firms for competition in capitalist world. It is very important for sustainable profitability also. State governments also providing incentives in this area to the energy companies R&D resarches. This is important for reducing dependence on foreign energy.

References

[1] BERBEROĞLU, B, (2011), “2008 Global Krizinin Türkiye ve Avrupa Birliği’ndeki Etkilerinin Kümeleme Analizi İle İncelenmesi”, Anadolu Üniversitesi Sosyal Bilimler Dergisi, Cilt: 11, Sayı: 1, ss. 105–130.

[2] EĞİLMEZ, M. (2011), “Küresel Finans Krizi”, Piyasa Sisteminin Eleştirisi içinde Edt, Saadet ÖZKAL, Remzi Kitabevi A.Ş., İstanbul, ss: 42-43

[3] GÜMÜŞ, F. B.,ve AYDEMİR, L. (2014). “2008 Küresel Finans Krizinin Sektörel Bazda Şirket Bilançolarına Etkilerinin Analizi”. İşletme Bilimi Dergisi, 2(1), 37-64.

[4] http://mpra.ub.uni-muenchen.de/29470/1/MPRA_paper_29470.pdf, Erişim Tarihi: 27.09.2016

[5] http://www.bilgaz.net/dosyalar/OranAnalizi.pdf, Erişim Tarihi: 27.09.2016

[6] http://www.denizmortgage.com.tr/mortgage_nedir/, Erişim Tarihi: 27.09.2016

[7] IŞIK, E. (2011), “2008 Küresel Finansal Krizin İşletmelerin Çalışma Sermayeleri Üzerindeki Etkilerinin Oranlar Aracılığı ile Tespiti, İMKB’ de bir araştırma” Eskişehir Osmangazi Üniversitesi, Sosyal Bilimler Enstitüsü, Yüksek Lisans Tezi, https:// tez. yok. gov. tr/ UlusalTezMerkezi/ tez Sorgu SonucYeni.jsp

[8] ÖZTÜRK, S., GÖVDERE, B. (2010). ‘Küresel Finansal Kriz ve Türkiye Ekonomisine Etkileri’, Süleyman Demirel Üniversitesi İ.İ.B.F. Dergisi, Sayı:1, ss.377-397.

[9] TERZİ, N. (2009) ; “Hedge Fonlar: Küresel Finans Piyasalarının Gizemli Oyuncuları” Beta Yayınları, İstanbul.

[10] YILDIRIM, S. (2010). 2008 Yılı Küresel Ekonomi Krizinin Dünya ve Türkiye Ekonomisine Etkileri. KMÜ Sosyal ve Ekonomik Araştırmalar Dergisi, 12(18), 47-55.