DIFFERENT APPROACHES TO THE EBIT CONSTRUCTION AND THEIR IMPACT ON CORPORATE FINANCIAL PERFORMANCE BASED ON THE RETURN ON ASSETS: SOME EVIDENCE FROM CZECH TOP100 COMPANIES

The paper discusses ways of measuring the financial performance of businesses. The aim is to determine to what extent the form of profit calculation influences value of return on assets (hereinafter referred to as 'ROA'), which is frequently used as an indicator for measuring financial performance. The theoretical part is focused on the comparative analysis of accounting data based on Czech practices and IFRS with the in-depth focus on interest charges and reporting requirements. There is discussed the topic of objective and subjective measurement of financial performance. In the practical part, ROA is calculated using a profit in two forms of its construction. There are evaluated TOP 100 Czech companies in order to assess the differences in the final values of the tested indicator. The results are linked to the capital structure of the analysed companies and prove that the level of indebtedness influences the difference in the ROA calculations when different kinds of profit are used. In the case of the companies with higher indebtedness, it is more appropriate to compare the ROA indicators based on the nominator containing earnings before interest and taxes. It shall be concluded that this is a pioneer study of this topic in the Czech Republic and probably also in the CEE region.

Перевод пока недоступен