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Lost Companies?
Dr. C. Víctor López Lescay*
The existence of loss-making enterprises is common in Cuba. When we talk about this issue, we are referring to entities, including those in the private sector, that are unable to generate wealth through the production of goods or services.
This confirms the hypothesis that economics is a science governed by laws, regardless of the prevailing social system and the will of individuals.
When we talk about undercapitalized companies, or bankrupt companies as they are also called, it is worth mentioning that in the interest of the State, red figures are planned for those companies that are vital for the country’s economy due to their social, political or economic impact.
In such cases, the State subsidizes them due to the losses that are usually associated with the lack of electricity, raw materials, fuel, water, gas, other resources or internal and external situations that trigger problems in their proper operation.
There is another group of companies that show negative results in their balance sheets and financial statements – which face similar shortages in the current conditions of the country’s economy – but unlike the aforementioned companies, they have a different corporate purpose and should be affordable and profitable.
It happens more often than necessary that the analysis in this respect takes place within the groups characterized by inefficient management, focusing on the effects that generate the losses and not on the causes that led to them.
The lack of knowledge of the laws of economics as a working tool for decision making has led to a loss of ability to evaluate, from an economic-accounting-financial approach, the origin of losses due to various causes:
Examples include slowness in making timely decisions, poor utilization of material and human resources, poor planning, failure to consider the behavior of financial ratios to prevent cash flow imbalances, and poor vision of market behavior.
To have companies with losses does not mean to have lost companies, which is demonstrated by the economic reality of the nation. It is possible to get out of this situation. There are many economic variables that can be used to face the financial imbalances of the entities.
Eradicate economic ignorance, move from purely administrative attitudes to the true economic literacy of corporate boards of directors, and unite in the effort to get out of the losses to those who create the wealth, the workers.
A culture of analyzing the behavior of financial ratios (indicators and effective tools for a thorough analysis to understand the profitability, soundness and financial situation of companies) is essential to prevent economic losses and eliminate the lack of knowledge, as well as the absence of strategies and work systems based on economic analysis.
Monthly economic-accounting-financial statements are prepared not only to inform the superior body, but their main function is to be a working tool for decision-making in the company.
A good analysis warns and predicts possible losses. It allows you to plan the way to mitigate or avoid the damage.
To do it in unity with the union, to have it as an ally, should be an option considered by the administrations, which can take advantage of the scenario of the meetings of the affiliates to look for collective ideas to eliminate the red numbers.
*President of the Association of Economists and Accountants of the Province of Santiago de Cuba.
Changing Numbers
Luis Castanedo Smith*
As part of the systematic evaluation of the Workers’ Central Union of Cuba () on the fulfillment of its main mission, which is to lead the workers in the strategic and decisive economic struggle, in the period following its XXI Congress, an analysis was made of the behavior of loss-making enterprises.
Despite the efforts made, the results are still far from what the Cuban business system needs. Proof of this is that at the end of February this year, 316 companies had losses in their management.
A significant number of them are involved in activities related to production or services (offers) for the population, so the sales prices are centralized as a protective measure, since their costs are higher than these.
If this reality is true, why do a number of companies with similar difficulties achieve better results? This deserves a rigorous analysis and evaluation in each place, in which the impact of their management and collectives in this situation is examined in depth.
This requires a more participatory exercise by the workers, especially in identifying the way forward, based on the timely use of the powers granted at company level, which are not always used efficiently.
There must be a more active attitude on the part of all those involved in solving the problem, aware that a loss-making company, on the one hand, has a negative impact on the inflationary process that the country is currently experiencing and, on the other hand, does not allow for an increase in workers’ salaries.
It is important to defend that the efficiency of the company is not only in terms of values: the key lies in the fulfillment of production and service plans in physical terms, essential in the growth of the level of supply, the only way to recover the purchasing power of our salary.
In this struggle, it cannot be postponed to demand, in a systematic and permanent way, the realization of the above principles, and not only those related to loss-making companies: a more active action is necessary to fight for the defense of not allowing payments without their corresponding productive or service support.
Measures such as the payment of retained earnings, decentralization at the entity level to approve the salary distribution system, as well as payment by results, must be supported by the generation of wealth, with strict compliance that the worker who contributes the most receives the most.
The issues discussed represent anomalies that urgently need to be corrected. The organic process of the 22nd Congress of the was and is an opportunity to evaluate the work of the union and to outline strategies to meet this challenge.
It is urgent to make further progress without delay in increasing the production of goods and services and reducing expenses. And in this sense, loss-making enterprises must be removed from this never-ending list.
*CTC General Secretary’s Office Official
