Profitability, indebtedness and liquidity analysis of microenterprises in Ecuador
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Published:
2021-09-23
Keywords:
Financial ratio, t-test, profitability, microenterprises, business performance, corporate liquidity, indebtedness, corporate finance
Main Article Content
Abstract
Microenterprises are an important factor in Ecuador’s economic development. This research analyzes and compares financial indicators such as financial profitability, indebtedness and current liquidity of microenterprises in the province of Guayas with those in other provinces of Ecuador. The analysis used a quantitative methodology of descriptive type of cross-sectional design for 13,768 microenterprises in the province of Guayas and 16,093 microenterprises in the rest of the provinces of Ecuador that reported their financial statements to the Superintendence of Companies, Securities and Insurance as of 2019. To compare these groups, a t-test was performed for independent samples with unequal variances. The results of this research indicate that, with a 95% confidence level, average indebtedness and average current liquidity are higher in the province of Guayas while microenterprises in the rest of Ecuador report better average financial profitability. Although Guayas province has the highest percentage of microenterprises in the country, this is not a sufficient condition to conclude that its financial indicators, on average, are better than those of the rest of Ecuador. This research aims to make a contribution to the development of lines of work that contribute to the elaboration and design of policies that help the survival and business performance of microenterprises
Article Details
Section
Monographic section
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References
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Appiah-Adu, K., Fyall, A., & Singh, S. (2001). Marketing effectiveness and business performance in the hotel industry. Journal of Hospitality and Leisure Marketing, 15(1), 18–34. https://doi.org/10.1300/J150v06n02_04
Arcos Mora, M. A., & Benavides Franco, J. (2008). Efecto del ciclo de efectivo sobre la rentabilidad de las firmas colombianas. Cuadernos de Administracion, 21(36), 167–182.
Aulová, R., Pánková, L., & Rumánková, L. (2019). Analysis of selected profitability ratios in the agricultural sector. Agris On-Line Papers in Economics and Informatics, 11(3), 3–12. https://doi.org/10.7160/aol.2019.110301
Blázquez Santana, F., Dorta Velázquez, J. A., & Verona Martel, M. C. (2006). Factores del crecimiento empresarial, especial referencia a las pequeñas y medianas empresas. Innovar, 16(28), 43–56.
Campuzano, J. C., & Rodriguez, P. N. (2018). Determinantes de la rentabilidad financiera en el sector de consumo del Ecuador y su estructura de capital. X-Pedientes Económicos, 2(4), 6–23.
Cano Flores, M., Olivera Gómez, D., Balderrabano Briones, J., & Pérez Cervantes, G. (2013). Rentabilidad y competitividad en la PYME. Ciencia Administrativa, 2.
Castillo Valero, J. S., & García Cortijo, M. del C. (2013). Análisis de los factores explicativos de la rentabilidad de las empresas vinícolas de Castilla-La Mancha. Revista de La Facultad de Ciencias Agrarias, 45(2), 141–154.
Cedeño, R., Ostaiza, J., & Vélez, G. (2018). El capital social en las microempresas de la economía popular y solidaria de Manabí. Polo Del Conocimiento, 3(2), 104–117. https://doi.org/10.23857/pc.v3i2.455
Cortés, A., Rayo, S., & Lara, J. (2011). Un modelo explicativo - predictivo de la rentabilidad financiera de las empresas en los principales sectores económicos españoles. Research Gate, January, 24.
de Jorge Moreno, J., Castillo, L. L., & de Zuani Masere, E. (2010). Firm size and entrepreneurial characteristics: Evidence from the SME sector in Argentina. Journal of Business Economics and Management, 11(2), 259–282. https://doi.org/10.3846/jbem.2010.13
De Zoysa, A., & Kanthi Herath, S. (2007). The impact of owner/managers’ mentality on financial performance of SMEs in Japan an empirical investigation. Journal of Management Development, 26(7), 652–666.
Díaz Arreguín, S. (2010). La Microempresa En El Desarrollo. Perspectivas, 25, 271–282.
