Evaluation of sectors’ performance according to EVA: The case of the Czech Republic

© 2020 Published by VŠB-TU Os a a. All igh s ese ed. ER-CEREI, Volume 23: 17–30 (2020). ISSN 1212-3951 (P in ), 1805-9481 (Online) doi: 10.7327/ce ei.2020.03.02 E alua ion o sec o s’ pe o mance acco ding o EVA: The case o he Czech Republic Dagma RICHTAROVÁa * , Ba bo a PTÁČKOVÁb, Ma ina BOROVCOVÁc a, b, c Depa men o Finance, Facul y o Economics, VSB – Technical Uni e si y o Os a a, Sokolská řída 33, 702 00 Os- a a, Czech Republic. Abs ac This pape is dedica ed o a inancial pe o mance analysis. I s aim is o analyse he inancial pe o mance o sec o s o he Czech economy using economic alue added (EVA) and, based on he esul s, o p opose a py amidal de- composi ion o quan i y he indica o s a ec ing EVA. The analysis conside s he pe iod om 2012 o 2019. Based on ou indings, we iden i y he main di isions in luencing he manu ac u ing sec o and, espec i ely, he Czech economy. Fi s , EVA is used o e alua e he inancial pe o mance o sec o s o he Czech economy. The sec o s a e so ed acco ding o he mean alue o EVA. F om ou p e ious esea ch, i is known ha he manu ac u ing sec o is he main d i ing o ce o he Czech economy. Then, he me hod o py amidal decomposi ion is applied and he main componen indica o s a ec ing he EVA o he manu ac u ing sec o a e dis inguished. The in eg al me hod is used o quan i y he in luence o he componen indica o s on EVA. Keywo ds Economic alue added, inancial pe o mance, py amidal decomposi ion JEL classi ica ion: G30, G32 * [email p o ec ed] (co esponding au ho ) This pape was suppo ed by he SGS P ojec VŠB – TU Os a a SP2020/124 Finanční modelo ání a ozhodo ání podniků a inančních ins i ucí za izika, lexibili y a in e akce. Ekonomická e ue – Cen al Eu opean Re iew o Economic Issues 23, 2020 18 E alua ion o sec o s’ pe o mance acco ding o EVA: The case o he Czech Republic Dagma RICHTAROVÁ, Ba bo a PTÁČKOVÁ, Ma ina BOROVCOVÁ 1. In oduc ion The e alua ion o inancial pe o mance belongs o he key ac i i ies o each company while e alua ing i s cu - en s a e and compa ing i wi h i s inancial and s a e- gic goals. A company’s inancial pe o mance is a an- dom p ocess ha can be di ided in o indi idual indica- o s. I can also be e alua ed using accoun ing, eco- nomic o ma ke indica o s. In he pas , adi ional indica o s, such as p o i abil- i y a ios, we e used o analyse inancial pe o mance. These indica o s a e based on accoun ing in o ma ion (see Dluhošo á, 2010; Mařík, 2005; Ve nimmen, 2005). Financial indica o s a e commonly used in co - po a e pe o mance analysis, bu hey can ha dly be used as a complex measu emen ool. One o hei big- ges p oblems is dimensional e alua ion. I is no pos- sible o show a p ope pic u e o he co po a e pe o - mance o he managemen and sha eholde s o a com- pany based on inancial indica o s (Abdoli e al., 2011). Acco ding o o he esea che s, such as Ed insson (1997), Eh ba (1998) and S eiby (2001), adi ional measu es o co po a e pe o mance based on he ac- coun ing p inciples o de e mining income may be un- sui able o he new economic wo ld, whe e compe i- i e ad an ages a e d i en by in ellec ual capi al. The use o adi ional measu es may lead in es o s and o he s akeholde s o make p oblema ic decisions when alloca ing hei esou ces (Fi e and Williams, 2003). Because o he inc easing p essu e on companies o deli e alue o hei sha eholde s, he e has been e- newed emphasis on de ising measu es o co po a e i- nancial pe o mance. The empi ical li e a u e o da e has sugges ed ha he e is no single accoun ing-based measu e upon which changes in sha eholde weal h can be eliably explained (see Chen and Dodd, 1997; Rog- e son, 1997). The accoun ing p o i measu es, such as ea nings pe sha e, e u n on equi y, e u n on asse s o e u n on in