Economic Performance: Variability of Businesses within Each Industry and Among Industries

Abstract

This article deals with the structure of economy as a factor affecting an intensity of economic growth. Shifts in sectoral contributions to gross value added cause two distinctive trends in the development of labour productivity: firstly, by increasing the contribution of the secondary sector to gross value added, which causes the increase of the labour productivity of the whole national economy, and by increasing the contribution of the tertiary sector to gross value added, which causes decline in labour productivity across the whole national economy. Generally, it is considered that economic characteristics of each determine through their consistency economic characteristics of “their” enterprises. The research question is whether for the determination of economic performance and financial health of a company its individual result is more important, or whether these issues are predetermined by its classification. The aim is to show the example of the Czech economy, both the development of selected economic characteristics of each in the context of the changing sectoral structure of the national economy, and the differences in results of the assessment of financial-economic indicators among six selected industries and selected sample of 72 companies within these industries. On the basis of available statistical data, there are assessed trends in labour productivity, capital endowment of labour and selected indicators of financial analysis of group the industry and the market services in the Czech Republic, which show the main differences between both segments of the economy. But the focus of the article is on the research aimed at the degree of result differences in assessment of economic performance and financial health within each and among industries. Using the data of financial statements of assessed companies, there were calculated both ratio indicators and synthetic indicators of financial analysis and their results were compared for each company within each industry, within companies of the whole sample and of the average. There was assessed variability of indicators within each and among industries. Attention was concentrated on 5 ratio indicators of financial analysis (current liquidity, return on costs, costs to revenues ratio, capital turnover and financial leverage) and 2 synthetic indicators – the Altman's model of 2002 and the Czech Grundwald's model of 2001. The analysis certified that ratio indicators of financial analysis of companies within industries show slightly higher variability than ratio indicators among industries, but the assessment of indicators of variability shows their slightly higher values. For the synthetic indicators of financial analysis this issue cannot be concluded clearly because there is the crucial way of construction of these models. Based on the performed research, there were formulated two other conclusions, both for financial analysis of enterprises, and for guiding regional growth area. http://dx.doi.org/10.5755/j01.ee.22.5.964