Basis of economic analysis of Czech firms
When looking for connections between particular business’s activities, theory of financial management uses pyramidal system of indicators. The effectiveness of this tool is based on the appropriate choice of the top indicator. Its decomposition enables to manage firm’s processes from the bottommost...
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| Format: | Article |
| Language: | English |
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Mendel University Press
2010-01-01
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| Series: | Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis |
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| Online Access: | https://acta.mendelu.cz/58/3/0079/ |
| Summary: | When looking for connections between particular business’s activities, theory of financial management uses pyramidal system of indicators. The effectiveness of this tool is based on the appropriate choice of the top indicator. Its decomposition enables to manage firm’s processes from the bottommost organizational levels to the main firm’s mission with respect to the connections between particular processes. The aim of this paper was to identify appropriate indicator, which corresponds with creation of firm’s value and design its decomposition. To measure creation of firm’s value it is nowadays very popular to use indicator Economic Value Added (EVA). Though from the theoretical point of view EVA is seen as a superior performance metric, the results of some empirical studies do not support this claim. That is why the information content of EVA was controlled in the concrete conditions of Czech Economy within this article. The results showed eligibility of using EVA in Czech firms and enabled to choose it as the top indicator in the pyramidal system. Ambition of further research is to design a complex of indicators offering a comprehensive economic view on the firm’s performance. |
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| ISSN: | 1211-8516 2464-8310 |