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

1 de Dezembro de 2011 | Publicação

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

- Autor: Alarco Tosoni, Germán
- Descrição física: páginas. 123-139
- Símbolo da ONU (Assinatura): LC/G.2508-P
- Data: 1 de Dezembro de 2011

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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.