Page 244 - Social Enterprise A New Business Paradigm for Thailand

Capital Structure, evaluated through metrics such as the ratio of current assets to total assets,
debt-to-equity ratio (D/E), long-term debt, short-term debt, and total debt; and (4) Liquidity,
measured by the current ratio, quick ratio, and cash ratio. Key financial performance indicators

also include return on assets (ROA), return on equity (ROE), and return on sales (ROS).

Ebaid (2022) classified financial performance into three main categories: (1) Profitability,
measured by return on assets (ROA), return on equity (ROE), and net profit margin (NPM); (2)
Liquidity, assessed through the current ratio, quick ratio, and operating cash flow coverage; and
(3) Leverage, measured by the debt ratio, equity ratio, and debt-to-equity ratio (D/E).

A review of prior literature indicates that most studies assess the performance of social
enterprises based on both financial and social objectives. However, there remains a lack of
consensus regarding which indicators most accurately reflect their operational performance. As
noted by Bellostas, López-Arceiz, and Mateos (2016), the analysis of social enterprise
performance typically aligns with the specific aims of each study. Still, a synthesis of existing

approaches to measuring financial performance allows for categorization into four key
dimensions: (1) Growth, defined as changes in performance indicators over time, measured by
revenue and net profit; (2) Profitability, referring to the organization's ability to generate income
relative to revenue, typically assessed using the gross profit margin; (3) Capital Structure,
representing the mix of debt and equity used for operations, measured by the debt-to-equity
ratio (D/E); and (4) Liquidity, reflecting the efficiency with which assets can be converted into
cash, measured by the current ratio. These dimensions are illustrated in Figure 8.1. This study

emphasizes accounting-based metrics and draws on financial data from social enterprises
publicly disclosed on the Department of Business Development’s website (dbd.go.th:
https://datawarehouse.dbd.go.th/index).

Figure 8.1 Measuring the Financial Performance of Social Enterprises

Source: Adapted from Batchimeg (2017), Pham et al. (2021), Ebaid (2022), Baby, Mia, and Pitchay (2024), and
Singhal et al. (2024)
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