Automotive industry has a strong tradition in Slovakia. It has become the most important industrial sector and the driving force of the Slovak economy. Car manufacturing is a sophisticated system of interconnected enterprises working together in a supply network or chain. Even small changes in production in this complex might have a huge impact on the whole sector. Basically, DuPont system are well-known analysis used to evaluate companies from financial performance point of view. The economic theory states that capital structure and leverage ratio can significantly affect Return on assets (ROA) and Return on equity (ROE) during the crises. A specific feature is that small change in ROA is reflected in a significant change in ROE. Moreover, effect of leverage ratio is stronger the higher is the share of foreign capital. Therefore the aim of this study is to point out the changes of ROA and ROE due to COVID-19 and energetic crisis among the biggest supplier for Slovak automotive industry. Using the correlation and comparative method for the analysing period 2018–2022 we show that the main impact on decreasing of the profitability on assets and equity is in decreased sale which caused subsequently the lack of liquidity as the result of decreased profit. The paper might allow the management to perceive the magnitude of liquidity risk and improve their decision during crisis.

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Du-Pont System Analyses of ROA and ROE to Highlight COVID-19 and Energetic Crisis Impact

  • Monika Kleinová

摘要

Automotive industry has a strong tradition in Slovakia. It has become the most important industrial sector and the driving force of the Slovak economy. Car manufacturing is a sophisticated system of interconnected enterprises working together in a supply network or chain. Even small changes in production in this complex might have a huge impact on the whole sector. Basically, DuPont system are well-known analysis used to evaluate companies from financial performance point of view. The economic theory states that capital structure and leverage ratio can significantly affect Return on assets (ROA) and Return on equity (ROE) during the crises. A specific feature is that small change in ROA is reflected in a significant change in ROE. Moreover, effect of leverage ratio is stronger the higher is the share of foreign capital. Therefore the aim of this study is to point out the changes of ROA and ROE due to COVID-19 and energetic crisis among the biggest supplier for Slovak automotive industry. Using the correlation and comparative method for the analysing period 2018–2022 we show that the main impact on decreasing of the profitability on assets and equity is in decreased sale which caused subsequently the lack of liquidity as the result of decreased profit. The paper might allow the management to perceive the magnitude of liquidity risk and improve their decision during crisis.