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The financial health of Valencian firms: their ability to withstand the impact of COVID-19

The economic paralysis brought about by COVID-19 has resulted in liquidity problems for firms suffering from a sharp fall in revenues. However, financially solvent companies are less badly affected than vulnerable companies (i.e. those with excessive debt and/or low profitability), who may not be able to take advantage of government-supported bank lending measures. Firms in the Valencian Community are somewhat better positioned than firms in Spain, since a smaller percentage of Valencian firms  (13.6%) than Spanish firms (14.6%) are vulnerable. The size of firms is important;  in Valencia before the COVID-19 outbreak, 39% of small firms had excessive debt compared to 16.6% of large firms. In addition, among large companies, vulnerable firms account for only 4% of jobs whereas this share almost triples for small companies (11.7%).