Financial leverage and profitability of the manufacturing industry of the canton of Cuenca, Ecuador

Authors

DOI:

https://doi.org/10.15381/quipu.v30i62.22103

Keywords:

financial leverage, dependence, performance, economic performance, financial performance

Abstract

Objective: To establish the relationship between profitability and financial leverage of micro, small and medium-sized enterprises, within the industrial sector of the canton, Cuenca (Ecuador), in the period 2018-2020. Method: The research approach was quantitative with a non-experimental and cross-sectional design. With the information of 150 companies, the Pearson correlation was applied, in order to recognize the level of association of the variables. Results: There is a correlation between financial leverage and the profitability of companies. This relationship is differentiated by the size of the company and by the year of study, both in direction and magnitude. However, the results of the linear relationship between financial leverage and profitability for the set of micro, small and medium-sized companies are not robust. Conclusion: Although there is a linear relationship between financial leverage and profitability, it is not robust for micro, small and medium enterprises. Similarly, the common variability between financial leverage and profitability is low, perhaps because there are other elements, such as the company's line of business, type of assets and decisions, that have an impact on the results generated by companies.

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Author Biographies

  • Lisseth Daniela Borja Peñaranda, Universidad de Cuenca. Ecuador

    Bachelor's Degree in Accounting and Auditing

  • Olga Piedad Villa Guanoquiza , Universidad de Cuenca. Ecuador

    Certified Public

  • Johanna Catalina Armijos Cordero, Universidad de Cuenca. Ecuador

    Commercial Engineer, Master in Business Management, Master in Education, specialist in Curriculum and Didactics. With a diploma in Socio-educational Research, postgraduate degree in CSR Training, Doctor in Administration (PhD). Professor and researcher at the University of Cuenca in the areas of Finance, Budget and Corporate Social Responsibility, researcher in Project: System of CSR indicators applied to the microenterprise hotel sector in Cuenca. Author of several articles, Co-director in projects of Linkage with Society, member of the Curricular Technical Commission, of the University Council and Coordinator of Graduate Follow-up of the University of Cuenca, Coordinator of the academic commission of the Accounting and Auditing Career.

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Published

2022-06-30

Issue

Vol. 30 No. 62 (2022)

Section

Original papers

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Copyright (c) 2022 Lisseth Daniela Borja Peñaranda, Olga Piedad Villa Guanoquiza , Johanna Catalina Armijos Cordero

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This work is licensed under a Creative Commons Attribution 4.0 International License.

AUTHORS RETAIN THEIR RIGHTS:

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b. Authors retain their right to share, copy, distribute, perform and publicly communicate their article (eg, to place their article in an institutional repository or publish it in a book), with an acknowledgment of its initial publication in Quipukamayoc .

c. Authors retain theirs right to make a subsequent publication of their work, to use the article or any part thereof (eg a compilation of his papers, lecture notes, thesis, or a book), always indicating the source of publication (the originator of the work, journal, volume, number and date).

How to Cite

Borja Peñaranda, L. D., Villa Guanoquiza , O. P. ., & Armijos Cordero, J. C. (2022). Financial leverage and profitability of the manufacturing industry of the canton of Cuenca, Ecuador. Quipukamayoc, 30(62), 47-55. https://doi.org/10.15381/quipu.v30i62.22103