Capital Structure and Profitability of Small and Medium Enterprises

In the City of San Fernando, La Union

Jennifer Ann D. Papa

Stephanie M. Llarenas
Lea E. Peralta
Karl Jay Q. Pimentel
Hazel D. Pulido

Don Mariano Marcos Memorial State University

Mid La Union Campus
City of San Fernando, La Union
Bachelor of Science in Business Administration
Major in Financial Management

September 25, 2017

 Survey Questionnaire

Capital Structure and Profitability of Small and Medium Enterprises

In The City Of San Fernando, La Union

Dear Respondents,

Greetings!

We are third year BS Business Administration students major in Financial Management

conducting a study entitled “Capital Structure and Profitability of Small and Medium Enterprises in
the City Of San Fernando, La Union”, in partial fulfillment of the requirements in the subject –
Methods of Research (Research 101).

The questionnaire intends to gather important information related to our study, we would like to
solicit your honest and objectives responses to the questionnaire. Rest assured that your answer will be
held with utmost confidentiality and shall be used for the aftermentioned purpose only.
Thank you very much!

The Researchers

Questionnaire (Respondents-Owners/Managers/Operators)

Name of Business Owner/Manager/Operator (optional):_______________________________

Address: ____________________________________________________________________

Name of the Business: _________________________________________________________

Direction: Check the item/s that corresponds to your answer.

1. Profile of the Enterprise

1.1 What industry sector do you operate in?

[ ] Agriculture, forestry, and fishing
[ ] Manufacturing - Processing & Food from agricultural activities and manufacturing of food from
non-agricultural activities (tobacco and beverages)
[ ] Manufacturing or apparel
[ ] Manufacturing - All other manufacturing (mining, paper, plastic, chemical, pharmaceutical,
machinery, car assembly, electronics, home appliances, crafts, small hydropower stations, other)
[ ] Construction - General construction (including general building & civil engineering)
[ ] Logistics/transportation
[ ] Retail Trade & Repairs (motor only)
[ ] Hotels & restaurants
[ ] Business services (auditing and accounting, financial consulting, legal, other business
consulting/services)
[ ] ICT and high value added sectors (cinema, industrial engineering, web design, fashion etc.)
[ ] Other, please specify ______________________

1.2 Including yourself, how many people are currently employed in your business?
[ ] 2-10
[ ] 10-20
[ ] 21-49
[ ] 50-100
[ ] 101-249
[ ] 250 above
[ ] Don’t know (spontaneous)

1.3 What is your firm‘s current legal status?

[ ] Shareholding company with shares traded in the stock market
[ ] Shareholding company with non-traded shares or shares traded privately
[ ] Sole proprietorship
[ ] Partnership
[ ] Limited partnership
[ ] Other, please specify ___________________
[ ] Don’t know (spontaneous)
1.4 In what year does the establishment begin its operations?
[ ] Year establishment began operations |__||__||__||__|
[ ] Don’t know (spontaneous)
[ ] Refused

2. Capitalization

2.1 What was your business’ turnover in fiscal year (insert last complete fiscal year), as per the following
bands?

[ ] Up to 30,000
[ ] 30,001 - 100,000
[ ] 100,001 – 500,000
[ ] 500,001 –1,000,000
[ ] 100,001 –1,500,000
[ ] 1,500,001 above
[ ] Don’t know (spontaneous)
[ ] Refused

2.2 Please fill in values in the following blanks about your business in fiscal year [insert last complete
fiscal year] *in thousands.

Total annual sales for all products

and services _____________ [ ] Don’t know [ ] Refused

Total annual sales for all

Products and services _____________ [ ] Don’t know [ ] Refused

Total profits _____________ [ ] Don’t know [ ] Refused

Total debt _____________ [ ] Don’t know [ ] Refused

Buildings owned _____________ [ ] Don’t know [ ] Refused

Value of equipment and

Vehicles owned _____________ [ ] Don’t know [ ] Refused

Value of inventories (raw

materials, finished goods) _____________ [ ] Don’t know [ ] Refused

2.3 At this time, does the establishment have a checking or savings account?
[ ] Yes
[ ] No
[ ] Don’t know (spontaneous)
[ ] Refused

2.4 If Yes, Is this account under the name of the establishment or manager?
[ ] Establishment
[ ] Manager
[ ] Don’t know (spontaneous)

2.5 Is this account under name of the establishment or manager?

[ ] Establishment
[ ] Manager
[ ] Don’t know

2.6 What is the annual interest rate that this establishment earns on its savings?
|__||__||__|%
[ ] Don’t know (spontaneous)
[ ] Refused

2.6 In fiscal year [insert last complete fiscal year], what percentage of material inputs or services was
purchased on credit (paid after delivery)?
Purchased on credit
|__||__||__|%
 [ ] Don’t know (spontaneous)
[ ] Refused

2.7 In fiscal year [insert last complete fiscal year], what percentage of this establishment’s total annual
sales of its goods or services were sold on credit (paid after delivery)?
Sold on credit
|__||__||__|%
[ ] Don’t know (spontaneous)
[ ] Refused

2.8 Over fiscal year [insert last complete fiscal year], please estimate the proportion of this
establishment’s working capital that was financed from each of the following sources? Please check
if the answer is either Don’t know or Refused

Percent Don’t know Refused

Internal funds or retained earnings
Owners’ contribution or issued new equity shares

Borrowed from banks (private and state-owned)

Borrowed from non-bank financial institutions which include

microfinance institutions, credit cooperatives, credit unions, or
finance companies
Purchases on credit from suppliers and advances from
customers
Other (moneylenders, friends, relatives, bonds, etc.)

