The weighted average cost of capital in the Ecuadorian business context: A comprehensive study of the productive sectors

Abstract

In the context of the contemporary economy, the weighted average cost of capital (WACC) emerges as a key indicator that allows for a deeper interpretation of the financial and operational dynamics of companies. Therefore, the objective of this research article is to apply the weighted average cost of capital to the Ecuadorian productive sector, identifying the financial determinants and their strategic implications for business decision-making. Accordingly, the methodology employed has a descriptive scope with a quantitative approach, grounded in the scientific method and statistical analysis. Additionally, the sources of information are derived from the Superintendence of Companies, Securities, and Insurance. Consequently, this research analyzes 124,534 Ecuadorian companies, unraveling the intricate relationships that determine the cost of capital in each productive sector of the country. The results reveal the following: (i) a marked heterogeneity in the weighted average cost of capital within the Ecuadorian business sector; (ii) the average value stands at 14.88%, reflecting significant structural differences among the various economic sectors; (iii) in particular, sectors such as mining and quarrying, commerce, and agriculture exhibit the highest capital costs, with values exceeding 20%; (iv) in contrast, sectors such as arts and entertainment show critically negative indicators, which may suggest severe financial issues or atypical financing structures; and (v) a generalized trend toward intensive use of borrowed resources is observed in most of the analyzed sectors, reinforcing the relevance of debt as the predominant financing mechanism.