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Effects of COVID-19 Pandemic on Textile, Leather and Clothing Companies and Their Financial Reports: a Research in BIST

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Listed:
  • Tuba Ergun

    (Istanbul Bilgi University, Graduate Programs Institute, Accounting and Auditing Master's Program with Thesis, Istanbul, Turkey)

  • Derya Uçoglu

    (Istanbul Bilgi University, Faculty of Business Administration, Department of Business Administration, Istanbul, Turkey)

Abstract

The novel coronavirus disease 2019 (COVID-19) is a health concern that has rapidly turned into a global economic crisis. This study aims to determine the effects of the COVID-19 on textile, leather, and clothing companies and their financial reports. For this purpose, horizontal, ratio, and content analyses were carried out using the financial statements and footnotes of 21 companies listed in the BIST that fall under the aforementioned sectors. The results show that most of the companies have increased their liabilities during the pandemic and thus, considering such uncertainties in 2020, possess more liquidity compared to the previous year. Revenues of retailing ready-made clothing, shoes, and bags were found to decrease, while those of clothing raw materials such as yarn, dyed fabric, and lining indicated an increase. Due to the pandemic, there has been a decrease in the revenues of companies producing or retailing ready-made clothing, shoes, and bags. In contrast, companies providing raw materials such as yarn, dyed fabric, and lining indicated an increase. Findings show reduced profitability in half of the examined companies due to decreased revenues, increased financial expenses, and foreign exchange losses. The companies reviewed their cash management strategies and enacted necessary measures. Therefore, except for two businesses, no other companies generated negative net cash flows in 2020. In summary, publicly traded textile, leather, and clothing companies were managed well during the pandemic. Apart from a few enterprises, no significant liquidity and profitability problems were encountered. Based on the analysis of the notes to the financial statements, several companies did not disclose any explanations regarding COVID-19, while others only reported limited disclosures.

Suggested Citation

  • Tuba Ergun & Derya Uçoglu, 2022. "Effects of COVID-19 Pandemic on Textile, Leather and Clothing Companies and Their Financial Reports: a Research in BIST," Muhasebe Enstitusu Dergisi - Journal of Accounting Institute, Istanbul University Business School, vol. 0(66), pages 95-112, January.
    • Handle: RePEc:ist:imeder:v:0:y:2022:i:66:p:95-112
    DOI: 10.26650/MED.998932
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    References listed on IDEAS

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