The experts identified nine indicators they considered the most appropriate for evaluating the efficiency of separate Lithuanian economic sectors, namely 1) gross profit margin, 2) profitability ratio, 3) return on assets ratio, 4) debt ratio, 5) leverage ratio, 6) current ratio, 7) receivables turnover ratio, 8) fixed assets turnover ratio, 9) equity turnover ratio.
With respect to the expert evaluation and correlation analysis, the following financial ratios were chosen for analysis: 1) gross profit margin, 2) return on assets ratio, 3) leverage ratio, 4) current ratio, 5) receivables turnover ratio, 6) equity turnover ratio.
That may be caused by relatively high values of gross profit margin, current ratio, and receivables turnover ratio. These ratios indicate smooth settlements of receivables and thus generation of sufficient flow of income.
Furthermore, both construction and real estate sectors experienced rather low values receivables turnover ratio suggesting delay in settlements peculiar for these sectors.
During the crisis receivables turnover ratio become 5.04, whereas it was 15.8 before the crisis.
As can be seen in Table 3, receivables turnover ratio is one of the most affected ratios among others.
Other ratios are not affected as much as receivables turnover ratio during the economic crisis.
AFFECTED WORKING CAPITAL RATIOS Affected ratios Pre-crisis era Crisis era Inventory Ratio 32.40% 29.46% Short Term Bank Loans to 28.49% 38.95% Short Term Liabilities Ratio Inventory Turnover Ratio 4.88 times 6.52 times Receivables Turnover Ratio 15.18 times 5.04 times Working Capital Turnover 1.61 times 1.45 times Ratio TABLE 4.
Table 5 shows the results of the robust regressions that explain firms' receivables turnover ratios
by firm characteristics, the medium and the heavy industry dummies, the time variable, the "Contractionary" dummy, and the Leverage *Contractionary interaction term.
This would lead to a lowered EV for sales and cost of sales as well as lowered inventory and receivables turnover ratios
. If book values (BVs) for sales and cost of sales are close to last year's AVs adjusted for the expected changes due to the shortage, the auditor might accept the book values without detailed auditing.