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A third of Irish SMEs are debt free

Friday, May 16 14:45:17

New research from the Central Bank today revealed that a third of Ireland's SMEs are free of debt.

The research paper entitled 'Profiling the indebtedness of Irish SMEs' found that increases in debt to turnover ratios (DT) are associated with increased default and solvency risk.

It also indicates that low DT levels in SMEs do not necessarily signal strong financial health.

The study concluded that incidences of extremely high indebtedness are not as common in Irish SMEs as might be expected given the difficulties of Irish SME loan repayments.

The majority of SMEs have relatively low DT ratios, with the share of SMEs with a DT of greater than a third being 16.3 pc.

The share of SMEs with a DT of greater than one is 7 pc. This number is highest for medium-sized firms (greater than 50 employees) at 12 pc.

The Hotels and Restaurants sector has the highest share of highly indebted SMEs, while the Business and Administrative and Construction sectors have the lowest share.