Using a base of simplified financial plan for determination innovations' economic effect in small and medium-sized enterprises

Abstract

Currently, innovations seem to be a crucial process in companies in order to at least maintain or even improve their competitiveness. Strengthening global competition puts the stress on continual improvements in every sphere of business entity's activities. This way, innovations are the almost only tool to maintain customers, subsequently to keep the place on a market or the market share, and then to sustain the financial performance of a company. It means that effect of innovations is closely connected with the financial performance of a business entity that can be measured with various methods or approaches while the financial analysis ratios are supposed to be basic ones. In order to interpret the results of these financial ratios, different bases are used when the base of financial plan is one of them. The objective of this article is to determine the economic effect of innovations on financial performance of small and medium-sized enterprises in the Czech Republic on the base of simplified financial plan. Obviously, starting-point of the financial plan preparation is the plan of sales. Sales represent one of the company's value generators, and sales projection is constituted as basis of authors' approach to determination of effect of innovations on financial performance of business entities while basic categorization of companies according to the business branch (CZ NACE), sphere of innovation and innovation's degree is applied.