Abstract
Research background: The success and stability of any company depends mainly on its financial health. This research is focused on the application of economic value added as a methods for analysis of financial health of company. The EVA indicator characterizes the company’s ability, which is reduced by the price of equity. In other words, the capital invested in the company has a benefit that exceeds the cost of that capital. The goal of each owner is to achieve the maximum possible appreciation of this invested capital and thus ensure the appreciation of the company’s assets. Purpose of the article: The main aim of the paper is to assess the financial health of companies in the real estate industry by economic added value under the conditions of globalization. Methods: For research was used the data of Slovak enterprises from real estate industry, obtained from annual financial reports covering the year 2019. Based on these data economic value added were calculated. Especially, EVA equity methods was used. Cost of equity were quantified by capital assets pricing model. Subsequently, the results obtained were examined by descriptive statistics. Findings & Value added: The results of paper bring comprehensive analysis of financial health of Slovak companies from real estate industry by economic value added. Paper identified the value of economic value added in all companies from this industry, quantified both, the largest and the smallest values of economic value added in data. Subsequently, study applied descriptive analysis of results.
Highlights
Following the outbreak of the pandemic in 2020, many real estate market experts believed that it would significantly mark its devellopemnt and that the prices rising so far each year would see a huge drop. (Kaplan and Stromberg, 2003) They feared that people lose interest in buying and renting apartments and houses due to the looming crisis and would postpone their plans until the pandemic was over. (Koijen et al, 2016) the impact of the pandemic was reflected in the activities of real estate agencies, which had to close their operations and personal inspections of houses and flats were replaced by digital ones
The reason why real estate prices are so high is the fact that demand far exceeds supply. (Berzakova et al, 2015) The following figure no. 1 shows the development of real estate prices over the last 15 years
We chose the EVA indicator because this indicator is just such an indicator that can evaluate and analyze companies in a way that makes them comparable. (Reck et al, 2021; Rosch, 2021) We can consider it as an economic indicator of the financial health of companies.Marshall first mentioned Economic Value Added („EVA“) in 1880, and today and in recent years it is best known for the Stern Stewart & Company
Summary
Following the outbreak of the pandemic in 2020, many real estate market experts believed that it would significantly mark its devellopemnt and that the prices rising so far each year would see a huge drop. (Kaplan and Stromberg, 2003) They feared that people lose interest in buying and renting apartments and houses due to the looming crisis and would postpone their plans until the pandemic was over. (Koijen et al, 2016) the impact of the pandemic was reflected in the activities of real estate agencies, which had to close their operations and personal inspections of houses and flats were replaced by digital ones. Following the outbreak of the pandemic in 2020, many real estate market experts believed that it would significantly mark its devellopemnt and that the prices rising so far each year would see a huge drop. 1 shows the development of real estate prices over the last 15 years. The price of real estate in 2020 increased by 11.9% compared to the previous year. The real estate market maintained its growth mainly due to the fact that it was not a structural complication, but only external influences. Experts assume only a very small probability of lowering property prices in the coming period, which means that the situation in the real estate market will depend only on property owners and their willingness to sell their houses or apartments. Experts assume only a very small probability of lowering property prices in the coming period, which means that the situation in the real estate market will depend only on property owners and their willingness to sell their houses or apartments. (Lee and Ryu, 2017; Wagner, 2016; Tschirhart, 2007)
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