Abstract
Business sustainability has been one of the leading topics of the financial management of Slovak companies since the beginning of the millennium. The initially relatively strict link only to environmental aspects has been supplemented by the economic and social dimensions in recent years, under the pressure of the business environment. Examining the link between a company’s financial performance and sustainability is addressed in this paper by the financial ratios method and the correlation and linear regression analysis methods. The subjects of investigation are enterprises from three selected sectors, with the selection criterion for the sample being determined based on the share of sales of the enterprises in the sectoral sales such that the sample includes enterprises with a total share of more than 50%. The aim was to design an integral indicator of business sustainability and linking it to the identified economic performance indicator, Economic Value Added, whereby it insists on economic pillar of sustainability exclusively. The research results show a strong direct dependence of the financial performance to the IUUP (Integral business sustainability indicator) in the supply of “Supply of electricity, gas, steam and cold air” and the independence of the IUUP in the “Information and communication” and “Industrial production” sectors. Further research should go beyond the borders of the Slovak Republic and should be aimed at proposing changes and amendments in IUUP, applying more comprehensive evaluation procedures, while respecting the public availability of input information.
Highlights
The business environment in the Slovak Republic has undergone fundamental changes in recent decades
Indicator Economic Value Added (EVA)-Momentum in Relation to: Value added per employee Value added per unit of annual turnover Value added per unit of balance sheet total
The subject of the research was a selected sample of enterprises operating in the Slovak Republic, as the aim of the research was to get acquainted with the existence and nature of the relation between business sustainability and financial performance for the domestic environment, for which this status has not yet been quantified
Summary
The business environment in the Slovak Republic has undergone fundamental changes in recent decades. The demands for responsible entrepreneurship, the sustainability of production and living conditions, the greening of consumption, etc., are beginning to emerge, all of which are linked to the requirement of higher ethics in business, while, in the broader context, we came to the issue of business sustainability [1,2]. The primary objective of the business is to continue to maximize profits, or, as the case may be, maximize the wealth of the owners and business interest groups. This concept of Smith’s “invisible hand” generates an incentive to constantly grow and expand, which, in the presence of limited natural and capital resources, cannot be infinite. For more than a decade, financial management has been discussing a stronger link between real business and business sustainability, a qualitative shift has been made in implementing the sustainability of financial activities, including promoting social and environmental responsibility [3,4]
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