IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v17y2024i8p338-d1450153.html
   My bibliography  Save this article

The Impact of Selected Financial Ratios on Economic Value Added: Evidence from Croatia

Author

Listed:
  • Robert Zenzerović

    (Faculty of Economics and Tourism “Dr. Mijo Mirković”, Juraj Dobrila University of Pula, 52100 Pula, Croatia)

  • Manuel Benazić

    (Faculty of Economics and Tourism “Dr. Mijo Mirković”, Juraj Dobrila University of Pula, 52100 Pula, Croatia)

Abstract

Traditional financial performance measures should be extended to provide additional information to stakeholders. One such extension is the economic value added (EVA). It shows residual profit above the cost of financing, both creditors and equity financing. This paper elaborates on the impact of selected financial ratios on EVA to total assets and EVA to capital employed using the 20-year aggregated data of non-financial business entities operating in Croatia. It answers the research question of which of the selected financial ratios impacts the above-mentioned EVA-based ratios. Applying dynamic panel data modeling using the generalized method of moments technique resulted in the derivation of two models. The human capital efficiency ratio was statistically significant in both models, positively affecting EVA/total assets and EVA/capital employed. In contrast, the debt ratio and net profit margin were significant only in the second model, where EVA/capital employed was a dependent variable. The research results indicate that the debt ratio affects EVA/capital employed negatively while the net profit margin has a positive effect, confirming the existing research. Total liabilities/earnings before interest, taxes, depreciation and amortization, and total asset turnover were not found to be significant in either of the two models.

Suggested Citation

  • Robert Zenzerović & Manuel Benazić, 2024. "The Impact of Selected Financial Ratios on Economic Value Added: Evidence from Croatia," JRFM, MDPI, vol. 17(8), pages 1-9, August.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:8:p:338-:d:1450153
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/17/8/338/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/17/8/338/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sabol, Andrija & Sverer, Filip, 2017. "A Review Of The Economic Value Added Literature And Application," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 8(1), pages 19-27.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Teodora Maria SUCIU, 2022. "Modern Model For Analysis Of Performance In Romanian Clothing Industry Based On Economic Value Added," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 7(2), pages 17-26.
    2. Alessio Faccia & Francesco Manni & Fabian Capitanio, 2021. "Mandatory ESG Reporting and XBRL Taxonomies Combination: ESG Ratings and Income Statement, a Sustainable Value-Added Disclosure," Sustainability, MDPI, vol. 13(16), pages 1-17, August.
    3. Dana Dluhosova & Karolina Lisztwanova & Antonín Poncik & Iveta Ratmanová & Zdenek Zmeskal, 2022. "Dynamic and Static Decomposition Analysis of the Czech Automotive Production Sector," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 84-95.
    4. Juan David González-Ruiz & Maria Isabel Acosta-García & Ramón Villa-García, 2021. "Financial Behaviour in a Mandatory Conversion Process: Empirical Evidence from Colombia," Global Business Review, International Management Institute, vol. 22(1), pages 69-84, February.
    5. Roristua Pandiangan & Etty Murwaningsari, 2020. "Effect of Investment Decision and Tax Management on Stock Liquidity," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(3), pages 64-77, July.
    6. Christopher Robinson & Scott Cloutier & Hallie Eakin, 2017. "Examining the Business Case and Models for Sustainable Multifunctional Edible Landscaping Enterprises in the Phoenix Metro Area," Sustainability, MDPI, vol. 9(12), pages 1-28, December.
    7. Kateřina Jančíková & František Milichovský, 2019. "HR Marketing as a Supporting Tool of New Managerial Staff in Industry 4.0," Administrative Sciences, MDPI, vol. 9(3), pages 1-12, August.
    8. Askoldas Podviezko & Ralph Kurschus & Giedre Lapinskiene, 2019. "Eliciting Weights of Significance of Criteria for a Monitoring Model of Performance of SMEs for Successful Insolvency Administrator’s Intervention," Sustainability, MDPI, vol. 11(20), pages 1-16, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:17:y:2024:i:8:p:338-:d:1450153. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.