Floros, C., & Voulgaris, F. (2016). Efficiency, leverage and profitability: The case of Greek manufacturing sector. Global Business and Economics Review, 18(3–4), 385–401. https://doi.org/10.1504/GBER.2016.076239
Ghosh, C., & Guha, S. (2015). Determinants of profitability of the microenterprises led by women micro entrepreneurs: Evidence from Mumbai slums. International Journal of Entrepreneurship and Small Business, 24(4), 455–473. https://doi.org/10.1504/IJESB.2015.068631
Goddard, J., Tavakoli, M., & Wilson, J. O. S. (2005). Determinants of profitability in European manufacturing and services: Evidence from a dynamic panel model. Applied Financial Economics, 15(18), 1269–1282. https://doi.org/10.1080/09603100500387139
González Perez, A. L., Correa Rodríguez, A., & Acosta Molina, M. (2002). Factores determinantes de la rentabilidad financiera de las pymes. Revista Española de Financiacion y Contabilidad, XXXI(112), 395–429.
González Pérez, A. L., Correa Rodríguez, A., & Acosta Molina, M. (2002). Factores Determinates de la Rentabilidad Financiera de las Pymes. Revista Espanola de Financiacion y Contabilidad, 31(112), 395–429. https://doi.org/10.1080/02102412.2002.10779452
González Sánchez, M., & Méndez Vásquez, M. (2017). Determinantes de la Rentabilidad Financiera de las MIPYMES de los Sectores Prioritarios en el Período 2012-2015 Determinants of the Financial Profitability of MSMEs in the Priority Sectors in the 2012- 2015 period. X-Pedientes Económicos, 1(1), 42–55.
Halabi, A. K., Dyt, R., & Barrett, R. (2010). Understanding financial information used to assess small firm performance: An Australian qualitative study. Qualitative Research in Accounting & Management, 7(2), 163–179. https://doi.org/10.1108/11766091011050840
Janda, K., Rausser, G., & Strielkowski, W. (2013). Determinants of profitability of polish rural micro-enterprises at the time of EU accession. Eastern European Countryside, 19(1), 177–217. https://doi.org/10.2478/eec-2013-0009
Jasiniak, M., & Pastusiak, R. (2014). The profitability of foreign and domestic enterprises in Poland. Business and Economic Horizons, 10(2), 86–93. https://doi.org/10.15208/beh.2014.8
Lagarda, A. M., & Urquidy, M. R. (2007). Capital humano y productividad en microempresas. Investigacion Economica, 66(260).
Lin, S., & Rowe, W. (2006). Determinants of the profitability of China’s regional SOEs. China Economic Review, 17(2), 120–141. https://doi.org/10.1016/j.chieco.2005.05.001
Lososová, J., & Zden?k, R. (2014). Key factors affecting the profitability of farms in the Czech Republic. Agris On-Line Papers in Economics and Informatics, 6(1), 21–36.
Manzaneque, M., Priego, A. M., & Merino, E. (2016). Corporate governance effect on financial distress likelihood: Evidence from Spain. Revista de Contabilidad-Spanish Accounting Review, 19(1), 111–121. https://doi.org/10.1016/j.rcsar.2015.04.001
Muñoz, J. M., Welsh, D. H. B., Chan, S. H., & Raven, P. V. (2014). Microenterprises in Malaysia?: a preliminary study of the factors for management success. International Entrepreneurship and Management Journal, February. https://doi.org/10.1007/s11365-014-0302-y
Okurut, F. N. (2008). Determinants of Microenterprise Performance in Uganda. The IUP Journal of Agricultural Economics, 1(January), 77–87.
Prijadi, R., & Desiana, P. M. (2017). Factors affecting the profitability and growth of Small & Medium Enterprises (SMEs) in Indonesia. International Journal of Economics and Management, 11(SpecialIssue1), 35–44.
Rasiah, D., Tong, D. Y. K., & Kim, P. K. (2014). Profitability and firm size-growth relationship in construction companies in Malaysia from 2003 to 2010. Review of Pacific Basin Financial Markets and Policies, 17(3), 1–19. https://doi.org/10.1142/S0219091514500143
Rivera Godoy, J., & Ruiz Acero, D. (2011). Análisis del desempeño financiero de empresas innovadoras del Sector Alimentos y Bebidas en Colombia. Pensamiento & Gestión, 31, 109–136.
Rodríguez Arrieta, G., Cano Lara, E., & Ruiz Velez, A. (2019). La competitividad en las microempresas en Manta. REVISTA SAN GREGORIO, 35, 67–85.
Rogerson, C. M. (2004). The impact of the south African government’s SMME programmes: A ten-year review (1994-2003). Development Southern Africa, 21(5), 765–784. https://doi.org/10.1080/0376835042000325697
Salazar Mosquera, G. M. (2017). Factores determinantes del desempeño financiero en el sector manufacturero en la República del Ecuador. Panorama Económico, 25(2), 243–254.
