SME APPAREL IN COLOMBIA: FINANCIAL PERFORMANCE ANALYSIS

Abstract

Traditionally, the financial behavior of SMEs has been studied through analysis of accounting profit and its components, given its restriction to access market information for not being listed on stock exchanges; This type of study does not allow knowing if it fulfills the financial objective of creating value, hence new methodologies have arisen, based on value management, which allow knowing financial performance by measuring its created value. This article presents the results of a research that aims to evaluate the financial performance of small and medium enterprises in the apparel sector in Colombia in the 2010-2016 period. The study follows as methodology the static and trend analysis of the accounting and economic value-added indicators that measure their growth, efficiency, efficacy and effectiveness; comparing the behavior of the small with the medium company and with the entire apparel sector in Colombia. It is found that the SME of this sector generates accounting returns in the period, being higher in the medium-sized company because it has greater efficiency in managing costs and expenses and always using positive financial leverage. However, the apparel SME destroys economic value added (EVA) in each of the years; but it is the small business that most destroys EVA for each monetary unit invested. This destruction of value is due to the fact that the cost of financial resources is greater than the operational profit after taxes. These findings will be strengthened with similar studies that allow comparing the SME of this sector with that of countries with which trade agreements are maintained.