es men , a e among he mos commonly used pe - o mance measu es, bu hey a e o en c i icized o no aking he o al cos o he capi al in o accoun and o being in luenced by he accoun ing con en ions (Chen and Dodd, 1997). Many s udies ha e sough an answe o he ques ion o how a company’s inancial pe o mance should be e alua ed. In he pas , a ious au ho s used accoun ing measu es o a company’s inancial pe o mance, such as ROE (Pa elko á, 2009; Rich a o á, 2010; S nado á and Ka as, 2014). In con as o accoun ing indica o s, mode n indica- o s, such as economic alue added, ha e been p o- mo ed as a measu e o a company’s eal p o i abili y. Economic alue added is he only pe o mance meas- u e ha is di ec ly ela ed o he in insic alue o s ock. Fo empi ical es ing, see Biddle, Bowen and Wallace (1997), Chen and Dodd (1997) o Roge son (1997). Economic alue added is p esen ed as a new echnol- ogy o managemen ha helps companies o enhance hei sha eholde alue c ea ion (see Copeland, 1994; Eh ba , 1998; Rappapo , 1986). Nowadays, many esea che s use mode n indica o s o analyse companies’ inancial pe o mance (see Dluhošo á, 2004; Mařík, 2005). The mos widely used mode n indica o , economic alue added, is based on he concep o economic p o i . The e olu ion o eco- nomic p o i has his o ical oo s. Fo ins ance, Ma shall de ined economic p o i in 1890. Based on Ma shall’s s a emen , economic p o i is adically di e en om he accoun ing measu es o p o i in use oday, such as EBIT o ne ope a ing income (G an , 2003). When he economic p o i is posi i e, i means ha he company ea ns mo e han he weigh ed a e age cos o he capi- al, which also means ha some weal h is c ea ed o he sha eholde s. Acco ding o G an (2003), he heo y o economic alue added es s on wo p inciples. A company is no p o i able unless i ea ns a e u n on he in es ed capi al ha exceeds he oppo uni y cos o he capi al, and weal h is c ea ed when he company managemen makes a posi i e NPV in es men decision o he sha eholde s. On he o he hand, acco ding o hese s udies, he inancial pe o mance o a company is analysed gene - ally. I is e y impo an o iden i y he main in luenc- ing ac o s and o quan i y he impac o he componen indica o s. Tha is why i is app op ia e o apply he me hod o py amidal decomposi ion oge he wi h he analysis o de ia ion o measu e inancial pe o mance. Decomposi ion analysis helps o analyse he ac o s a ec ing selec ed key measu es and o quan i y hei impac on he key measu es. The me hod o py amidal decomposi ion is usually used o quan i y he impac o D. Rich a o á, B. P áčko á, M. Bo o co á – E alua ion o he pe o mance o sec o s acco ding o EVA: The case o he Czech Republic 19 he componen indica o on he change in he base indi- ca o (Gu ný, Rich a o á and Čulík, 2017). This me hod also allows s udies o iden i y he in e ac ions and ela ionships among he componen indica o s. Du Pon analysis, as a common me hod o py ami- dal decomposi ion, is one o he o ms o inancial s a emen analysis ha decomposes inancial indica o s in o hei componen indica o s. The concep o he Du Pon model was i s designed in 1918 by F. Donaldson B own. He ecognized ha a ma hema ical ela ionship exis ed be ween commonly compu ed indica o s, he ne p o i , he o al asse u no e and he ROA. This was he o iginal Du Pon model (Doo asamy, 2016). In he 1970s, he ocus shi ed om he ROA o he ROE, which led o he i s modi ica ion o he o iginal Du Pon model (Gi man, 1998). The modi ied Du Pon model became a s anda d o all inancial indica o analysis (B igham and Hous on, 2001; Zalai, 2002). I is possible o apply Du Pon analysis o o he inancial indica o s, such as economic alue added (Gu ný, Rich a o á and Čulík, 2017; Rich a o á, 2016). Py amidal decomposi ion is an impo an pa o i- nancial analysis, especially when analysing a com- pany’s p o i