Sanchez, A. (1994). La Rentabilidad Economica Y Financiera de la Gran Empresa Española. Revista Española de FInanciacion y Contabilidad, XXIV N° 78, 159 179.
Sánchez, M., & Lazo, V. (2018). Determinantes de la rentabilidad empresarial en el ecuador: un análisis de corte transversal. ECA Sinergia, 9(1), 60. https://doi.org/10.33936/eca_sinergia.v9i1.1006
Schreiner, M., & Woller, G. (2003). Microenterprise development programs in the United States and in the developing world. World Development, 31(9), 1567–1580. https://doi.org/10.1016/S0305-750X(03)00112-8
Spitsin, V., Ryzhkova, M., Vukovic, D., & Anokhin, S. (2020). Companies profitability under economic instability: evidence from the manufacturing industry in Russia. Journal of Economic Structures, 9(1), 1–20. https://doi.org/10.1186/s40008-020-0184-9
Steinerowska-Streb, I. (2012). The determinants of enterprise profitability during reduced economic activity. Journal of Business Economics and Management, 13(4), 745–762. https://doi.org/10.3846/16111699.2011.645864
Sumba Bustamante, R. Y., & Santistevan Villacreses, K. L. (2018). Las microempresas y la necesidad de fortalecimiento: reflexiones de la zona sur de Manabí, Ecuador. Revista Universidad y Sociedad, 10(5).
Valls Martínez, M. del C., & Cruz Rambaud, S. (2019). Women on corporate boards and firm’s financial performance. Women’s Studies International Forum, 76(June), 102251. https://doi.org/10.1016/j.wsif.2019.102251
Wood, E. H. (2006). The internal predictors of business performance in small firms. A logistic regression analysis. The Eletronic Library, 13(3), 441–453.
Yazdanfar, D., Salman, K., & Arnesson, L. (2013). Life cycle of profitability among Swedish micro firms. World Review of Entrepreneurship, Management and Sustainable Development, 9(3), 340–351. https://doi.org/10.1504/WREMSD.2013.054738
Zainol, N. R., Al Mamun, A., Hassan, H., & Muniady, R. A. L. (2017). Examining the effectiveness of microenterprise development programs in Malaysia. Journal of International Studies, 10(2), 292–308. https://doi.org/10.14254/2071-8330.2017/10-2/20
Zeli, A., & Mariani, P. (2009). Productivity and profitability analysis of large Italian companies: 1998-2002. International Review of Economics, 56(2), 175–188. https://doi.org/10.1007/s12232-009-0067-8
Ampudia Márquez, N. C. (2008). Micro empresa y pobreza, financiamiento y contribución al desarrollo. Economia Informa, 355, 136–149. http://www.economia.unam.mx/publicaciones/econinforma/pdfs/355/09Nora.pdf
Appiah-Adu, K., Fyall, A., & Singh, S. (2001). Marketing effectiveness and business performance in the hotel industry. Journal of Hospitality and Leisure Marketing, 15(1), 18–34. https://doi.org/10.1300/J150v06n02_04
Arcos Mora, M. A., & Benavides Franco, J. (2008). Efecto del ciclo de efectivo sobre la rentabilidad de las firmas colombianas. Cuadernos de Administracion, 21(36), 167–182.
Aulová, R., Pánková, L., & Rumánková, L. (2019). Analysis of selected profitability ratios in the agricultural sector. Agris On-Line Papers in Economics and Informatics, 11(3), 3–12. https://doi.org/10.7160/aol.2019.110301
Blázquez Santana, F., Dorta Velázquez, J. A., & Verona Martel, M. C. (2006). Factores del crecimiento empresarial, especial referencia a las pequeñas y medianas empresas. Innovar, 16(28), 43–56.
Campuzano, J. C., & Rodriguez, P. N. (2018). Determinantes de la rentabilidad financiera en el sector de consumo del Ecuador y su estructura de capital. X-Pedientes Económicos, 2(4), 6–23.
Cano Flores, M., Olivera Gómez, D., Balderrabano Briones, J., & Pérez Cervantes, G. (2013). Rentabilidad y competitividad en la PYME. Ciencia Administrativa, 2.