2.9 In fiscal year [insert last complete fiscal year], did this establishment purchase any fixed assets, such
as machinery, vehicles, equipment, land or buildings?
[ ] Yes
[ ] No
*If yes how much did this establishment spend on purchases of:
Machinery, vehicles, and equipment (new or used) ______________
Land and buildings _____________

2.10 Over fiscal year [insert last complete fiscal year], please estimate the proportion of this
establishment’s total purchase of fixed assets that was financed from each of the following sources:

Percent Don’t know Refused

Internal funds or retained earnings
Owners’ contribution or issued new equity shares
Borrowed from banks (private and state-owned)
Borrowed from non-bank financial institutions which
include microfinance institutions, credit cooperatives,
credit unions, or finance companies
Purchases on credit from suppliers and advances from
customers
Other (moneylenders, friends, relatives, bonds, etc.)

2.11 How many loans/lines of credit does the firm have?

[]1
[]2
[]3
[]4
[ ] Don’t know (spontaneous)
[ ] Refused

2.12 At this time does the owner or owners of this establishment have any outstanding personal loans that
are used to finance this establishment’s business activities?
[ ] Yes
[ ] No
[ ] Don’t know (spontaneous)
[ ] Refused
 2.13 In fiscal year [insert last complete fiscal year], did this establishment’s level of debt increase,
decrease or remain the same?
[ ] Increase
[ ] Decrease
[ ] Remain the same
[ ] Does not apply (spontaneous)
[ ] Don’t know (spontaneous)
[ ] Refused

2.14 In the fiscal year [insert last complete fiscal year], did this establishment do the following?

Yes No Doesn’t apply Don’t know Refused

Did not pay its debts in time?

Restructured its outstanding

liabilities?
Filed for insolvency or
bankruptcy?
Applied for state aid?

2.16 Which strategies, if any, do you use to make sure you can meet cash emergencies for your business?
[ ] No strategies
[ ] Offering discounts for cash payments/ Accelerated payments from credit customers
[ ] Increased sales through effective advertising
[ ] Selling off assets/inventory
[ ] Eliminating costs
[ ] Negotiating longer payment terms with suppliers
[ ] Taking advantage of early payment incentives
[ ] Leasing instead of buying
[ ] Adding new outside cash (ex: loan, issuing of shares, etc.)
[ ] Other (specify) ______________

2. Financial Status

3.1 The following indicators are relevant for the income generation of your firm. Please put a check
whether the following indicators have decreased, remained unchanged or increased over the past 6
months in your company?

Increase Remained Decreased Don’t know

unchanged
Turnover
Labour cost (including social contributions)

Other cost (materials, energy, other)

Net interest expenses [= INTEREST
EXPENSES MINUS INTEREST INCOME]

Profit [= NET INCOME AFTER TAXES]

Mark up [= SELLING PRICE MINUS

PRODUCTION COST PER UNIT]

3.2 For each of the following types of external financing, please put a check if your needs increased,
remained unchanged or decreased over the past 6 months?

Increased Remained Decreased Instrument is not

unchanged applicable to my
firm
Bank loans
Trade credit
Equity investments in your
firm
Debt securities issued
3.3 For each of the following items, would you say that they have increased, decreased, or had no impact
on your firm’s needs for external financing over the past 6 months?

Increased needs for No impact on Decreased needs Not relevant, did

external financing needs for external for external not occur
financing financing
Fixed Investment
Inventories and
working capital
Internal funds

3.4 For each of the following ways of financing, would you say that their availability has improved,
remained unchanged or deteriorated for your firm over the past 6 months?

Improved Remained Deteriorated Not applicable to

unchanged my firm
Bank loans
Trade credit
Equity investments in
your firm
Debt securities issued

3.5 The availability of external financing depends on various factors, which are in part related to the
general economic situation, your firm-specific situation and to lenders’ attitudes. For each of the
following factors, would you say that they have improved, remained unchanged or deteriorated over the
past 6 months?

Improved Remained Deteriorated Not applicable /

unchanged did not want to
use
General economic outlook
Access to public financial support
including guarantees
Your firm-specific outlook with
respect to your sales and
profitability or business plan
Your firm’s own capital
Your firm’s credit history
Willingness of banks to provide a
loan
Willingness of business partners to
provide trade credit
Willingness of investors to invest
in equity or debt securities issued
by firm

3.6 Please rank from 1 to 8 the sources of external financing you would seek (in order of preference):
[ ] Money lender
[ ] Non-bank credit institution
[ ] Commercial bank
[ ] Leasing company
[ ] Family/friends
[ ] Non-bank financial institutions (including microfinance institutions, credit cooperatives, credit
unions)
[ ] Other non-bank financial institutions (Angel funds, venture capital, etc.)
[ ] Other sources (specify) _____________
REFERENCE:

Hallberg, Kristen. (2010), A Market Oriented Strategy for Small and Medium Enterprises, IFC
Discussion Paper 40, p.5, Washington D.C.

Coleman, S. (2009), ‘Access to Capital and Terms of Credit: A Comparison of Men and
Women-Owned Small Businesses’, Journal of Small Business Management, 38(3), pp. 37-52.

Ross et al., (2008). Corporate Finance Fundamentals: Interna-tional Student Edition (8th edition). New
York: McGrawHill/Irwin.

Singh, R.K., Suresh, K., Garg, S., Deshmukh, G. (2010), “The Competitiveness of Smes in A Globalized
Economy”, Management Research Review, Vol. 33 No.1, pp.54-65.