abili y o sha eholde s; o example, he Du Pon analysis o he e u n on equi y (ROE) decom- poses he ROE in o o he indica o s, e e ed o as com- ponen indica o s. While a change in any o he compo- nen indica o s shows an ob ious change in he decom- posed indica o , he obse ed change is gi en by he change in all he componen indica o s simul aneously, and he ques ion is which indica o ep esen s he main eason o such a change. The me hods o inancial pe o mance analysis a e usually applied o companies, bu hese companies a e analysed sepa a ely, ega dless o he sec o in which hey ope a e. Mos au ho s ha e add essed he issue o company pe o mance alua ion, bu only a ew publi- ca ions ha e conside ed indus y pe o mance alua- ion; see Bo o co á and Rich a o á (2020) and Dluhošo á, P áčko á and Rich a o á (2018), whose conclusions we will ex end in his a icle. The aim o his pape is o analyse he inancial pe - o mance o sec o s o he Czech economy using EVA and, based on he esul s, o p opose a py amidal de- composi ion o quan i y he indica o s a ec ing EVA. The analysis ocuses on he pe iod 2012 o 2019. Based on ou indings, we iden i y he main di isions in lu- encing he manu ac u ing sec o and, espec i ely, he Czech economy. The pape is s uc u ed as ollows. Fi s , economic alue added is cha ac e ized as a inancial pe o mance measu e. Then, he py amidal decomposi ion o EVA is p oposed. To unde ake an in-dep h analysis o he componen indica o s’ impac on he base indica o , he analysis o de ia ions is applied. In his pape , he in e- g al me hod is used o quan i y he impac o he com- ponen indica o s on he base indica o . Finally, he e- sul s o he inancial pe o mance analysis a e summa- ized and discussed. 2. E alua ion o inancial pe o mance The me hodological pa o he pape is di ided in o wo subchap e s. In he i s pa , economic added alue is used as a measu e o e alua ing he inancial pe o - mance o selec ed sec o s o he Czech economy. The second pa ocuses on he py amidal decomposi ion and he analysis o de ia ions. Then, py amidal decom- posi ion o economic alue added is p oposed and he in eg al me hod is desc ibed as one o he me hods o he analysis o de ia ions ha se es o quan i y he in- luence o he componen inancial indica o s. 2.1 Economic alue added (EVA) The e a e many ways in which economic alue added can be exp essed. Acco ding o G an (2003), he e is an accoun ing way and a inance way o de ining eco- nomic alue added. F om a inance pe spec i e, eco- nomic alue added is de ined in e ms o how i ela es o he company’s ma ke alue added. In his con ex , a company’s ma ke alue added o ne p esen alue is equal o he p esen alue o i s expec ed u u e eco- nomic alue added. Economic alue added is based on he concep o economic p o i . When he economic p o i is posi i e, he company ea ns mo e han he weigh ed a e age cos o capi al, which also means ha some weal h is c ea ed o he sha eholde s. One way o de ining economic alue added de- sc ibes i as he di e ence be ween a company’s ne op- e a ing p o i a e axes (NOPAT) and i s weigh ed a - e age cos o capi al. B igham (2001) also calcula ed economic alue added using he ollowing basic o - mula: 𝐸𝑉𝐴 = 𝑁𝑂𝑃𝐴𝑇 − 𝑊𝐴𝐶𝐶 ∙ 𝐶, (1) whe e NOPAT is he company’s ne ope a ing p o i a - e axes, WACC is he weigh ed a e age cos o capi al and C is he capi al. Acco ding o Eh ba (1998), Mařík (2005) and Ve - nimmen (2005), economic alue added can also be ex- p essed as ollows: 𝐸𝑉𝐴 =(𝑅𝑂𝐸 − 𝑅𝐸)∙ 𝐸, (2) whe e ROE is he e u n on equi y, RE is he cos o eq- ui y and E is he equi y. In his case, he di e ence be- ween ROE and RE is called he sp ead. The sp ead is a e y impo an pa ame e in luencing EVA. I he Ekonomická e ue – Cen al Eu opean Re iew o Economic Issues 23, 2020 20 sp ead is posi i e, i means ha he indus y o com- pany ea ns mo e han he cos o he equi y. This ex- p ession o economic alue added is used o e alua e he inancial pe o mance o indi idual sec o s o he Czech economy. 