Credit Absorption Capacity of Businesses in the Construction Sector of the Czech Republic—Analysis Based on the Difference in Values of EVA Entity and EVA Equity

Jakub Horak, Petr Suler, Jaroslav Kollmann and Jan Marecek
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Jakub Horak: School of Expertness and Valuation, Institute of Technology and Business in Ceske Budejovice, 37001 Ceske Budejovice, Czech Republic
Petr Suler: School of Expertness and Valuation, Institute of Technology and Business in Ceske Budejovice, 37001 Ceske Budejovice, Czech Republic
Jaroslav Kollmann: School of Expertness and Valuation, Institute of Technology and Business in Ceske Budejovice, 37001 Ceske Budejovice, Czech Republic
Jan Marecek: School of Expertness and Valuation, Institute of Technology and Business in Ceske Budejovice, 37001 Ceske Budejovice, Czech Republic

Sustainability, 2020, vol. 12, issue 21, 1-16

Abstract: The contribution deals with the economic value added and its influence on credit absorption capacity. The aim was to determine the significance of the difference between the economic value added (EVA) entity and EVA equity indicators on credit absorption by the construction sector in the Czech Republic. The data came from the Albertina database of Bisnode Czech Republic for the period 2012–2018; small and medium-sized enterprises, in particular, were selected. The most important factor for calculating the amount of credit absorption depends on the EVA entity indicator and the weighted average cost of capital. The calculations produced negative values for credit absorption, which reflects an unattractive investment climate for business owners and their creditors. In other words, loans sought by enterprises in the Czech construction sector do not lead to a greater degree of realization of their goals, i.e., an increase in value for shareholders.

Keywords: credit absorption; economic value added; construction; EVA entity; EVA equity; capital costs (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:21:p:9078-:d:438317

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