Modification of EVA in Value Based Management

AbstractThis article deals with the value based management and the metrics used in it. Nowadays, one of the basic requirements on the company is creation of value for the shareholders and that is why managers have adopted value-oriented methods to be able to measure any change of value. In the past, managers of many companies were focused on the main economic objective which they considered to be the maximization of profits. But this attitude was not sufficient to satisfy the requirements of shareholders, because their preferences lie in the value of the company. There will be described the most common value-oriented indicator, economic value added (EVA), in the article. The developer of the EVA concept is Stern Stewart & Company. They criticized the traditional indicators as ROA, ROI, PAT, EPS etc. for their characteristic and the weak explanatory power in terms of value creation. Company valuation through EVA is an appropriate mean to determine creditworthiness of a company. The EVA calculation also provides valuable information for various areas of management. This metric is quantifying the value that was added as a result of the implementation of operational activities during the reference period. Moreover, there are many modifications of the EVA used in practice, such as MVA, CVA, SVA, RONA that will be described and compared in the article

Strategies for sustainable socio-economic development and mechanisms their implementation in the global dimension

The authors of the book have come to the conclusion that it is necessary to effectively use modern approaches to developing and implementation strategies of sustainable socio-economic development in order to increase efficiency and competitiveness of economic entities. Basic research focuses on economic diagnostics of socio-economic potential and financial results of economic entities, transition period in the economy of individual countries and ensuring their competitiveness, assessment of educational processes and knowledge management. The research results have been implemented in the different models and strategies of supply and logistics management, development of non-profit organizations, competitiveness of tourism and transport, financing strategies for small and medium-sized enterprises, cross-border cooperation. The results of the study can be used in decision-making at the level the economic entities in different areas of activity and organizational-legal forms of ownership, ministries and departments that promote of development the economic entities on the basis of models and strategies for sustainable socio-economic development. The results can also be used by students and young scientists in modern concepts and mechanisms for management of sustainable socio-economic development of economic entities in the condition of global economic transformations and challenges

The Importance of Non-Profit Organization in Globalized World: International Comparison of American and European Continent

Research background: In developed countries, we see a significant increase in the importance of non-profit organizations thank to public initiative. The primary objective is to improve the quality of life in society. Cooperation between private, public and non-profit sectors creates synergy effects. The primary problems of non-profit organizations include legislation that does not sufficiently motivate entrepreneurs to support non-profit subjects, but also a shortage of employees and volunteer. Purpose of the article: Despite the fact that, under the conditions of globalization, there is a greater interconnection of the economies of individual countries, also in the area of non-profit sector, there is still exist important differences between the operation and importance of non-profit organization in an American and European continent. Methods: Firstly, theoretical part of the paper provides historical development of non-profit sector based on primary theoretical approaches. Secondly, practical part of the paper describes non-profit sector on American and European continent. In other words, the paper summarises theoretical and empirical knowledge on importance of non-profit sector in various countries around all the world. Paper main aim is the highlighted the importance of non-profit sector under the conditions of globalization with the emphasis on the international comparison of American and European point of view. Findings & Value added: The results show that non-profit sector plays significant role in building national economies. This paper is the one part of the project outputs focused on non-profit sector. In developed countries, we see a significant increase in the importance of non-profit organizations thank to public initiative

Financial Distress and Bankruptcy Prediction in Conditions of Slovak Republic

Research background: Prediction of bankruptcy has an important place in financial analysis of an organization in the globalized economy. Ever since the first publication of a paper on bankruptcy prediction in 1932, the field of bankruptcy prediction was attracting researchers and scholars internationally. Over the years, there have been a great many models conceived in many different countries, such as Altman’s Z score or Ohlson’s model for use for managers and investors to assess the financial position of a company. Globalization in last few decades has made it even more important for all stakeholders involved to know the financial shape of the company and predict the possibility of bankruptcy. Purpose of the article: We aim in this article to examine the financial distress and bankruptcy prediction models used or developed for Slovakia to provide an overview of possibilities adjusted to specific conditions of the Slovak Republic in context of globalization. We will also look at the possibility of use of these prediction models for assessing financial status of non-profit organizations in the Slovak Republic. Methods: We will use analysis and synthesis of current research and theoretical background to compare existing models and their use. Findings & Value added: We hope to contribute with this paper to the theoretical knowledge in this field by summarizing and comparing existing models used

The verification of prediction and classification ability of selected Slovak prediction models and their emplacement in forecasts of financial health of a company in aspect of globalization

Predicting financial health of a company is in this global world necessary for each business entity, especially for the international ones, as it´s very important to know financial stability. Forecasting business failure is a worldwide known term, in a global notion, and there is a lot of prediction models constructed to compute financial health of a company and, by that, state whether a company inclines to financial boom or bankruptcy. Globalized prediction models compute financial health of companies, but the vast majority of models predicting business failure are constructed solely for the conditions of a particular country or even just for a specific sector of a national economy. Field of financial predictions regarding to international view consists of elementary used models, for example, such as Altman´s Z-score or Beerman´s index, which are globally know and used as basic of many other modificated models. Following article deals with selected Slovak prediction models designed to Slovak conditions, states how these models stand in this global world, what is their international connection to the worldwide economies, and also states verification of their prediction ability in a specific sector. The verification of predictive ability of the models is defined by ROC analysis and through results the paper demonstrates the most suitable prediction models to use in the selected sector

