1st ICAI 2020

International Conference on Automotive Industry 2020

Mladá Boleslav, Czech Republic

in 2018) and Spain (3,839 in 2018). The turnover of capital employed in the Czech Republic in 2018 amounts to 3,280 – four times the value of Germany. Regarding the structure of capital employed, France, Spain and Romania have a share of fixed assets excessing 100%. In these countries, net working capital is negative and short-term sources (usually primarily accounts payables to suppliers) also finance part of long-term (fixed) assets. By contrast, Malta, Estonia, Luxembourg, Austria, Lithuania and Denmark have the lowest share of fixed assets. In 2018, the share of fixed assets in the invested capital of Germany was 47.11%, the Czech Republic reached 72.98% and Slovakia 91.16%. The relative importance of fixed assets for generating sales can also be assessed using the indicator of turnover of fixed assets (i.e. sales / fixed assets). Among the EU-27 countries, this indicator has long been the lowest in Hungary, Ireland and Germany (1.8 in 2018). Another perspective that can be applied on capital employed is its composition in terms of sources of financing – i.e. the shares of equity and debt. The debt ratio, together with the country’s rating, is reflected in the cost of equity and, of course, in the weighted average cost of capital. Germany, Denmark, Luxembourg, the Netherlands and Sweden achieve the best rating (i.e. AAA) among the EU-27. By contrast, Greece received the worst rating (B3), adding the country’s risk premium of 9.03% to the cost of equity of the local automotive industry. The second worst group of EU-27 countries is Cyprus and Croatia (4.17% country risk premium), followed by Italy, Hungary, Portugal and Romania (3.06% country risk premium). The highest debt ratios among EU-27 countries are had by Germany (64.89% in 2018), the Netherlands (62.91% in 2018), Finland (51.68% in 2018) and Luxembourg (49.45 % in 2018). On the other hand, Estonia (9.41% in 2018), Lithuania (11.28% in 2018), Hungary (11.44% in 2018) and the Czech Republic (18.13% in 2018) keep the lowest values. Using the Pearson coefficient, we measure the relationship between the turnover of capital employed, the share of automotive industry turnover to GDP, operating profit margin and the share of fixed assets on capital employed. We also measured the relationship between the share of fixed assets on capital employed and the share of automotive industry turnover on GDP. The results obtained (see Table 3) indicate that the higher the share of automotive turnover on GDP, the higher the efficiency of asset usage – that is, in countries with a high importance of the automotive industry, the capital employed is used more efficiently (i.e. smaller amount of investments in capital employed is necessary to generate one EUR of turnover). Furthermore, a significant negative linear relationship between the operating profit margin and the turnover of capital employed was identified. It can be stated that the lower the turnover of capital employed (and thus the higher the volume of fixed assets and net working capital), the higher the operating profit margin. Capital employed generates costs (depreciation, interest) that increase with its growth and thus reduce the generated profit. On the other hand, a higher volume of capital employed may be evidence of a higher degree of production automation and its lower demands on non- capital production factors (i.e. on labor and the resulting costs). Higher capital employed can result in higher operating profit margin. A very significant correlation rate has been identified between the capital employed turnover

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