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Instituto Valenciano de Investigaciones Económicas

News

Valencian firms have reduced their debt ratio to 21.6% below the Spanish average

The financial situation of Valencian firms in terms of liquidity and profitability also surpasses the national average

Valencian firms have improved their overall situation relative to Spanish firms. They have also improved their pre-crisis levels of liquidity and profitability and have reduced their debt burden, according to the Observatory on the financial situation of Valencian firms at national level, developed by the Ivie for the Valencian Regional Government within the IvieLAB (Laboratory for the Analysis and Evaluation of Public Policy) project.

The liquidity of Valencian firms has improved, as shown by the reduction in the average payment delay to suppliers, which has fallen from 84.8 days in 2008 to 70 days in 2016 (latest data available), lower than the national average (76 days).

Valencian firms have also reduced their debt at a greater pace than the national average since 2008. At the beginning of the crisis, their debt/asset ratio was similar to the national average (42.9% and 43.7%, respectively), but by 2016 the ratio for Valencian firms was 27.3% while the national average was 34.8%. Valencian firms overall, therefore, have 21.6% less debt than Spanish firms.

Valencian firms are also slightly more profitable than national firms, with a 5.8% return on assets in 2016, 0.44 percentage points above the Spanish average. This improvement in profitability and debt containment means that profits (EBIT + interest income) for Valencian firms were 6.6 times their financial costs –triple the 2008 rate and 40% more than the national average–.

February 28th, 2019