2.2 Desc ip ion o he py amidal decomposi ion o economic alue added and he analysis o de i- a ions The py amidal decomposi ion helps o iden i y he e- la ionships be ween inancial indica o s and o quan i y he impac o he componen indica o s on he base in- dica o (Dluhošo á, 2010). The e a e many ways o de- compose economic alue added in o i s componen i- nancial indica o s. Fo he analysis o economic alue added, we p o- pose he ollowing py amidal decomposi ion (see Fig- u e 1). The i s le el o he decomposi ion is based on he alue o equi y and he sp ead. The sp ead is de e - mined as he di e ence be ween he e u n on equi y and he cos o capi al. A he lowe le els o he de- composi ion, a en ion is paid o a deepe analysis o he e u n on equi y. Selec ed inancial indica o s analyse he ne p o i gene a ion, e u n on asse s and inancial le e age. The main componen s o he decomposi ion a e highligh ed. Fo an in-dep h analysis o he impac o he com- ponen indica o s on he base indica o , i is use ul o apply he analysis o de ia ions. Th ough his analysis, i is possible o quan i y he impac o he changes in he componen indica o s on he base indica o (Zmeškal, 2013). Using py amidal decomposi ion o- ge he wi h he analysis o de ia ion helps no only o iden i y he ela ionships be ween he inancial indica- o s bu also o quan i y he impac o he selec ed indi- ca o s on he base indica o . Gene ally, any base indica o x can be exp essed as a unc ion o he componen indica o s ai, ha is, 𝑥 = 𝑓(𝑎1, 𝑎2… 𝑎𝑛). (3) The change in he base indica o can be de e mined as he sum o he in luences o he componen indica- o s, ∆𝑦𝑥=∑∆𝑥𝑎𝑖 𝑖, (4) whe e x is he base indica o , Δyx is he change in he base indica o , ai is he i- h componen indica o and Δxai is he impac o he i- h componen indica o on he change in he base indica o . Among he indica o s, i is possible o dis inguish be ween wo ope a ions – he addi i e ela ionship and he mul iplica i e ela ionship (Zmeškal, 2013). The addi i e ela ionship can be exp essed as 𝑥 = ∑𝑎𝑖= 𝑎1+ 𝑎2+ ⋯ + 𝑎𝑛. 𝑖 (5) The quan i ica ion o he impac unde he addi i e ela ionship is gene ally applicable, and he o al im- pac is di ided in p opo ion o he changes in he com- ponen indica o as ollows: ∆𝑥𝑎𝑖=∆𝑎𝑖 ∑∆𝑎𝑖𝑖 ∙ ∆𝑦𝑥, (6) whe e Δai = ai,1 – ai,0, ai,0 is he alue o he i- h com- ponen indica o a he beginning o he analysed pe iod and ai,1 is he alue o he i- h componen indica o a he end o he analysed pe iod. The mul iplica i e ela ionship can be exp essed as ollows: 𝑥 = ∏𝑎1𝑖 = 𝑎1∙ 𝑎2∙ … ∙ 𝑎𝑛. (7) Acco ding o he way in which he mul iplica i e ela ionship is handled, we can dis inguish i e basic me hods: a me hod o g adual changes, a decomposi- ion me hod wi h a esidue, a loga i hmic me hod, a unc ional me hod and an in eg al me hod (Zmeškal, 2015). In his pape , he in eg al me hod is used o quan i y he impac o he componen indica o s on he base in- dica o . While, in he pas , he in luence o he compo- nen indica o s on he base indica o was calcula ed ac- co ding o he loga i hmic o unc ional me hod (Dluhošo á, 2004; Rich a o á, 2007), nowadays, he in eg al me hod is mo e o en applied (see Dluhošo á and Zmeškal, 2014; Gu ný, Rich a o á and Čulík, 2017). The ad an age o his me hod is ha i can e- lec simul aneous changes in all he analysed indica- o s. The e a e no p oblems o he indica o anking and a ising o esidues. The p oblem o nega i e alues o he indica o s, one o he disad an ages o he loga i h- mic me hod, does no occu . I is also possible o ana- lyse non-linea ope a ions, and he in e p e a ion can be easie and clea e (Zmeškal, 2013). Acco ding o Dluhošo á and Zmeškal (2014), he p ocedu e o he in eg al me hod is analogical o ha o