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A guide to measuring profits and net worth microenterprise
Based on a review of previous studies and data from 448 microenterprises in Zimbabwe, this paper examines five alternative measures of profits and five alternative measures of net worth. The results showthat the single-question proxies are too difficult for proprietors to answer, whereas the most complex profit measures generate many negative estimates. The best measure of profits, based on three questions,
could be answered by all proprietors and it avoids recall problems associated with sales and expenses. Among the net worth proxies, all of the measures are positively correlated. Nonetheless, the proxy
based on fixed assets, accounts receivable, debt and inventory, showed the highest correlation with the full measure of net worth.
Based on a review of previous studies and data from 448 microenterprises in Zimbabwe, this paper examines five alternative measures of profits and five alternative measures of net worth. The results show
that the single-question proxies are too difficult for proprietors to answer, whereas the most complex profit measures generate many negative estimates. The best measure of profits, based on three questions,
could be answered by all proprietors and it avoids recall problems associated with sales and expenses. Among the net worth proxies, all of the measures are positively correlated. Nonetheless, the proxy
based on fixed assets, accounts receivable, debt and inventory, showed the highest correlation with the full measure of net worth.
that the single-question proxies are too difficult for proprietors to answer, whereas the most complex profit measures generate many negative estimates. The best measure of profits, based on three questions,
could be answered by all proprietors and it avoids recall problems associated with sales and expenses. Among the net worth proxies, all of the measures are positively correlated. Nonetheless, the proxy
based on fixed assets, accounts receivable, debt and inventory, showed the highest correlation with the full measure of net worth.
‘Helping a Large Number of People Become a Little Less Poor’: The Logic of Survival Entrepreneurs
Berner, Erhard
Gomez, Georgina
Knorringa, Peter
The European Journal of Development Research, Vol. 24 (2012), Iss. 3 P.382
https://doi.org/10.1057/ejdr.2011.61 [Citations: 108]Tabs navigation
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