EBITDA as a Key Indicator of Sustainability in Colombian Companies

EBITDA as a Key Indicator of Sustainability in Colombian Companies

Rafael Ignacio Pérez-Uribe, Carlos Salcedo-Perez, Luz Janeth Lozano-Correa
DOI: 10.4018/978-1-7998-9301-1.ch009
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Between 2017 and 2021, the RISE model (route of innovation and sustainability for enterprises) has been applied in 106 organizations of different sizes and economic sectors in the Colombian environment. From the results of application of the RISE, the following research question arises for the authors of this chapter: Which variables or descriptors better explain the financial performance of the EBITDA Margin and in which should a manager should concentrate his efforts for organizational sustainability, in terms of this indicator? The objective of this work is to present the analysis of the variables that best explain the financial performance of the EBITDA Marginl to facilitate the organizational sustainability of Colombian companies. The data were processed with the statistical package Statgraphic Centurion XVI, using factorial analysis with multiple regression, and seven variables were obtained from the 36 that make up the model, which explain at 51.15% the performance of the EBITDA.
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The Rise Model (from its acronym in Spanish, Path for Organizational Innovation and Sustainability) helps managers to implement the best practices related to innovation and sustainability business; it has been useful to evidence the technological gaps to manage innovation and sustainability that organizations face today compared to top enterprises in each industry; this model allows enterprises to have an orientation to improve their current situation (Perez-Uribe & Ramírez- Salazar, 2020).

The RISE had been applied to 86 organizations so far, enabling them to develop paths for innovation and sustainability (Pérez-Uribe, Ramírez-Salazar, Ocampo-Guzmán & Saiz-Álvarez, 2021, p.1). This chapter aims to present those descriptors or variables that explain EBITDA as a key indicator to measure Colombian enterprises’ sustainability so managers can rely on it to develop activities that let them have certain control over this factor.

Therefore, first, the reader will find the theoretical foundations related to the main descriptors or variables that explain or have a higher effect on the EBITDA as a key indicator to explain an enterprise’s sustainability. Then, the methodology used to develop the model is explained, showing which descriptors or variables are more important to explain the EBITDA. Finally, conclusions and recommendations useful for the academic and business communities are drawn up based on the former parts; such conclusions allow having a guide to develop actions to keep or improve the EBITDA.

Key Terms in this Chapter

EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. Financial indicator that shows the financial benefits of an enterprise before subtracting interest paid for debt, taxes paid to the government, depreciation for wearing out and amortizations on investments.

ROA: Return on Assets, measures the Benefit generated by the assets of an enterprise (operating profit/total assets). It provides a clear vision about the profitability that an enterprise can obtain from its assets.

RISE: Model that shows a path for innovation and sustainability, assessing the state of these factors in organizations. This managerial model tries to improve organizational innovation.

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