he loga i hmic me hod; he only di e ence is ha he linea componen o he Taylo se ies app oxima ion is applied, and he esul ing in luence quan i ica ion o any componen indica o is exp essed as D. Rich a o á, B. P áčko á, M. Bo o co á – E alua ion o he pe o mance o sec o s acco ding o EVA: The case o he Czech Republic 21 - . . . ++ + EAT/EBT EBT/EBIT EBIT/R R/A EAT/E Eo he /E EAT/EBIT . EBIT/A A/E EVA ROE RE SPREAD . L/E OL/E E Figu e 1 Economic alue added – py amidal decomposi ion No a ion used: E – equi y, EAT – ea nings a e ax, EBIT – ea nings be o e in e es and ax, EBT – ea nings be o e ax, A – asse s, R – e enues, Eo he – o he equi y (E-EAT), L – liabili ies, OL – o he liabili ies and RE – cos o equi y, which a e de e mined acco ding o a build-up model om he Minis y o Indus y and T ade o he Czech Republic. 𝛥𝑥𝑎𝑖=𝑅𝑎𝑖 𝑅𝑥´⋅ 𝛥𝑦𝑥, (7) whe e 𝑅𝑎𝑖=𝛥𝑎𝑖 𝑎𝑖,0 and 𝑅𝑥′=∑𝑅𝑎𝑖. 𝑁 𝑖=1 3. Applica ion The applica ion sec ion o his pape is di ided in o ou pa s. A e in oducing he inpu da a, he EVA analy- sis o he sec o s o he Czech ecqonomy is pe o med. Acco ding o he mean alues o EVA, he ou sec o s wi h he highes posi i e and nega i e EVA a e iden i- ied. Then, he py amidal decomposi ion me hod is ap- plied and he main ac o s in luencing EVA a e ound. The nex pa is dedica ed o he analysis o he manu- ac u ing sec o as he mos impo an sec o o he Czech economy. 3.1 Inpu da a The his o ical da a o economic alue added and i s de- elopmen in he selec ed sec o s o he Czech Republic a e a ailable on he websi e o he Minis y o Indus y and T ade o he Czech Republic. Table 1 in he appen- dix shows he de elopmen o EVA in he selec ed sec- o s o he Czech Republic in he pe iod 2012–2019. Annual da a a e used o he analysis. The indi idual sec o s a e ma ked acco ding o he CZ_NACE classi- ica ion. These a e A: Ag icul u e, Fo es y and Fish- ing; B: Mining and qua ying; C: Manu ac u ing; D: Elec ici y, Gas, S eam and Ai Condi ioning Supply; E: Wa e Supply; Sewe age, Was e Managemen and Remedia ion Ac i i ies; F: Cons uc ion; G: Wholesale and Re ail T ade; Repai o Mo o Vehicles and Mo o - cycles; H: T anspo a ion and S o age; I: Accommoda- ion and Food Se ice Ac i i ies; J: In o ma ion and Communica ion; L: Real Es a e Ac i i ies; M: P o es- sional, Scien i ic and Technical Ac i i ies; and N: Ad- minis a i e and Suppo Se ice Ac i i ies. 3.2 Analysis o indi idual sec o s’ economic alue added This pa is dedica ed o he EVA analysis o he sec o s o he Czech economy. Table 1 in he appendix shows he EVA alues o he sec o s o he analysed pe iod 2012–2019. Mos sec o s, such as sec o s B, E, F, H and L, gene a ed nega i e EVA alues. On he con a y, sec o s C and J showed posi i e economic alue added h oughou he pe iod unde e iew. Since 2016, he economic alue added o sec o J has been inc easing, and he highes alue was eached in 2019. This sec o includes he p oduc ion and dis ibu ion o in o ma ion and cul u al p oduc s and he p o ision o means o he ansmission o dis ibu ion o hese p oduc s, as well as da a o communica ion, IT ac i i ies and da a p o- cessing and o he in o ma ion se ice ac i i ies. Sec o C (Manu ac u ing) c ea ed he highes economic alue added be ween 2015 and 2017. I can be desc ibed as he d i ing o ce o he Czech economy. Fo he analysis, he mean alue o EVA o all he sec o s is de e mined. Based on he esul s, he sec o s a e anked; see Figu e 2. Fo a deepe analysis, he ou sec o s wi h he highes posi i e EVA and he ou sec- o s wi h he highes nega i e EVA a e selec ed. Ekonomická e ue – Cen al Eu opean Re iew o Economic Issues 23, 2020 22 Figu e 2 Mean alues o EVA ( housand CZK) The sec o s wi h he highes nega i e mean alue o EVA include sec o s L, H, G and E. This is because o hei low alue o equi y and he nega i e alue o sp ead. The e u n on equi y was much lowe han he cos o