BULGARIA – CURRENT ECONOMIC SITUATION
Bulgaria’s economic development depends heavily on the ability of the country’s production to compete on the European market. From 2000 until 2006 the industry has experienced a speedy development. The invested capital has increased three times. The original capital has increased 3.4 times and the floating capital – 2.9 times. At the same time the effectiveness of expenses is low and the increase is insignificant. For this period one lev of expenses has resulted in 1.06 levs of income. The profitability of the invested capital is 6% – rather disappointing in comparison to the level of the interest rates of the bank credits. The increase of the production is mainly due to the increase of the number of producers, rather than good organisation. The reason for this is the structure of the industry which is still to a great extent ineffective. As result there is a necessity to develop a new strategy for the Bulgarian industry and to underline priorities. The emphasis should be on highly effective projects. Another significant problem related to this one is the decrease of the profitability of the long-term assets and the inadequate qualification of the workforce.
The situation is much better in relation to the use of the current assets. The improvement is obvious and it is expressed in the decreased time for the turn over of the material reserves and the decreased need for materials. One lev of goods has been serviced by 0.16 levs of material reserves, which is an increase of about two levs.
The short term debt to suppliers has increased and also both the number of days for the collection of the short term debts and for paying the short term debts. The ratio observed is that for one lev of receipts from clients, there are 0,83 levs of short-term debts to suppliers.
Generally, there is a tendency for the short term improvement of the financial situation of the companies and their liquidity has increased which mainly due to the good work of the management.