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JOURNAL OF INTERDISCIPLINARY RESEARCH

DEVELOPMENT OF ECONOMIC VALUE ADDED (EVA) OF LEASING COMPANIES ACTIVE IN
THE CZECH REPUBLIC IN THE YEARS 2005-2019

JIŘÍ KUČERA,

PETR ŠULEŘ

University of Zilina, The Faculty of Operation and Economics

of Transport and Communications, Department of Economics,
Univerzitna 8215/1, 01026 Zilina, Slovakia

email:

Institute of Technology and Business, School of Expertness and

Valuation, Okruzni 517/10, 37001 Ceske Budejovice, Czech
Republic

kuceraj@mail.vstecb.cz,

petr.suler@cez.cz

Abstract: In times of economic crisis, leasing companies can be an alternative way to
obtain a loan. However, their value is constantly changing during economic cyclical
events. However, this value of the company is important from the point of view of
their owners as well as investors and creditors. Likewise, the number of currently
active leasing companies on the market is affected by economic cyclical events. It was
found that with the upcoming economic situation, it is very likely that the value of
leasing companies in the Czech Republic will have a similar development trend in the
coming years as during the last global economic crisis.

Keywords: leasing company, economic crisis, company value, EVA, market
occupancy

1 Introduction

All companies are established with the goal of a future profit and
rise in value. The value of these companies and the profit they
are able to generate depends on many aspects. These are both the
consequences resulting from decisions made by their owners and
possibly management, but also the external influences of the
market and, finally, the overall economy of the country or the
world. Kasych and Vochozka also draw attention to this fact [1].

Leasing companies providing motor vehicle leasing can be
considered very specific in comparison to other types of
businesses. These are companies that are strongly influenced by
developments in the banking sector, but also in the automotive
industry. Another influential aspect could also be considered the
fuel market. Leasing companies provide motor vehicles to
consumers under specific pre-agreed conditions. Until the expiry
of these conditions, however, they are still the owners of the
motor vehicle in question and the lessee is liable for their
obligations in most cases by guaranteeing the motor vehicle in
question, which they operate through leasing companies, for
commercial or private purposes.

Leasing companies therefore provide a specific type of non-bank
financial services. It is therefore very important for owners and
creditors, as in any other sector, to know the economic
performance of these companies quickly and with the greatest
possible accuracy. Strong and economically efficient companies
are also able to respond quickly to sudden changes in the local,
state and global economy. Specific economic evaluation
indicators can be used to continuously measure the economic
performance of leasing companies. One of the economic
indicators that can be applied repeatedly to individual leasing
companies or also to this sector as a whole is the Economic
Value Added (EVA) indicator.

The EVA indicator provides owners and existing and potential
investors with information on the economic performance of a
particular leasing company to which this indicator is currently
applied. From a broader view of the whole issue of economic
performance, this indicator can also be applied to the entire
group of leasing companies and thus obtain information that can
then be compared within the sector, the state and worldwide.

In times of economic crises, which recur cyclically, the numbers
of companies active in a given sector may also change. With the
decline in the number of active companies, we are referring to a
market cleanse, because only strong and stable companies are
able to withstand these extreme economic shocks. Thus, for
economically weaker companies, a decrease in the values of the
EVA indicator can be expected in this period. In some cases, the

value of the EVA indicator may be negative. If the value of the
EVA indicator is negative in the long run, it is economically best
to shut down the company's operations and thus prevent further
financial losses caused by the loss of the company's value.

The aim of this paper is to analyse the development of the EVA
Entity and EVA Equity indicators of leasing companies
operating in the Czech Republic in the years 2005-2019. To
achieve the set goal of the paper, three research questions were
formulated:

1.

Did leasing companies operating in the Czech Republic
generate positive economic value for their owners in the
years 2005-2019?

Did leasing companies operating in the Czech Republic in
the years 2005-2019 generate a positive economic value for
existing and potential investors and creditors?

How did the global economic crisis, which began in 2008,
affect the development of the economic value of leasing
companies?

The second goal of the paper is to analyse the number of leasing
companies active in the Czech Republic for the period 2005-
2019 with a focus on fluctuations in their numbers on the market
during the economic crisis.

2 Literature Review

In a time of ever-increasing competition and changing economic
conditions, the individual economic sectors of each country must
adapt to economic development. By measuring the effectiveness
of leasing companies, it is possible to determine the performance
of individual entities and the entire economic sector, and based
on the results obtained, look for ways to improve it. An
economic sector with economically efficient companies is
generally better able to cope with negative economic fluctuations
and thus also contributes to stability in related economic sectors
that are dependent on this economic sector or overlap with this
economic sector in several places.

In a time of ever-increasing competition and changing economic
conditions, the individual economic sectors of each country must
adapt to economic development. By measuring the effectiveness
of leasing companies, it is possible to determine the performance
of individual entities and the entire economic sector, and based
on the results obtained, look for ways to improve it. An
economic sector with economically efficient companies is
generally better able to cope with negative economic fluctuations
and thus also contributes to stability in related economic sectors
that are dependent on this economic sector or overlap with this
economic sector in several places.

Andrikopoulus and Markellos [2] have therefore developed a
dynamic interaction model between fluctuations in the leasing
sector and motor vehicle sales. Based on the analysis of data
from 2002 to 2011 and the application of the created model, it
was concluded that changes in motor vehicle prices have a large
effect on the development of market leasing prices. They are also
inclined to believe that leasing valuations could also be
performed using this model. According to Dasgupt, Siddarth and
Silva-Risso [3], from the consumer's point of view, a lease can
be seen as a way of obtaining otherwise inaccessible expensive
motor vehicles. However, they also point out that consumers of
leasing services are often very short-sighted and therefore prefer
small monthly payments and do not realize that the total price of
a motor vehicle purchased in this way will be much higher than
if they bought the motor vehicle with cash up front. At the end of
the last century, Mannering, Winston and Starkey [4] conducted
research on the share of motor vehicles purchased by households
in the US between 1984 and 1988. During this time, the share of
motor vehicles purchased by households in the form of a lease in
the US increased from 3% to 30% of all motor vehicles operated

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