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DETERMINANTS OF FINANCIAL PROFITABILITY OF MICROENTERPRISES: A CROSS-SECTIONAL STUDY FOR THE COMMERCE SECTOR

Abstract:

The purpose of this study is to examine the determinants of the profitability of microenterprises belonging to the wholesale and retail trade sector in the province of Guayas. The study sample contains 788 companies that reported their financial statements to the Superintendence of Companies, Securities and Insurances as of 2019. For this research, a multiple linear regression analysis was used to establish the variables that explain the financial profitability of these companies. The results of this work indicate that the age of the company, the level of debt and current liquidity have a positive effect on financial profitability, while the age of the microenterprise and its size, measured as the total assets owned by the microenterprise, has an inverse relationship with performance. This paper shows which financial factors can significantly affect performance and is therefore of practical use to enterprises operating in this sector.