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Results of non-financial corporations to 2021 Q4. Preliminary year-end data

Author

Listed:
  • Álvaro Menéndez
  • Maristela Mulino

Abstract

Data from the Central Balance Sheet Data Office Quarterly Survey (CBQ) show that corporate earnings and activity increased significantly in 2021. However, the recovery was dampened in Q4 at the firms most exposed to rising energy costs. Against this background, average profitability levels rose significantly compared with 2020, albeit remaining below pre-pandemic values. The overall debt of the sample firms grew in 2021, leading to a slight increase in the average debt-to-assets ratio. Conversely, the average ratio of debt to ordinary earnings, which proxies repayment capacity, fell, helped by the recovery in corporate earnings. The average interest coverage ratio also decreased. This was due to both the lower cost of outstanding debt and higher ordinary earnings. Following the sharp rise in the previous year, liquidity ratios declined at most firms and sectors, against a less uncertain backdrop. The article includes a box analysing recent developments in the degree of financial vulnerability of CBQ firms. It shows that, after the severe downturn in 2020, there was a clear improvement in 2021. However, they remained more financially vulnerable than in 2019.

Suggested Citation

  • Álvaro Menéndez & Maristela Mulino, 2022. "Results of non-financial corporations to 2021 Q4. Preliminary year-end data," Economic Bulletin, Banco de España, issue 1/2022.
  • Handle: RePEc:bde:journl:y:2022:i:01:d:aa:n:06
    Note: Analytical Articles
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    More about this item

    Keywords

    activity; earnings; financial position; non-financial corporations; COVID-19.;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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