Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®)

Ana Bela de Sousa Delicado Teixeira; Rosa Maria Morgado Galvão; Sandra Cristina Dias Nunes

doi:doi:10.11648/j.ijafrm.20200501.12

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Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®)

Ana Bela de Sousa Delicado Teixeira, Rosa Maria Morgado Galvão, Sandra Cristina Dias Nunes

Published in International Journal of Accounting, Finance and Risk Management (Volume 5, Issue 1)

Received: 24 December 2019 Accepted: 2 January 2020 Published: 10 March 2020

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Abstract

Today, it is unquestionable the importance that organizational management is supported by indicators. Also, knowledge of value creation and operating risk are information that differentiates this management support. This study aimed to verify the relationship between the value creation generated by companies included in the sample and the indicators used in operating risk (cost-volume-profit analysis). In the literature review the concept of value creation and the indicators usually used to measure operating risk, break-even point, margin of safety, and degree of operating leverage, were presented and characterized, as well as the Economic Value Added (EVA®), which was the value-based performance measure used in the study. The sample consists of 27 non-financial companies listed in Euronext Lisbon and the period analyzed was the one between 2014 and 2018. The data were obtained through the consolidated annual accounts of the sample companies, and its analysis was performed using the multivariate statistical analysis technique, linear regression. The results showed that the estimated multiple linear regression model allowed, with a very reasonable quality, to estimate the impact that the break-even point and the margin of safety variables have on the variation of the value of EVA®. This study gives significant information showing how operating risk indicators affect value creation, which is considered one the main objectives of companies.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 5, Issue 1) This article belongs to the Special Issue Perspectives on Risk Management and Impact on Sustainability of Companies
DOI	10.11648/j.ijafrm.20200501.12
Page(s)	12-25
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2020. Published by Science Publishing Group

Keywords

Operating Risk, Value Creation, Break-even Point, Margin of Safety, EVA®

References

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APA Style

Ana Bela de Sousa Delicado Teixeira, Rosa Maria Morgado Galvão, Sandra Cristina Dias Nunes. (2020). Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®). International Journal of Accounting, Finance and Risk Management, 5(1), 12-25. https://doi.org/10.11648/j.ijafrm.20200501.12

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ACS Style

Ana Bela de Sousa Delicado Teixeira; Rosa Maria Morgado Galvão; Sandra Cristina Dias Nunes. Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®). Int. J. Account. Finance Risk Manag. 2020, 5(1), 12-25. doi: 10.11648/j.ijafrm.20200501.12

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AMA Style

Ana Bela de Sousa Delicado Teixeira, Rosa Maria Morgado Galvão, Sandra Cristina Dias Nunes. Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®). Int J Account Finance Risk Manag. 2020;5(1):12-25. doi: 10.11648/j.ijafrm.20200501.12

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@article{10.11648/j.ijafrm.20200501.12,
  author = {Ana Bela de Sousa Delicado Teixeira and Rosa Maria Morgado Galvão and Sandra Cristina Dias Nunes},
  title = {Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®)},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {5},
  number = {1},
  pages = {12-25},
  doi = {10.11648/j.ijafrm.20200501.12},
  url = {https://doi.org/10.11648/j.ijafrm.20200501.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20200501.12},
  abstract = {Today, it is unquestionable the importance that organizational management is supported by indicators. Also, knowledge of value creation and operating risk are information that differentiates this management support. This study aimed to verify the relationship between the value creation generated by companies included in the sample and the indicators used in operating risk (cost-volume-profit analysis). In the literature review the concept of value creation and the indicators usually used to measure operating risk, break-even point, margin of safety, and degree of operating leverage, were presented and characterized, as well as the Economic Value Added (EVA®), which was the value-based performance measure used in the study. The sample consists of 27 non-financial companies listed in Euronext Lisbon and the period analyzed was the one between 2014 and 2018. The data were obtained through the consolidated annual accounts of the sample companies, and its analysis was performed using the multivariate statistical analysis technique, linear regression. The results showed that the estimated multiple linear regression model allowed, with a very reasonable quality, to estimate the impact that the break-even point and the margin of safety variables have on the variation of the value of EVA®. This study gives significant information showing how operating risk indicators affect value creation, which is considered one the main objectives of companies.},
 year = {2020}
}

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TY  - JOUR
T1  - Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®)
AU  - Ana Bela de Sousa Delicado Teixeira
AU  - Rosa Maria Morgado Galvão
AU  - Sandra Cristina Dias Nunes
Y1  - 2020/03/10
PY  - 2020
N1  - https://doi.org/10.11648/j.ijafrm.20200501.12
DO  - 10.11648/j.ijafrm.20200501.12
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 12
EP  - 25
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20200501.12
AB  - Today, it is unquestionable the importance that organizational management is supported by indicators. Also, knowledge of value creation and operating risk are information that differentiates this management support. This study aimed to verify the relationship between the value creation generated by companies included in the sample and the indicators used in operating risk (cost-volume-profit analysis). In the literature review the concept of value creation and the indicators usually used to measure operating risk, break-even point, margin of safety, and degree of operating leverage, were presented and characterized, as well as the Economic Value Added (EVA®), which was the value-based performance measure used in the study. The sample consists of 27 non-financial companies listed in Euronext Lisbon and the period analyzed was the one between 2014 and 2018. The data were obtained through the consolidated annual accounts of the sample companies, and its analysis was performed using the multivariate statistical analysis technique, linear regression. The results showed that the estimated multiple linear regression model allowed, with a very reasonable quality, to estimate the impact that the break-even point and the margin of safety variables have on the variation of the value of EVA®. This study gives significant information showing how operating risk indicators affect value creation, which is considered one the main objectives of companies.
VL  - 5
IS  - 1
ER  -

