Factors Determining Profi tability of Small and Medium Enterprises in Selected Industry of Mechanical Engineering in the Slovak Republic – the Empirical Study

Abstract

The profi tability analysis revealing factors infl uencing profi tability becomes a very helpful tool providing guidelines for managers in their short-term as well as strategic decision-making process. To take right decisions, managers need to analyse their fi nancial situation, especially in respect to fi rm´s profi tability and the factors infl uencing it. Mechanical engineering industry belongs to key industries in Slovakia. It apparently plays an essential role in the global economy, it is a source of entrepreneurship, innovations and new jobs. Many of enterprises operating in this industry are small or medium-sized. These are some of the reasons for which SMEs´ profi tability and ways of its improvement should draw particular attention. The paper presents results of research carried out in the selected industry of mechanical engineering of SMEs in Slovakia (SK NACE rev. 2 28xxx-Manufacture of machinery and equipment not elsewhere classifi ed). The aim of the research is to analyse and evaluate the development of profi tability in this industry during the period 2008-2015 and to identify key external and internal factors infl uencing profi tability of SMEs over that period. In order to determine the infl uence of basic indicators, the DuPont pyramidal analysis was performed. Data obtained by means of the questionnaire survey enabled to identify the factors affecting profi tability whose infl uence is impossible to calculate. The Friedman and Wilcoxon tests were used to evaluate the answers in questionnaires. Results are connected with the evaluation of three hypotheses defi ned in regard of the established goal of the paper.

Emergent Strategy in the COVID-19 Situation: A Case Study of Tatuis

“…To make the right decisions, managers need to analyze the company's financial condition, especially profitability, and the factors. The measurement of profitability is most precisely measured based on the profitability indicators construction because the profitability ratio shows the efficiency of all business activities (Lesakova 2019). Some of the dimensions commonly used in performance measurement are efficiency, growth, profit, size, liquidity, market share, leverage, and others (Neely 1998).…”

“…There are five ratios: liquidity, profitability, activity, solvency, and investment valuation ratios (IAI 2019). In this case, measuring company performance for financial health aspects can be viewed from the profitability ratio (Lesakova 2019), and the activities ratio is still relevant for analyzed company efficiency utilization.…”

Results of SME Investment Activities: A Comparative Analysis among Enterprises Using and Not Using EU Subsidies in Poland

“…On the other hand, the investment decisions themselves should be made by owners of enterprises based on the results of the economic balance, including an analysis of the diverse economic environment (Rosłon and Ciupiński 2014). Economic effectiveness balance of an investment includes an investment undertaking profitability assessment along with an analysis of risk associated with its execution and a process of choice of an investment decision out of the presented options (Rogowski and Michalczewski 2005;Lesáková et al 2019).…”

European benchmarking of determinants of profitability for companies with accrual accounting in the agricultural sector

“…Empirical studies on profitability often use the parameters of such decomposition models as predefined sets of independent variables for regression models on profitability (Burja and Marginean 2014) or as subjects of specific research (Mishra et al 2012). A further step in the decomposition of profitability can be made by considering dynamic changes of these elements over time or by referring to differences regarding specific reference points (Lesáková et al 2019), which is an important element of the present study.…”