The effects of the COVID-19 pandemic on business activity indicators in the V4 region

Research background: The COVID-19 pandemic introduced challenges that significantly impacted all business entities. The Nomenclature of Economic Activities (NACE) C is important for the Visegrad Four (V4) countries because it classifies the manufacturing sector, which constitutes a key part of their economies, contributing to economic growth, job creation, and exports both within the region and beyond. Manufacturing was one of the most affected sectors during the pandemic era and encountered new and demanding tasks. Purpose of the article: Business activity, represented by ratios of financial analysis, is a key factor for the economic growth of enterprises in each sector. The aim of this article is to unveil the impact of the COVID-19 pandemic on indicators of business activity in the V4 region. Methods: The data sample consists of 11,110 enterprises from NACE C, gained by Moody's Orbis database. The research focuses on analysing activity ratios based on individual size categories within Slovak, Czech, Polish, and Hungarian entities from 2018 to 2021. The Friedman test was used to assess the impact of the COVID-19 pandemic on chosen ratios. Findings & Value added: The COVID-19 pandemic impacted all businesses in the V4 region, with significant effects confirmed across all enterprise size categories. For small businesses, the pandemic's impact was evident in turnover and turnover period indicators. For medium-sized businesses, the affected indicators included turnover, turnover period, and credit period ratios. For large businesses, the affected indicators were turnover, turnover period, collection period ratio, and credit period ratio. However, the pandemic's impact was not confirmed on the collection period ratio and credit period ratio indicators for small businesses; on the long-term asset turnover period and collection period ratio for medium-sized businesses; or on the long-term asset turnover and long-term asset turnover period for large businesses. The added value of this contribution lies in the regional comparisons of activity ratios and the proven impact of the COVID-19 pandemic on the manufacturing sector, based on a robust sample.