Economics in a picture

In 2020, the cash over assets ratio for the firms that participate in the Quarterly Survey of Non-financial Corporations (ITENF) increased 2.1 pp, 1.3 pp more than in 2019, to a ratio of 13.2%. The higher increase in cash in 2020 resulted from less negative contributions of the cash flow from investing and the cash flow from financing, which increased, respectively, from -4.5% to -3.5% and from -3.9% to -3.0%. The lower investment cash outflows is consistent with the context of uncertainty regarding the evolution of demand. The lower financing cash outflows reflects the decline in debt servicing costs for firms that applied to credit moratoria and the increase in bank funding, partly state-guaranteed credit lines. The lower investing and financing cash outflows more than compensated the reduction in the cash flows from operating activities from 9.2% to 8.5% of the assets. The decrease in the cash flow from operating activities was due to the decrease in the gross margin (6.9% of the assets), which reflected the slowdown in economic activity, and was compensated mainly by a strong decrease in the supplies and external services expenses (4.5% of the assets).

For more details see the Special Issue: “The evolution of firms’ liquidity during the pandemic”, published in the Economic Bulletin of Banco de Portugal, May 2021.

Prepared by Nuno Silva and Pedro Moreira. The analyses, opinions and findings expressed above represent the views of the authors and not necessarily those of Banco de Portugal or the Eurosystem.

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