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Using the Value Added Statement to Measure the Return on Capital Used to Finance Assets of Brazilian Electricity Distributors

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Author Info

  • Maisa de Souza Ribeiro

    (University of São Paulo)

  • Ariovaldo dos Santos

    (University of São Paulo)

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    Abstract

    The electric power sector is hugely important from an economic, political and social standpoint. The wealth created by this sector represented, on average, 2% of Brazil’s GDP in the period from 1998 to 2002. By looking at the financial statements of companies in the sector, one finds a very low rate of investments, but that these firms are still highly indebted. As a result of this debt load and the respective increase in financial expenses, besides the lack of investments, most electricity distributors have been accumulating significant losses. The objective of this study is to examine the way these companies are financing themselves and how the wealth they produce is being distributed to internal and external financial agents. By means of their Value Added Statements (VAS), one can observe that the portion of wealth going to remunerate capital (own and third-party) has gone mainly to external financiers. Our research also shows that in the past three years, electricity distributors have been creating increasing levels of wealth, but the volume of assets necessary for its creation has fallen significantly.

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    File URL: http://www.bbronline.com.br/public/edicoes/1_1/artigos/zjobjpz@gg26112010140849.pdf
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    Bibliographic Info

    Article provided by Fucape Business School in its journal Brazilian Business Review.

    Volume (Year): 1 (2004)
    Issue (Month): 1 (January)
    Pages: 17-30

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    Handle: RePEc:bbz:fcpbbr:v:1:y:2004:i:1:p:17-30

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    Postal: Fucape Business School Brazilian Business Review Av. Fernando Ferrari, 1358, Boa Vista CEP 29075-505 Vitória-ES
    Phone: +55 27 4009-4408
    Fax: +55 27 4009-4422
    Web page: http://www.bbronline.com.br/
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    Keywords: financing of assets; VAS; electric power;

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