he capi al. By con as , he sec o s wi h he highes posi i e mean alues o EVA a e C, J, D and M. Figu e 3 shows he de elopmen o he economic alue added o sec o s C, D, J and M as he sec o s ha gene a ed he highes posi i e mean alue o EVA. Sec- o C (Manu ac u ing) gene a ed he posi i e economic alue added h oughou he analysed pe iod. EVA ol- lowed an upwa d end om 2013 o 2015 and has been declining since hen. The decline o EVA is due o a lowe e u n on equi y caused by a educ ion in he ne p o i , mainly he ope a ing p o i . On he con a y, sec- o D (Elec ici y, Gas, S eam and Ai Condi ioning Supply) gene a ed he highes EVA in he i s yea o he analysed pe iod. In he ollowing yea s, he EAT dec eased signi ican ly (by mo e han 50% be ween 2013 and 2014), which led o a signi ican educ ion in he ROE, esul ing in a nega i e sp ead alue. Since 2016, he e has been an inc ease in ex e nal esou ces. The highe le e age has had a posi i e impac on EVA, which eached posi i e alues in 2019. Sec o J (In o - ma ion and Communica ion) gene a ed a posi i e EVA h oughou he analysed pe iod, despi e he decline be- ween 2012 and 2014, and i has inc eased s eadily since 2015. This inc ease in EVA was due o he highe ne p o i , which had a posi i e impac on he e u n on equi y. In 2012, sec o M (P o essional, Scien i ic and Technical Ac i i ies) gene a ed he highes nega i e EVA. Since ha yea , he ne p o i and e u n on equi y ha e inc eased, exe ing a posi i e e ec on EVA. In 2017–2018, he esul ing EVA was a ec ed by a sig- ni ican dec ease in he ne p o i due o a decline in sales. In 2019, sec o M had al eady gene a ed a posi- i e EVA because he ne p o i inc eased and hus he e u n on he equi y exceeded he cos o he capi al em- ployed. Figu e 4 shows he de elopmen o he EVA o he sec- o s, including sec o s E, G, H and L as he sec o s ha gene a ed he highes nega i e mean alue o EVA. Figu e 3 EVA– selec ed sec o s wi h he highes posi i e mean alues o EVA ( housand CZK) -50000000 050000000 100000000 C J D M N I A F B E G H L Mean alue o EVA Sec o s -40000000 -20000000 0 20000000 40000000 60000000 80000000 100000000 120000000 2012 2013 2014 2015 2016 2017 2018 2019 EVA Analysed pe iod C D J M D. Rich a o á, B. P áčko á, M. Bo o co á – E alua ion o he pe o mance o sec o s acco ding o EVA: The case o he Czech Republic 23 Figu e 4 EVA– selec ed sec o s wi h he highes nega i e mean alue o EVA ( housand CZK) Sec o s E (Wa e Supply; Sewe age, Was e Man- agemen and Remedia ion Ac i i ies), F (Cons uc- ion), H (T anspo a ion and S o age) and L (Real Es- a e Ac i i ies) gene a ed a nega i e alue o EVA du - ing he analysed pe iod. I was a ec ed by a nega i e alue o he sp ead. Only sec o G (Wholesale and Re- ail T ade; Repai o Mo o Vehicles and Mo o cycles) was able o gene a e a posi i e EVA in he yea s 2016 and 2018, when he e u n on he equi y was highe han he cos o equi y. Indus ial p oduc ion plays an impo an ole in e alua ing he pe o mance o he Czech economy. Ac- co ding o CZ-NACE, ac i i ies classi ied in o sec o s B (Mining and Qua ying), C (Manu ac u ing), D (P o- duc ion and Dis ibu ion o Elec ici y, Gas, Hea and Ai Condi ioning) and E (Wa e Supply; Ac i i ies Re- la ed o Was ewa e , Was e and Remedia ion) a e con- side ed as indus ial. The analysis showed ha sec o s C and D gene a ed a posi i e mean alue o EVA and sec o s B and E, on he con a y, p oduced nega i e al- ues. Figu e 5 shows he de elopmen o EVA o he in- dus y as a whole and o he sec o s ha a e pa o i . The manu ac u ing sec o (C) has he la ges sha e in he esul ing economic alue added o indus y. Figu e 5 EVA– sec o s o indus y ( housand CZK) -30000000 -25000000 -20000000 -15000000 -10000000 -5000000 0 5000000 10000000 2012 2013 2014 2015 2016 2017 2018 2019 EVA Analysed pe iod E G H L -40000000 -20000000 0 20000000 