Factors affecting financial performance in the waste management industry: A comparative analysis of pre- and post-COVID-19 periods

The linear economic model is unsustainable for a long time, so the transition to a circular economy seems inevitable. By adopting a new Circular Economy Action Plan, the EU is taking concrete steps in this direction and identifying indicators to measure progress. In this context, businesses operating in the waste management industry are among the key actors helping to meet the objectives of circular economy policies. This study aims to identify and compare the determinants of the financial performance of companies in the NACE 38 industry and to quantify their impact on ROA and ROS in 2019 and 2022. Pearson's R was used to select the variables we examined using principal components analysis as one of the methods used in exploratory factor analysis. Linear regression analysis was employed to explain the influence of the extracted factors on changes in ROA and ROS. For 2019, we extracted five factors (capital structure, business policy, current assets' efficiency, operational activity, and working capital management) that explain 79.2% of the variability in profitability. For 2022, we extracted six factors (liquidity management, current assets' efficiency, asset structure, volume of available resources, capital structure and operational activity), which explain 84.17% of the variability of the variables. By comparing the findings, we concluded that while in the pre-crisis period, operating ratios appeared to be key to the financial performance of companies, in the post-crisis period, the factors of liquidity and available resources have become more critical.