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Profit margins, financing and investment in the Peruvian business sector (1998-2008)

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  • Alarco Tosoni, Germán

Abstract

This paper develops a model and explains the determinants of profitmargins in the Peruvian business sector in the 1998-2008 period. Theseare established in a fixed-price scenario, with reference to a set of variablessuch as the price elasticity of demand, the behaviour of possible industryentrants and any regulatory intervention by government. In addition,there is a direct relationship between profit margins and self-financingof investment. Profit margins and profit ratios in the business sector arerising and exceed international norms. The paper also identifies a trendtowards lower levels of debt and leverage. It does not reject the hypothesisof linkage between profit margins and investment at the aggregate andsectoral level. The output-to-capital ratio or sales-to-assets ratio is directlylinked to profit margins. Most investment is self-financed.

Suggested Citation

  • Alarco Tosoni, Germán, 2011. "Profit margins, financing and investment in the Peruvian business sector (1998-2008)," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    • Handle: RePEc:ecr:col070:11541
    Note: Includes bibliography
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    File URL: http://repositorio.cepal.org/handle/11362/11541
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    1. Urzúa, Carlos M., 2009. "Efectos sobre el bienestar social de las empresas con poder de mercado en México," Finanzas Públicas, Centro de Estudios de las Finanzas Públicas, H. Cámara de Diputados, vol. 1(1), pages 79-118.
    2. Alarco Tosoni, Germán & Del Hierro, Patricia, 2010. "Growth and concentration among the leading business groups in Mexico," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
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    Cited by:

    1. Alex Coad & Gregory Scott, 2018. "High-growth firms in Peru," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 37(75), pages 671-696, May.

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