40000000 60000000 80000000 100000000 120000000 2012 2013 2014 2015 2016 2017 2018 2019 EVA Analysed pe iod B C D E Indus y Ekonomická e ue – Cen al Eu opean Re iew o Economic Issues 23, 2020 24 Table 2 Fi s le el o decomposi ion o EVA – selec ed sec o s ( housand CZK) Indica o s C D J M E G H L ∆ EVA 24 396 253 -45 574 482 7 213 430 23 057 030 -1 529 667 19 350 701 11 302 654 -2 326 717 ∆ E 22 758 122 -45 033 439 6 824 913 16 246 398 729 194 28 686 715 14 047 142 2 305 399 ∆ SPREAD 1 638 131 -541 042 388 517 6 810 632 622 472 -9 336 014 -2 744 488 -4 632 117 3.3 Py amidal decomposi ion o EVA o sec o s C and D The py amidal decomposi ion me hod is used o pe - o m a deepe analysis o he ac o s in luencing he economic alue added o he selec ed sec o s. The py- amidal decomposi ion is pe o med as shown in Figu e 1. The in eg al me hod is used o quan i y he e ec s acco ding o o mula (7). Table 2 shows he change in EVA, equi y and sp ead in he selec ed sec o s be ween 2012 and 2019. The i s le el o his decomposi ion quan i ies he impac o he equi y and sp ead on he economic alue added. The la ges inc ease in he economic alue added be ween 2012 and 2019 occu ed in sec o C, when i inc eased om CZK 2.73 billion o CZK 27.13 billion, a o al inc ease o CZK 24.4 billion. The g ow- ing end o economic alue added was in luenced by he ising equi y and sp ead alues. Equi y g ew as e han loans and liabili ies. The g owing sp ead signals a g ea e app ecia ion o equi y han he cos s incu ed. Sec o C (Manu ac u ing) was able o inc ease i s ne p o i du ing he analysed pe iod, which had a posi i e e ec on he inal alue o EVA. On he o he hand, he la ges decline was eco ded in sec o D (Elec ici y, Gas, S eam and Ai Condi ion- ing), in which he economic alue added ell by CZK 45.58 billion, om CZK 47.98 billion o CZK 2.4 bil- lion. The eason o his dec ease was a lowe alue o gene a ed p o i caused by a dec ease in sales. In he yea s 2014 o 2018, i eached a numbe o nega i e alues, when he cos o he capi al exceeded he e u n on his capi al, which caused a dec ease in EVA. In 2019, he sec o had al eady c ea ed posi i e economic alue added h ough g ea e s eng hening o equi y. Fo a deepe analysis o inancial pe o mance, he py amidal decomposi ion me hod was applied o all he sec o s lis ed in Table 2. The in luence o he compo- nen indica o s is shown in Figu e 6 and Figu e 7 in he appendix. The py amidal decomposi ion e ealed ha he o de and magni ude o he in luences a e changing. A posi i e in luence means ha , i he in luence o he componen indica o inc eases, hen he EVA alue in- c eases. On he o he hand, a nega i e in luence esul s in a dec ease. As sec o s C and D signi ican ly a ec he pe o - mance o indus y, Table 3 shows he in luences o he selec ed componen indica o s on he EVA indica o s. The py amidal decomposi ion e ealed ha he o de and magni ude o he in luences o he componen indi- ca o s o sec o s C and D a e changing. The py amidal decomposi ion o EVA e ealed ha , in sec o C, he alue o equi y had he g ea es posi i e e ec on he change in EVA. The cos o equi y is ano he indica o ha had a posi i e e ec on he change in EVA, and he EAT/EBT indica o was he indica o wi h he hi d-la ges in luence, bu his indi- ca o had he opposi e e ec as i educed EVA. Table 3 Componen indica o s o EVA – sec o s C and D ( housand CZK) C D Indica o s In luence O de o in luences In luence O de o in luences RE 1 769 182 2 (+) 30 828 7 (+) EAT/EBT -355 804 3 (-) 32 429 6 (+) EBT/EBIT 244 861 4 (+) 712 10(+) EBIT/R -8 737 7 (-) -3 025 9 (-) R/A -28 533 5 (-) -26 141 8 (-) EAT/E 446 8 (+) 547 032 3 (+) O he E/E -446 9 (-) -547 032 4 (-) L/E 17 569 6 (+) -931 871 2 (-) O he L/E -406 10 (-) 356 026 5 (+) E 22 758 122 1 (+) -45 033 439 1 (-) D. Rich a o á, B. P áčko á, M. Bo o co á – E alua ion