This article presents updated and revised estimates of company profitability and financing. Among the main developments in 1984:
- company profitability improved for the third year in succession, although for non North Sea companies the rise may have been checked at the end of the year as cost pressures re-emerged;
- fixed investment grew strongly, but destocking persisted, leaving companies in record financial surplus;
- a large 'unidentified' item makes it unusually difficult to interpret the financial behaviour of companies: it is particularly difficult to reconcile the apparent financial health of companies with their heavy borrowing from banks in 1984;
- company liquidity deteriorated, while the rapid growth of bank lending in a period of comparatively low inflation has caused capital gearing ratios to rise.
An appendix considers the post-tax profitability of companies and the returns earned on equity capital.