New developments in financial statement analysis: liquidity in the winery sector

Abstract

The aim of this article is to analyse the short-term solvency of large companies in the wine sector in the period 2014-2018, in two relevant Spanish wine-production areas and assess significant differences in time and between regions. Liquidity is a direct threat to the financial health of companies and is analysed using standard financial indicators and compositional data, in order to prevent the common outlier, non-linearity and asymmetry problems in standard financial ratios. The study shows that the compositional ratios are statistically more adequate and that the turnover indicator between operating cash inflows with respect to current investments and operating cash outflows with respect to current liabilities is a complementary indicator to standard cash flow ratios. Wineries in La Rioja have better liquidity than Catalan wineries in the period under study