Castillo Valero, J. S., & García Cortijo, M. del C. (2013). Análisis de los factores explicativos de la rentabilidad de las empresas vinícolas de Castilla-La Mancha. Revista de La Facultad de Ciencias Agrarias, 45(2), 141–154.
Cedeño, R., Ostaiza, J., & Vélez, G. (2018). El capital social en las microempresas de la economía popular y solidaria de Manabí. Polo Del Conocimiento, 3(2), 104–117. https://doi.org/10.23857/pc.v3i2.455
Cortés, A., Rayo, S., & Lara, J. (2011). Un modelo explicativo - predictivo de la rentabilidad financiera de las empresas en los principales sectores económicos españoles. Research Gate, January, 24.
de Jorge Moreno, J., Castillo, L. L., & de Zuani Masere, E. (2010). Firm size and entrepreneurial characteristics: Evidence from the SME sector in Argentina. Journal of Business Economics and Management, 11(2), 259–282. https://doi.org/10.3846/jbem.2010.13
De Zoysa, A., & Kanthi Herath, S. (2007). The impact of owner/managers’ mentality on financial performance of SMEs in Japan an empirical investigation. Journal of Management Development, 26(7), 652–666.
Díaz Arreguín, S. (2010). La Microempresa En El Desarrollo. Perspectivas, 25, 271–282.
Floros, C., & Voulgaris, F. (2016). Efficiency, leverage and profitability: The case of Greek manufacturing sector. Global Business and Economics Review, 18(3–4), 385–401. https://doi.org/10.1504/GBER.2016.076239
Ghosh, C., & Guha, S. (2015). Determinants of profitability of the microenterprises led by women micro entrepreneurs: Evidence from Mumbai slums. International Journal of Entrepreneurship and Small Business, 24(4), 455–473. https://doi.org/10.1504/IJESB.2015.068631
Goddard, J., Tavakoli, M., & Wilson, J. O. S. (2005). Determinants of profitability in European manufacturing and services: Evidence from a dynamic panel model. Applied Financial Economics, 15(18), 1269–1282. https://doi.org/10.1080/09603100500387139
González Perez, A. L., Correa Rodríguez, A., & Acosta Molina, M. (2002). Factores determinantes de la rentabilidad financiera de las pymes. Revista Española de Financiacion y Contabilidad, XXXI(112), 395–429.
González Pérez, A. L., Correa Rodríguez, A., & Acosta Molina, M. (2002). Factores Determinates de la Rentabilidad Financiera de las Pymes. Revista Espanola de Financiacion y Contabilidad, 31(112), 395–429. https://doi.org/10.1080/02102412.2002.10779452
González Sánchez, M., & Méndez Vásquez, M. (2017). Determinantes de la Rentabilidad Financiera de las MIPYMES de los Sectores Prioritarios en el Período 2012-2015 Determinants of the Financial Profitability of MSMEs in the Priority Sectors in the 2012- 2015 period. X-Pedientes Económicos, 1(1), 42–55.
Halabi, A. K., Dyt, R., & Barrett, R. (2010). Understanding financial information used to assess small firm performance: An Australian qualitative study. Qualitative Research in Accounting & Management, 7(2), 163–179. https://doi.org/10.1108/11766091011050840
Janda, K., Rausser, G., & Strielkowski, W. (2013). Determinants of profitability of polish rural micro-enterprises at the time of EU accession. Eastern European Countryside, 19(1), 177–217. https://doi.org/10.2478/eec-2013-0009
Jasiniak, M., & Pastusiak, R. (2014). The profitability of foreign and domestic enterprises in Poland. Business and Economic Horizons, 10(2), 86–93. https://doi.org/10.15208/beh.2014.8
Lagarda, A. M., & Urquidy, M. R. (2007). Capital humano y productividad en microempresas. Investigacion Economica, 66(260).
Lin, S., & Rowe, W. (2006). Determinants of the profitability of China’s regional SOEs. China Economic Review, 17(2), 120–141. https://doi.org/10.1016/j.chieco.2005.05.001
Lososová, J., & Zden?k, R. (2014). Key factors affecting the profitability of farms in the Czech Republic. Agris On-Line Papers in Economics and Informatics, 6(1), 21–36.
