The Impact of Estimated Depreciation of Infrastructure Assets on Sales Profitability

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216305%3A26110%2F25%3APU155406" target="_blank" >RIV/00216305:26110/25:PU155406 - isvavai.cz</a>

Result on the web

<a href="https://www.mdpi.com/2073-4441/17/3/393" target="_blank" >https://www.mdpi.com/2073-4441/17/3/393</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.3390/w17030393" target="_blank" >10.3390/w17030393</a>

Result language

angličtina

Original language name

The Impact of Estimated Depreciation of Infrastructure Assets on Sales Profitability

Original language description

Acquired long-term tangible assets of water management companies generate depreciation costs during operation. The cost item naturally reduces the profit/loss and income tax deduction and, at the same time, creates financial space for the future restoration of this property, reinvestment by being able to include it in the unit price of water and/or sewerage charge rates if certain rules are met. On the basis of these legislative rules, it follows that property financed by subsidies cannot be depreciated in this way, i.e., cannot generate funds for future reinvestment. The contribution aims to present a methodical procedure for deciding on a strategy for the development of the profit/loss of enterprises when “predicted” (modeled) depreciation of fixed assets acquired from subsidies is included in the model, with a focus on the indicator of financial performance—profitability of sales. Basic methods and selected indicators from ratio indicator methods used in financial analysis were used in the methodical procedure. The methodological procedure, which was developed on the basis of a case study as part of a research report for a selected water management enterprise, was further implemented and verified on a sample of water management enterprises, which have almost a 50% share in the value of all assets in the form of infrastructure assets in the Czech Republic. The output of the article is the fact that when “predicted” (modeled) depreciation is included in the profit/loss, the profitability of sales decreases. The study shows that there is up to a 15% change in the profitability of sales. The contribution of the article is a proven methodological procedure that takes into account the generation of profit/loss with regard to the necessary reinvestment of assets acquired with subsidies. This strategy can generally be used by all companies that acquire assets from public subsidy sources.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

20101 - Civil engineering

Project

—

Continuities

S - Specificky vyzkum na vysokych skolach

Publication year

2025

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Water

ISSN

2073-4441

e-ISSN

—

Volume of the periodical

2025

Issue of the periodical within the volume

17(3)

Country of publishing house

CH - SWITZERLAND

Number of pages

18

Pages from-to

1-18

UT code for WoS article

001419206400001

EID of the result in the Scopus database

2-s2.0-85217535475