Analysis and evaluation of financial structures of state economic enterprises for the term 1994-2008

The aim of this study is to test the hypothesis stating government owned enterprises can not create value, and lacking ability to generate necessary funds of them constitutes a burden on government sector.In terms of industries; after financial positions had been determined by the beginning value of every fiscal year, fund flows between 1994-2008 were examined via three sub periods. Therefore capital requirements for working capital and investments were revealed and mixture of funds supplied by retained earnings and external funds were examined.In 1994-1998, 1999-2001, and 2002-2008 sub periods, the factors that have influenced fund flows were examined; annual change in financial positions was determined; capital structures were evaluated annually.We conclude that; except 1999-2001 term as a whole and 2004-2008 term partially due to specific problems in energy industry, government owned enterprises created substantial amount of EBIT (earnings before interest and taxes) throughout 1994-2008. Capital needs of some enterprises have been approximately equal to funds having transfered to national budget by some profitable enterprises. In this respect, external fund requirements of enterprises have occurred mainly due to investments. On the other hand the total of dividends distributed to national treasury and mission loss receivabes from the Treasury is also approximately equal to total of additional capital provided by national budget; hence enterprises have not constituted a burden on the government sector. Funds necessary for investments could not be obtained from internal operations wholly and therefore the deficit was financed by commercial bank loans. By the end of 2008, enterprises have much more cash and cash equivalents than notes payable as a whole. A Capital Fund mechanism for government owned enterprises can be established. Profitable enterprises can transfer their cash distributions from net profits into Capital Fund instead of giving Treasury. Furthermore enterprises with excess funds can transfer those funds into Capital Fund as well. Hence, enterprises with capital needs may provide funds from this Capital Fund instead of bank loans.If suggestions taking place in our conclusion part is realized, financial problem of government owned enterprises may be solved and privatization may not be the sole solution.Key wordsCapital requirements of Government Owned EnterprisesCapital structure of Government Owned EnterprisesFinancial position of Government Owned EnterprisesFinancial management of Government Owned Enterprises