Analysis of the population of non-financial corporations with negative economic profitability

The article describes the characteristics of firms with negative economic profitability. Analysis of the pattern of profitability during the period from 1999 to 2008 on the basis of the annual accounts of non-financial corporations shows that, year after year, one in ten firms makes a loss, and in the case of SMEs that figure is actually as high as one in four firms. These findings require further investigation. For the majority of non-financial corporations (85.6 p.c.) the period of negative economic profitability does not persist for longer than 4 years. Negative economic profitability is proportionately more common for firms in the non-manufacturing sectors than in manufacturing industry. Analysis by firm size, distinguishing between large firms and SMEs, reveals that SMEs are proportionately more affected. If age is considered, large firms with negative economic profitability are 2 to 3 years younger, on average, than other firms, whereas age is not a factor in the case of SMEs. In regard to regional location, the Brussels Capital Region has the highest ratio of firms with a negative profitability. For most firms, the negative sign of the profitability ratio can be attributed to the firm ending the financial year with an operating loss. Within that group of firms with a negative operating result, as many as 33.1 p.c. of large firms and 44.9 p.c. of SMEs fail to generate any value added. Ultimately, in the case of 30.8 p.c. of the large firms and 42.1 p.c. of the SMEs, the net assets had fallen below the specified minimum, so that – under the alarm bell procedure – any interested party can apply to the court for dissolution of the companyfirms’ results, financial structure, distribution analysis, sectoral analysis

Trend in the financial structure and results of firms in 2006

In 2006, growth of total value added generated by Belgian non-financial corporations accelerated to reach 6.4 p.c. At the same time, operating costs rose by 5.5 p.c. So, for the fourth year in a row, value added rose faster than operating costs. As a consequence, net operating profit saw a further noticeable increase (+9.2 p.c.), reaching a total of nearly 33 billion euro. After taking into account the other elements of the profit and loss account, non-financial corporations generated an overall net profit after tax of 43 billion euro, representing a new year-on-year increase. The financial position of firms also continued to improve in 2006. Globalised as well as median measures confirm the exceptional levels of profitability, solvency and liquidity that have been reached today. Finally, the article focuses on the effects of the corporation tax reforms of 2003 and 2005. Although an increase in revenue from corporate taxation can be noted from 2002 onwards, the tax burden has declined for non-financial corporations as a result of these reforms. The most recent reform, which introduced a notional interest deduction from the 2007 tax year onwards, has had a structural impact on the financial behavior of corporations. Share issues grew by more than 250 p.c. to reach a record level of 114 billion euro. Large companies, in particular, resorted to techniques to optimise the impact of the tax deduction. Their rectified equity capital, which is used as a base to calculate the size of the tax deduction, increased by 30 p.c. and their payment of dividends decreased by 20 p.c. in 2006.firms results, financial structure, corporate tax, sectoral analysis

Life history trade-offs imposed by dragline use in two money spiders

Trade-offs among life history traits are central to understanding the limits of adaptations to stress. In animals, virtually all decisions taken during life are expected to have downstream consequences. To what degree rare, but energy-demanding, decisions carry over to individual performance is rarely studied in arthropods. We used spiders as a model system to test how single investments in silk use - for dispersal or predator escape - affect individual performance. Silk produced for safe lines and as threads for ballooning is of the strongest kind and is energetically costly, especially when resources are limited. We induced dragline spinning in two species of money spider at similar quantities to that under natural conditions and tested trade-offs with lifespan and egg sac production under unlimited prey availability and a dietary restriction treatment. We demonstrate strong trade-offs between dragline spinning and survival and fecundity. Survival trade-offs were additive to those imposed by the dietary treatment, but a reduction in eggs produced after silk use was only prevalent under conditions where food was restricted during the spider's life. Because draglines are not recycled after their use for dispersal or predator escape, their spinning incurs substantial fitness costs in dispersal, especially in environments with prey limitation. Rare but energetically costly decisions related to dispersal or predator escape may thus carry over to adult performance and explain phenotypic heterogeneity in natural populations

Analysis of business demography using markov chains : an application to Belgian data

This paper applies the theory of finite Markov chains to analyse the demographic evolution of Belgian enterprises. While other methodologies concentrate on the entry and exit of firms, the Markov approach also analyses migrations between economic sectors. Besides helping to provide a fuller picture of the evolution of the population, Markov chains also enable forecasts of its future composition to be made, as well as the computation of average lifetimes of companies by branch of activity. The method is applied to Belgian data from the Crossroads Bank for Enterprises (CBE). To ensure compliance with Eurostat-OECD definitions, only 'active' enterprises, i.e. enterprises with a positive turnover and/or at least one employee, are considered. The forecasting method is applied to simulate the demographic evolution of the CBE population between 2000 and 2006. This simulation seems to match well the observed changes. Taking migrations into account yields better forecasts than if they are not considered. Moreover, several off-diagonal percentages in the transition matrix are sigificantly different from zero. A case study shows that these migrations are changes in main activity and not the consequence of corrections of wrongly classified firms. Next, the average remaining lifetime and the average age of enterprises in a particular branch of activity is computed and analysed. These lifetimes and ages differ considerably across branches. As expected the life-times of public services are longer than average. Shorter lifetimes combined with an increasing number of enterprises is an indication of renewal inside the branch. A low average age is a sign of relatively new branches. Comparing age to total expected lifetime yields an indicator of closeness to extinction. This might be an indicator of the maturity of the branch. The method is more generally applicable in the sense that it can be used to analyse other populations than those from the CBE and other partitions of the populationBusiness demography, Markov chains, Transition matrix

Computer evaluation of network performance by a topological flowgraph technique

Algorithm for computer evaluation of linear network by topological flow techniqu