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Financing Profile: Small and Medium-Sized Enterprises in Tourism Industries
Financial performance
The poor financial performance of small and medium-sized enterprises in tourism industries may help explain their difficulties in accessing financing
Using anonymized tax file data linked by Statistics Canada, Table 11 presents a summary of financial statement figures for the average tourism SME in comparison with the average non-tourism SME. In both 2004 and 2007, the average SME operating in a tourism industry had substantially lower total revenues, profit and retained earnings compared with the average SME operating in a non-tourism industry.
| 2004 | 2007 | |||
|---|---|---|---|---|
| Tourism SMEs | Non-Tourism SMEs | Tourism SMEs | Non-Tourism SMEs | |
|
* Bold values denote statistically significant difference at 5 percent. |
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| Total Revenue | $685 000 | $951 000 | $775 000 | $1 167 000 |
| Total Expenses | $676 000 | $908 000 | $745 000 | $1 086 000 |
| Net Income/Loss before tax | $10 000 | $43 000 | $30 000 | $81 000 |
| Current Assets | $101 000 | $327 000 | $138 000 | $476 000 |
| Fixed Assets** | $368 000 | $302 000 | $496 000 | $469 000 |
| Total Assets | $469 000 | $629 000 | $634 000 | $946 000 |
| Current Liabilities | $161 000 | $224 000 | $177 000 | $294 000 |
| Total Liabilities | $396 000 | $423 000 | $496 000 | $591 000 |
| Retained Earnings | $39 000 | $144 000 | $73 000 | $211 000 |
| Total Shareholder Equity | $73 000 | $206 000 | $138 000 | $354 000 |
Additionally, from 2004 to 2007, average current assets increased for both types of businesses; however, the increase was smaller for SMEs in tourism industries. The result was a widened gap between the industries in terms of assets.
This poor financial performance suggests that businesses in tourism industries have more financial difficulties, which could be a result of the industry's challenging environment or it could indicate poor financial management. In any event, this performance may help to explain why businesses in tourism have more difficultly obtaining financing.
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