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The Treatment of Financial Information in Croatia small Entepreneurial Firms

Financial information can be applied to different forms of short-term decisions. Usage of financial information in making business decisions (for example, when setting a selling price, a product mix or the basis of workers’ s wages) is of great importance in determining enterprise performance. The crucial task of a decision-making process in a small firm is to enable its efficient functioning and achieve competitiveness in the market. The process of free market development in transitional countries has resulted in a large number of small companies with inexperienced management. Because of their failure to exploit accounting as a source of financial information for making decisions, they are relatively inefficient. Entrepreneurs do not regularly use financial information to evaluate performance and to suggest when corrective action must be taken. Enterprises in transitional countries are exposed to a permanently growing competition, but their performance is poor. Most of the companies are oriented primarily toward the local market. Small entrepreneurs do not focus on what will happen to the financial results if the level of activity or input and output prices fluctuates. These kinds of information are required for making optimal short-time business decisions. Entrepreneurs try to apply appropriate remedial measures to improve cost efficiency and profitability. But, personal financial information of entrepreneurs who exclude the accounting system may not be sufficiently accurate for decision-making purposes. The purpose of this paper is to consider how an accountant can be of assistance in providing answers to questions about the consequences of following entrepreneurial manager particular courses of action. The paper will introduce a research on the effects of accounting information on entrepreneurship development in Croatia. We intend to analyse different attitudes of entrepreneurs towards the importance of financial information, as well as the influence of accounting on economic efficiency and the growth of small business firms. The Osijek Faculty of Economics organized this research, which was based on empirical data. 147 entrepreneurs were interviewed in the sectors of production, trade and services in Croatia. After data cleaning, the database was reduced to 121 respondents. The research objective was to study the main reasons for neglecting accounting tools in making decisions and to find out the possibilities to better treating financial information, especially for the benefit of small business owners.

financial information; small business; entrepreneur; statistical analysis; survey; transitional economy

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