Page 258 - Social Enterprise A New Business Paradigm for Thailand

2019 due to widespread losses, turned positive in 2023. This suggests that the social enterprises
included in the study significantly improved their profitability, transitioning from a period of
substantial net loss in 2019 to achieving net gains. These improvements in NPM are consistent

with trends observed in return on assets (ROA) and return on equity (ROE), both of which
moved from negative to positive values over the same period. The shift indicates that the
enterprises became more efficient in utilizing their assets to generate profit (as reflected in ROA)
and in delivering greater returns to shareholders (as reflected in ROE).

With regard to the current ratio and debt-to-equity ratio (D/E), the findings indicate that
although the social enterprises studied showed improvements in total income and net profit,
they continued to face challenges related to liquidity and debt servicing. This is reflected in a
slight decline in the current ratio between 2019 and 2023, suggesting that, in the aftermath of
the COVID-19 pandemic, these enterprises had reduced short-term liquidity or a weakened

ability to meet immediate financial obligations. Meanwhile, the D/E ratio remained unchanged,
indicating a stable capital structure and no significant shift in their overall debt repayment
capacity.

8.7 Determinants of Financial Performance in Social Enterprises

This section analyzes two main objectives: (1) to empirically test a core hypothesis using
statistical methods, namely, that social enterprises established as flexibly supported spin-offs
demonstrate stronger financial performance than those with other organizational models; and

(2) to identify additional characteristics of social enterprises that may influence financial
performance, such as year of registration, business type, social objectives, business size, tax
registration status, and legal form. The analysis applies analysis of variance (ANOVA) to
determine whether these characteristics, including legal form, account for differences in the
seven financial performance indicators. According to the F-statistic results, return on equity
(ROE) is the only financial indicator for which none of the social enterprise characteristics
produced statistically significant differences at the 0.10 level, indicating that the variation in

ROE could not be explained by any of the characteristics observed in the study.

This suggests that, based on the F-test, none of the characteristics examined in the study had a
statistically significant effect on ROE. A likely explanation is that over 75% of registered social
enterprises are non-profit-distributing entities. Among the remaining 25%, those permitted to
distribute profits, the law allows no more than 30% of total profits to be distributed to owners
or shareholders. In contrast, the other six financial performance indicators were each
significantly influenced by at least one characteristic of social enterprises at the 0.10 level.
However, two indicators, net profit margin (NPM) and the debt-to-equity ratio (D/E), had

relatively weak explanatory power, with R² values of less than 0.10. As a result, findings related
to those two indicators are not presented here but can be found in the appendix. This section
therefore focuses on the four indicators for which social enterprise characteristics explained

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