Non-profit organizations in the conditions of Slovakia

Non-profit organisations play an important role in the life of a society by providing generally beneficial services. The purpose of these organizations is to provide services in domains where they are not provided by the government, nor by the market. Their goal is to make the society a better place for everyone. In other words, non-profit organizations play a relevant role in society by attempting to satisfy human needs in different way or as a complement to lucrative firms and governmental activity. A non-profit organization may be defined as an entity that is concerned with its activities about the realization of social value adding mission. Globalisation is also playing a part in the growing importance of non-profits around the world as the non-profit sector spreads to the less developed economies and also grows in the international dimension via international non-profits and non-profit alliances. This article aims to establish a basic overview of Slovak non-profit organisations after dealing with the theoretical background for non-profit organizations in general. It deals with the definitions for non-profit organisations in Slovakia, the possibilities of financing of non-profits in Slovakia and basic rules and conditions for the accounting of non-profit organisations based in the Slovak republic

Sensitivity analysis of Economic Value Added as a dominant indicator of concept of economic profit

Research background: The modern goal of enterprises, value creation, is achieved through the concept of economic profit. Profit, as part of profit or loss, is one of the most important flows, pointing to how efficiently corporate capital is used in an entity (Coatney & Poliak, 2020). The article deals with the difference between accounting and economic profit, the selected form of economic profit - the EVA indicator. The economic value added (EVA) indicator is one of the best-known modern indicators of a company's performance (Siekelova et al., 2019). It shows whether the given entity increases its value or only earns for its economic survival. The benefit of this indicator is the valuation of equity and taking into account the risk. It is difficult to express the economic profit itself, therefore the article also addresses the issue of its calculation (Shah et al., 2016). The company needs to know its financial status and the direction it is heading, so we decided to calculate a selected form of economic profit. Purpose of the article: The company needs to know its financial status and the direction it is heading, so we decided to calculate a selected form of economic profit. When expressing the value of the economic value added indicator, it is also important to know the items and components of the calculation that have the strongest meaning and effect on the possible amount of the indicator. Given this, we decided to use a sensitivity analysis, which points to the effect of individual variables that participate in the construction of the EVA calculation. Methods: In this work, the methods of induction, deduction, and comparison were used to obtain a true picture of the subject issue. Methods of synthesis and analysis of the researched issues were also used. Findings & Value added: In the paper there is pointed out the intensity of the impact of individual variables that entered into the calculation of the economic value added indicator as a dominant indicator of concept of economic profit

Non-profit organization’s endowment as a source of financing to improve its sustainability

Non-profit organizations are an important part of the economy and are needed to fulfill many beneficiary roles that neither market, nor state would fill. Non-profit organizations in Slovakia became important after the 1989 Velvet revolution, the dissolution of the Czechoslovakia and creation of the free and democratic Slovak Republic. Ever since them, non-profit played a role in everyday life of people in Slovakia. Non-profit organizations exist with the aim of providing generally beneficiary services without the aim of making profit for their founders – which is what makes them distinct from for profit businesses. However, non-profit organizations need funding for their operations in the same way as any other organizations. They need to pay their bills, salaries, purchase materials, services, etc. Because of their non-profit nature, the sources of financing for these costs are different. The aim of this paper was to look at the endowment of non-profit organizations and its investment as a source of non-profit financing and the current situation in Slovakia regarding it use. We analysed financial statements of foundations available through Finstat.sk database. We found that the use of investing the endowment for self-financing of non-profit organizations is almost non-existent in conditions of Slovak non-profit sector, with only 13,7% of organizations having any long-term financial assets and only 3,9% having any substantial gains from them. Further, we proposed a framework for possible use of the endowment as a source of funding for more non-profit organizations in order to improve the financial situation and sustainability of the non-profit sector

Prediction of Financial Health of Business Entities of Selected Sector Using Balance Analysis II. by Rudolf Doucha and Verification of Its Predictive Ability through ROC

Forecasting business failure is a worldwide known term, in a global notion, and there is a lot of prediction models constructed to compute financial health of a company and, by that, state whether a company inclines to financial boom or bankruptcy. A healthy financial management of a business entity is very important for the proper operation of the business, and it is therefore very important to know how to assess financial health and to anticipate possible problems that will be easier to eliminate in advance. Globalized prediction models compute financial health of companies, but the vast majority of models predicting business failure are constructed solely for the conditions of a particular country or even just for a specific sector of a national economy. Predictive models can indicate whether an entity tends to prosper or bankruptcy, and so we can assess the financial health of the business. This paper provides a description of the balance analysis II. by Rudolf Doucha, discusses its application to a sample of 266 Slovak subjects and points to its prediction in the given field. The verification of the ability to forecast bankruptcy or financial stability has been evaluated through ROC analysis

Current state of accounting in Slovak Republic in the conditions of globalization

Research background: Globalization currently impacts every aspect of economic life. Accounting and the law that govern it are no exceptions. The interconnectedness of companies across state boundaries brings with itself challenges to the accounting practices around the world. The globalization in the world of accounting is represented with the movement for harmonization of accounting practices around the world. International Financial Reporting Standards (IFRS) are a vehicle for that harmonization. Slovak Republic also allows companies to publish their financial statements in accordance with the IFRS standards. Therefore, it is important to study them and their effect on Slovak accounting law and practice. Purpose of the article: In this article, we will look at the accounting harmonization that resulted from the globalization of the world economy and the impact it had on accounting in the Slovak Republic. We will also look closer at International Financial Reporting Standards (IFRS) in Slovak Republic – their use, regulations governing them and potential implications for future. Methods: We use the methods of analysis and synthesis of current literature and law concerning the regulation of accounting in Slovakia with the focus on the impact of globalization on it. We then analysed the current state of use of International Financial Reporting Standards in Slovakia. Findings & Value added: We found a high level of accounting harmonization with the European Union