Manzaneque, M., Priego, A. M., & Merino, E. (2016). Corporate governance effect on financial distress likelihood: Evidence from Spain. Revista de Contabilidad-Spanish Accounting Review, 19(1), 111–121. https://doi.org/10.1016/j.rcsar.2015.04.001
Muñoz, J. M., Welsh, D. H. B., Chan, S. H., & Raven, P. V. (2014). Microenterprises in Malaysia?: a preliminary study of the factors for management success. International Entrepreneurship and Management Journal, February. https://doi.org/10.1007/s11365-014-0302-y
Okurut, F. N. (2008). Determinants of Microenterprise Performance in Uganda. The IUP Journal of Agricultural Economics, 1(January), 77–87.
Prijadi, R., & Desiana, P. M. (2017). Factors affecting the profitability and growth of Small & Medium Enterprises (SMEs) in Indonesia. International Journal of Economics and Management, 11(SpecialIssue1), 35–44.
Rasiah, D., Tong, D. Y. K., & Kim, P. K. (2014). Profitability and firm size-growth relationship in construction companies in Malaysia from 2003 to 2010. Review of Pacific Basin Financial Markets and Policies, 17(3), 1–19. https://doi.org/10.1142/S0219091514500143
Rivera Godoy, J., & Ruiz Acero, D. (2011). Análisis del desempeño financiero de empresas innovadoras del Sector Alimentos y Bebidas en Colombia. Pensamiento & Gestión, 31, 109–136.
Rodríguez Arrieta, G., Cano Lara, E., & Ruiz Velez, A. (2019). La competitividad en las microempresas en Manta. REVISTA SAN GREGORIO, 35, 67–85.
Rogerson, C. M. (2004). The impact of the south African government’s SMME programmes: A ten-year review (1994-2003). Development Southern Africa, 21(5), 765–784. https://doi.org/10.1080/0376835042000325697
Salazar Mosquera, G. M. (2017). Factores determinantes del desempeño financiero en el sector manufacturero en la República del Ecuador. Panorama Económico, 25(2), 243–254.
Sanchez, A. (1994). La Rentabilidad Economica Y Financiera de la Gran Empresa Española. Revista Española de FInanciacion y Contabilidad, XXIV N° 78, 159 179.
Sánchez, M., & Lazo, V. (2018). Determinantes de la rentabilidad empresarial en el ecuador: un análisis de corte transversal. ECA Sinergia, 9(1), 60. https://doi.org/10.33936/eca_sinergia.v9i1.1006
Schreiner, M., & Woller, G. (2003). Microenterprise development programs in the United States and in the developing world. World Development, 31(9), 1567–1580. https://doi.org/10.1016/S0305-750X(03)00112-8
Spitsin, V., Ryzhkova, M., Vukovic, D., & Anokhin, S. (2020). Companies profitability under economic instability: evidence from the manufacturing industry in Russia. Journal of Economic Structures, 9(1), 1–20. https://doi.org/10.1186/s40008-020-0184-9
Steinerowska-Streb, I. (2012). The determinants of enterprise profitability during reduced economic activity. Journal of Business Economics and Management, 13(4), 745–762. https://doi.org/10.3846/16111699.2011.645864
Sumba Bustamante, R. Y., & Santistevan Villacreses, K. L. (2018). Las microempresas y la necesidad de fortalecimiento: reflexiones de la zona sur de Manabí, Ecuador. Revista Universidad y Sociedad, 10(5).
Valls Martínez, M. del C., & Cruz Rambaud, S. (2019). Women on corporate boards and firm’s financial performance. Women’s Studies International Forum, 76(June), 102251. https://doi.org/10.1016/j.wsif.2019.102251
Wood, E. H. (2006). The internal predictors of business performance in small firms. A logistic regression analysis. The Eletronic Library, 13(3), 441–453.
Yazdanfar, D., Salman, K., & Arnesson, L. (2013). Life cycle of profitability among Swedish micro firms. World Review of Entrepreneurship, Management and Sustainable Development, 9(3), 340–351. https://doi.org/10.1504/WREMSD.2013.054738
Zainol, N. R., Al Mamun, A., Hassan, H., & Muniady, R. A. L. (2017). Examining the effectiveness of microenterprise development programs in Malaysia. Journal of International Studies, 10(2), 292–308. https://doi.org/10.14254/2071-8330.2017/10-2/20
Zeli, A., & Mariani, P. (2009). Productivity and profitability analysis of large Italian companies: 1998-2002. International Review of Economics, 56(2), 175–188. https://doi.org/10.1007/s12232-009-0067-8