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Author Information

Ana Bela de Sousa Delicado Teixeira

School of Business Administration, Polytechnic Institute of Setúbal, Setúbal, Portugal
Rosa Maria Morgado Galvão
Sandra Cristina Dias Nunes

School of Business Administration, Polytechnic Institute of Setúbal, Setúbal, Portugal

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APA Style

Ana Bela de Sousa Delicado Teixeira, Rosa Maria Morgado Galvão, Sandra Cristina Dias Nunes. (2020). Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®). International Journal of Accounting, Finance and Risk Management, 5(1), 12-25. https://doi.org/10.11648/j.ijafrm.20200501.12

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ACS Style

Ana Bela de Sousa Delicado Teixeira; Rosa Maria Morgado Galvão; Sandra Cristina Dias Nunes. Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®). Int. J. Account. Finance Risk Manag. 2020, 5(1), 12-25. doi: 10.11648/j.ijafrm.20200501.12

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AMA Style

Ana Bela de Sousa Delicado Teixeira, Rosa Maria Morgado Galvão, Sandra Cristina Dias Nunes. Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®). Int J Account Finance Risk Manag. 2020;5(1):12-25. doi: 10.11648/j.ijafrm.20200501.12

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@article{10.11648/j.ijafrm.20200501.12,
  author = {Ana Bela de Sousa Delicado Teixeira and Rosa Maria Morgado Galvão and Sandra Cristina Dias Nunes},
  title = {Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®)},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {5},
  number = {1},
  pages = {12-25},
  doi = {10.11648/j.ijafrm.20200501.12},
  url = {https://doi.org/10.11648/j.ijafrm.20200501.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20200501.12},
  abstract = {Today, it is unquestionable the importance that organizational management is supported by indicators. Also, knowledge of value creation and operating risk are information that differentiates this management support. This study aimed to verify the relationship between the value creation generated by companies included in the sample and the indicators used in operating risk (cost-volume-profit analysis). In the literature review the concept of value creation and the indicators usually used to measure operating risk, break-even point, margin of safety, and degree of operating leverage, were presented and characterized, as well as the Economic Value Added (EVA®), which was the value-based performance measure used in the study. The sample consists of 27 non-financial companies listed in Euronext Lisbon and the period analyzed was the one between 2014 and 2018. The data were obtained through the consolidated annual accounts of the sample companies, and its analysis was performed using the multivariate statistical analysis technique, linear regression. The results showed that the estimated multiple linear regression model allowed, with a very reasonable quality, to estimate the impact that the break-even point and the margin of safety variables have on the variation of the value of EVA®. This study gives significant information showing how operating risk indicators affect value creation, which is considered one the main objectives of companies.},
 year = {2020}
}

Copy | Download

TY  - JOUR
T1  - Operating Risk (Cost-Volume-Profit) and Economic Value Added (EVA®)
AU  - Ana Bela de Sousa Delicado Teixeira
AU  - Rosa Maria Morgado Galvão
AU  - Sandra Cristina Dias Nunes
Y1  - 2020/03/10
PY  - 2020
N1  - https://doi.org/10.11648/j.ijafrm.20200501.12
DO  - 10.11648/j.ijafrm.20200501.12
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 12
EP  - 25
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20200501.12
AB  - Today, it is unquestionable the importance that organizational management is supported by indicators. Also, knowledge of value creation and operating risk are information that differentiates this management support. This study aimed to verify the relationship between the value creation generated by companies included in the sample and the indicators used in operating risk (cost-volume-profit analysis). In the literature review the concept of value creation and the indicators usually used to measure operating risk, break-even point, margin of safety, and degree of operating leverage, were presented and characterized, as well as the Economic Value Added (EVA®), which was the value-based performance measure used in the study. The sample consists of 27 non-financial companies listed in Euronext Lisbon and the period analyzed was the one between 2014 and 2018. The data were obtained through the consolidated annual accounts of the sample companies, and its analysis was performed using the multivariate statistical analysis technique, linear regression. The results showed that the estimated multiple linear regression model allowed, with a very reasonable quality, to estimate the impact that the break-even point and the margin of safety variables have on the variation of the value of EVA®. This study gives significant information showing how operating risk indicators affect value creation, which is considered one the main objectives of companies.
VL  - 5
IS  - 1
ER  -

Copy | Download