Company financial independence at record levels

The profitability of Portuguese companies fell to 9% in the last quarter of 2023 while their financial independence achieved record levels according to figures from the Bank of Portugal.

Portugal’s central bank released the statistics on Thursday when profitability fell to 9% from 9.2% in the third quarter of 2022.
Company profitability is measured by the ratio between EBITDA results and total assets, said the BoP.
Compared to the like-for-like period, the profitability of private company assets fell over all activity sectors, with the exception of electricity, gas, and water (Which the BoP explains by an increase in renewable energy production) and construction.
The profitability of public companies was positive by 7.6%, above the 6% posted for the last quarter of 2022.
The financial independence of companies, measured by the ratio of own capital from total assets was 44.3% in the fourth quarter of 2023, above the like-for-like quarter in 2022 of 41.7%.
The financial independence of private companies rose across all sectors with the exception of construction and head offices. Financial independence of SMEs rose 42.2% to 44.5% and 35.4% for large companies.
Public sector company financial independence rose from 33.6% to 35.0%.
The cost of credit for companies increased from 3% to 4% since the financing costs to industry, trade and headquarters has risen.
However, covering the costs of company financial expenditure (which quantifies the number of times that the EBITDA generated by companies is greater than their debt servicing costs) fell from 10.2% to 8.0% in the last quarter of 2023.