The effect of the crisis through financial information on business distribution and retailer trade Spanish: Small vs big companies

Abstract

Purpose: In this paper, we analyze the evolution of the financial information of companies in the retail trade sector to show how and how much the actual crisis has affected them.

Design/methodology: In this paper, we have established the hypothesis about the particular behavior of the sector due to its specialization in the sale of basic goods and the strong position of the trade chain in the market. For the analysis we searched an example of companies from the SABI database, then we sorted the sample by size and linked theirs to per capita income and domestic consumption through a lineal regression. We looked for the economic variable than were explaining the evolution of the results of the sector better and studied the evolution of efficiency, operability, profitability or financial solvency ratios. We analyzed the statistically significant changes on the accounting ratios depending of the company size.

Findings: The retail trade sector could be could be listed as counter-cyclical sector but all companies have lost profitability although the small ones have lost more and have had to reorganize their financial structure as a result of the crisis. On the contrary, the big companies have kept their high level of indebtedness and even their negative working capital. The specialization in the sale of products with a low elasticity demand-income and the power in the markets have allowed that these big companies don´t suffer important changes in their revenue and expenditure results.

Research limitations/implications: This investigation describes and analyzes, with statistical techniques, the evolution of several accounting ratio of the companies of the retail and the relation with economics variables. However, a study of other financial information and the utilization of other statistical techniques could explain with more accuracy the reasons of these results.

Originality/value: On very few occasions the retail sector has been analyzed through their financial statements. The actual crisis has caused a restructuration in most of the companies, specially in the indebtedness level. However, the big companies of the retail sector haven´t needed deleverage. The difference of the crisis effect between companies of different sectors and between the size of the same sector, is presented as a different approach.