Analysis of the population of non-financial corporations with negative economic profitability
The article describes the characteristics of firms with negative economic profitability. Analysis of the pattern of profitability during the period from 1999 to 2008 on the basis of the annual accounts of non-financial corporations shows that, year after year, one in ten firms makes a loss, and in the case of SMEs that figure is actually as high as one in four firms. These findings require further investigation. For the majority of non-financial corporations (85.6 p.c.) the period of negative economic profitability does not persist for longer than 4 years. Negative economic profitability is proportionately more common for firms in the non-manufacturing sectors than in manufacturing industry. Analysis by firm size, distinguishing between large firms and SMEs, reveals that SMEs are proportionately more affected. If age is considered, large firms with negative economic profitability are 2 to 3 years younger, on average, than other firms, whereas age is not a factor in the case of SMEs. In regard to regional location, the Brussels Capital Region has the highest ratio of firms with a negative profitability. For most firms, the negative sign of the profitability ratio can be attributed to the firm ending the financial year with an operating loss. Within that group of firms with a negative operating result, as many as 33.1 p.c. of large firms and 44.9 p.c. of SMEs fail to generate any value added. Ultimately, in the case of 30.8 p.c. of the large firms and 42.1 p.c. of the SMEs, the net assets had fallen below the specified minimum, so that – under the alarm bell procedure – any interested party can apply to the court for dissolution of the company
Volume (Year): (2010)
Issue (Month): i (June)
|Contact details of provider:|| Postal: Boulevard de Berlaimont 14, B-1000 Bruxelles|
Phone: (+ 32) (0) 2 221 25 34
Fax: (+ 32) (0) 2 221 31 62
Web page: https://www.nbb.be/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:nbb:ecrart:y:2010:m:june:i:i:p:77-91. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.