o he pe o mance o sec o s acco ding o EVA: The case o he Czech Republic 25 In sec o D, wo indica o s had he la ges nega i e impac on he EVA indica o : he alue o equi y and he sha e o liabili ies in he equi y. Bo h indica o s e- duced he alue o EVA in he pe iod unde e iew. On he con a y, he EAT/E indica o had a posi i e impac . The analysis showed ha , in bo h sec o s, ou com- ponen indica o s had a posi i e e ec on he economic alue added, he cos o capi al, he EBT/EBIT indica- o and he EAT/E indica o and he sha e o he o he componen s o equi y in he o e all equi y. Th ee ac- o s had he opposi e e ec on he alue o EVA in sec- o s C and D. The indica o o liabili ies in he equi y caused a dec ease in he economic alue added in sec o D and an inc ease in sec o C. The EAT/EBT indica o and he sha e o o he liabili ies in he equi y inc eased he EVA indica o s in sec o D and con e sely educed he alue o EVA in sec o C. The analysis o de ia ions e ealed ha se en com- ponen indica o s had he same impac on he economic alue added in bo h sec o s. Only h ee indica o s had he opposi e e ec . Equi y had he bigges in luence on he change in EVA, which inc eased in sec o C and dec eased in sec o D (see Table 3). 3.4 Main ac o s in luencing he EVA o manu- ac u ing Acco ding o ou analysis, one o he mos impo an sec o s o he Czech economy is he manu ac u ing sec- o . The manu ac u ing sec o con ains 24 di isions, which ha e CZ_NACE code numbe s. An EVA analy- sis o each di ision in he pe iod 2008–2017 can be ound in he s udy by Rich a o á and P áčko á (2019). In his pape , he analysed pe iod was changed o 2012– 2019. Fi s , he economic alue added was calcula ed o all he di isions o sec o C. Then, he di isions we e classi ied acco ding o he mean alues o EVA. The di isions wi h he la ges nega i e mean alues o EVA include di ision 24 (Manu ac u e o Basic Me als, Me allu gy; Cas ing o Me als), 10 (Manu ac- u e o Food P oduc s) and 26 (Manu ac u e o Com- pu e , Elec onic and Op ical P oduc s). These nega i e alues o EVA we e caused by he low alue o equi y and he nega i e alue o he sp ead. The e u n on cap- i al was much lowe han he cos o capi al. In con as , he di isions wi h he highes posi i e mean alues o EVA a e 22 (Manu ac u e o Rubbe and Plas ic P od- uc s), 27 (Manu ac u e o Elec ical Equipmen ) and 29 (Manu ac u e o Mo o Vehicles (Excep Mo o cycles), T aile s and Semi- aile s). Fo a deepe analysis o he economic alue added o sec o C, he py amidal decomposi ion was used, as shown in Figu e 1. The h ee di isions wi h he highes mean alue o EVA we e selec ed. Table 4 con ains hese selec ed di isions’ EVA in he analysed pe iod. Di isions 22 and 29 c ea ed posi i e economic alue added du ing he analysed pe iod. Only in di i- sion 27 did he economic alue added each nega i e alues, which occu ed in he yea s 2018 and 2019. These nega i e alues we e due o a lowe e u n on capi al and a ising cos o capi al. The eason o he dec easing ROE was mainly he signi ican dec ease in he ope a ing p o i . The economic alue added o di i- sions 22 and 27 dec eased du ing he analysed pe iod, while he EVA indica o o di ision 29 inc eased. Figu e 8 shows he alues o de ia ion o he com- ponen indica o s o he selec ed di isions’ EVA (29, 22 and 27) o sec o C (Manu ac u ing), which had he highes posi i e economic alue added in he pe iod 2012–2019. Table 4 EVA – selec ed di isions o sec o C ( housand CZK) 2012 2013 2014 2015 2016 2017 2018 2019 C 2 731 592 5 940 525 77 086 034 106 443 249 90 018 849 90 941 304 41 855 681 27 127 845 22 8 482 070 10 663 137 15 285 525 19 632 581 19 964 189 12 810 204 4 293 218 5 665 939 27 3 537 431 4 711 551 8 124 412 10 255 171 8 073 676 3 556 955 -1 452 854 -1 216 991 29 9 720 537 4 686 415 26 214 400 42 528 321 38 436 256 36 398 356 19 857 102 22 170 441