Models of creation value measurement in different branches of manufacturing industry in Czech Republic

Abstract

The subject of the article is the construction of a model. It is able to measure whether an enterprise is creating or destroying value. However, in the light of our previous research, we do not seek to create a universal model but, on the contrary, we want to create a set of special models that take into account the specificities of different branches. Thus we create three models, especially for the food, mechanical engineering and transportation. In addition to the found differences within the model structure, we also want to discuss their causes, including more general cross-sectoral differences.

We divided each of the surveyed sectors based on the EVA ratio, into the three groups (creating value, destroying value and enterprises that it cannot decide whether they create or destroy the value – so called “grey zone” enterprises). Based on the study of literature, about 40 financial ratios were selected, which are commonly used to evaluate the performance of the company. Using logistic regression, statistically significant differences were identified between the selected financial indicators within the groups of enterprises creating and destroying the value. Calculated statistically significant regression functions represent models capable to distinguish enterprises that create or destroy the value. By retrospectively comparing with the EVA ratio, it is possible to set the limits of the relevant models so that they to the best divided the examined enterprises into three groups (value-creating enterprises, value-destroying enterprises and “grey zone” enterprises).

The aim of the article is to construct value-measuring models in various sectors of the manufacturing industry. We come out from the conclusion that it is very problematic to construct a universal model that is able to measure equally well the value in different sectors. Therefore, on the example of three selected manufacturing industries (namely food, mechanical engineering and transportation). We constructed three models and then compared and discussed the observed differences.

The results confirmed that there are significant differences between the models of value creation within the three sectors, which we studied. Mainly each sector has a different capital structure. For each model, we selected different number of the indicators with using statistical methods to create the optimal model. It was also detected each model has a different limits among groups. This results from the fact that the models are created from different indicators.

First research limit is focusing on only three sectors. In the framework of further research, it will be necessary to construct different models in other sectors as well. Second limit of research is a purely financial focus, which does not allow much to identify and discuss the internal and qualitative differences of the examined enterprises and sectors. It could contribute to further increasing the accuracy of the model. The model is constructed from public available data; this is both the limit and the advantage. On the one hand, it limits its ability to inform the user. On the other it allows wide use without the necessary to know internal data.