Sherlock Holmes Between Homogeneity Tests: Detection Power Based on Profitability Ratios in the V4 Region

Pavol Durana (), Roman Blazek and Erika Kovalova
Additional contact information
Pavol Durana: Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia
Roman Blazek: Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia
Erika Kovalova: Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia

Stats, 2024, vol. 7, issue 4, 1-21

Abstract: Profitability reveals the key financial ratios that ensure the long-term sustainability of an enterprise’s ability to invest in further growth. Without knowledge of the course of development, particularly changes in profitability, enterprises face financial difficulties that threaten their existence. Although the homogeneity tests serve as a reliable tool for identifying changes, their application in financial management often receives insufficient attention. The aim of this research is to evaluate the detection power of homogeneity tests and identify the one with the highest ability based on testing changes in the development of profitability ratios across sectors in the Visegrad Four. Buishand’s test, Pettitt’s test, the SNHT, and the von Neumann test were run for 8671 enterprises during 2016–2021 and gained from Moody’s Orbis. Comparison tables for ROA, ROC, ROE, ROS, ROR, and ROW using Monte Carlo simulation with a million replications identified the number of Slovak, Czech, Polish, and Hungarian enterprises in which heterogeneity was divided according to the Nomenclature of Economic Activities, NACE. The SNHT disclosed the greatest number of changes in the development of all profitability ratios. The results validate the use of selected tests for ratio assessment. Furthermore, business agencies may replicate this approach to determine the economic situation and sector performance.

Keywords: Buishand’s test; change; homogeneity; Pettitt’s test; profitability; SNHT; Visegrad group; von Neumann test (search for similar items in EconPapers)
JEL-codes: C1 C10 C11 C14 C15 C16 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2571-905X/7/4/77/pdf (application/pdf)
https://www.mdpi.com/2571-905X/7/4/77/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jstats:v:7:y:2024:i:4:p:77-1353:d:1511630

Access Statistics for this article

Stats is currently edited by Mrs. Minnie Li

More articles in Stats from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().