The Critical Analysis of Profit for its Allocation Decision-Making

Pakšiová, Renáta

doi:10.1515/saeb-2017-0039

Cited by 12 publications

(6 citation statements)

References 10 publications

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“…In Slovakia, but also in the neighbouring Czech Republic and Hungary, this topic is in the scientific community still new. Some authors from Slovakia have mentioned earnings management in their studies, for example, Saxunova (2015), Vagner (2015), Paksiova (2017). But their studies are not dedicated to this issue and do not deal with it deeper.…”

Section: Literature Reviewmentioning

confidence: 99%

Dependency Analysis Between Various Profit Measures and Corporate Total Assets for Visegrad Group’s Business Entities

et al. 2020

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Background and Purpose: Models of identifying and predicting earnings management in companies by using accruals are in general based on the dependence between total assets of companies and various profit measures. In this paper, we focused on an initial dependency analysis between these business indicators in the Visegrad group’s business entities. We explore the mentioned relationships, verify, and quantify the strength of the dependencies between earnings levels of companies (in terms of economic evaluation of the return on business capital in absolute terms) and the value of their total assets (i.e. business capital tied in the assets without its further classification and analysis).Methodology: We use descriptive statistics as well as a correlation analysis based on the real business data on almost 300 thousand companies in the V4 countries from the Amadeus database, covering the period from 2013 to 2017. Finally, we use a comparative analysis to identify disproportion among the results that were found out for each of the analysed countries.Results: The analysis showed that Slovak companies have the average values of profit measures and total assets comparable to Hungarian companies. Czech and Polish companies have several times higher average values of profit measures and also of total assets than Slovak and Hungarian companies. The analysis of the development of the profit measures and the total assets of the companies over the years showed significant differences across the four countries during the period covered by this study.Conclusion: The analysis of relationships between total assets of the companies and their profit measures showed that the strength of these dependencies among countries is very similar, and over the years, these results did not change. The results of this study can be further used in the creation of the earnings management model in enterprises, both in Slovakia and in other V4 countries.

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Section: Literature Reviewmentioning

confidence: 99%

Dependency Analysis Between Various Profit Measures and Corporate Total Assets for Visegrad Group’s Business Entities

et al. 2020

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“…Managers and owners focus their attention on the business performance measured mainly by profit or distributed dividends [37]. In the case of a profit distribution, a situation may arise where the resources left in the business are not sufficient in the long run to cover the renewal of necessary fixed assets or purchase of inputs, which may cause that the business will not be able to maintain its main or productive capacity in the short term and will face bankruptcy in the future [38,39]. In identifying potential problems, the financial distress of a business and assessing financial stability, the information provided by the accounts is based, which should contain the correct and comprehensible information necessary for the financial analysis [40,41].…”

Section: Measuring the Financial Performance Of Businessesmentioning

confidence: 99%

The Impact of Equity Information as An Important Factor in Assessing Business Performance

Tasáryová¹,

Pakšiová²

2021

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Assessing the business performance is an important aspect of almost all economic decisions at the microeconomic and macroeconomic level, in the short and long term. Information about the partners' relationship to the business, their interest in the evaluation of investments can be explained by various indicators. It is relevant to understand the dependencies of the business performance and the amount of equity, while negative equity can be considered as critical information of existence. The purpose of quantitative research is to identify the relationship between reported negative equity and the business performance in Slovakia on an exhaustive sample of financial data of businesses with negative equity in the period 2014–2018. The business performance with negative equity is assessed through the Altman Z-score and the IN05 index, by classifying businesses into bankruptcy, prosperity and gray zones. Pearson's correlation analysis between negative equity and Altman Z-score performance confirms the strong direct relationship between negative equity and the bankruptcy zone, the weaker indirect relationship between negative equity and the gray zone, and almost no dependence of negative equity and prosperity zone. In the case of the IN05 index, a low correlation was found between negative equity and all three zones. Although businesses with negative equity are in a bankruptcy zone, they do not have to close automatically, but they have to improve resource management, in particular to increase equity, for example by making a profit and good financial management.

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“…However, concepts relating to the capital maintenance are significant because they reflect economic reality of business environment in which the enterprise performs its business activity (Jianu et al, 2017). If an enterprise distributes profit in extent that the resources left in enterprise does not cover restoration of non-current assets and input purchases, it can lead to inability to maintain capital or productive capacity in short term and causes bankruptcy in long term (Jianu et al, 2011;Paksiova, 2017). Capital maintenance is observed from two points of view: financial and physical, that are defined in Conceptual Framework for Financial Reporting (IASB, 2018) issued by International Accounting Standards Board (IASB).…”

Section: Capital Maintenance As a Relevant Indicator Of Sustainabilitmentioning

confidence: 99%

Capital Maintenance Evolution using Outputs from Accounting System

Freitas

Espinosa

Correia

2020

SAEB

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Decision making based on information provided by an enterprise accounting information system, is essential for sustainable development and enterprises growth. Besides widely used prediction models for an assessment of the financial distress, there is also a useful indicator of a capital maintenance evolution, that provides a deeper view to the enterprise growth or decline compared to traditional performance measures. The aim of the contribution is to develop a model for assessment of a capital maintenance evolution using available accounting outputs. Our constructed model and coefficient for a capital maintenance evolution CMEOPNN has been developed using the multi-layer (triple) artificial neural network with a feedforward signal transmission by a backpropagation method and an activation function is a sigmoid function. For construction our model we used 663 Slovak enterprises sample out of 5 most frequented industry sectors with a unified structure of the provided information in the financial statements for 2014-2017.

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The Critical Analysis of Profit for its Allocation Decision-Making

Cited by 12 publications

References 10 publications

Dependency Analysis Between Various Profit Measures and Corporate Total Assets for Visegrad Group’s Business Entities

Dependency Analysis Between Various Profit Measures and Corporate Total Assets for Visegrad Group’s Business Entities

The Impact of Equity Information as An Important Factor in Assessing Business Performance

Capital Maintenance Evolution using Outputs from Accounting System

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