Economic analysis of firms in the European film industry through their financial ratios

Abstract

Within the field of cultural industries the film sector is immersed in a spiral of changes from two different standpoints. On the one hand, new technologies are revolutionising all the stages of the chain of value in the sector, while on the other, consumers are changing their consumption habits. Together with these changes, the huge turnover in the sector, the number of jobs created, and the industry’s contribution to the Gross Domestic Product (GDP), make it interesting to explore this sector from the standpoint of the financial situation of the firms involved. Taking these premises into account, this study seeks to examine the film industry, specifically the firms included in code 591 in revision 2 of the Statistical Classification of Economic Activities in the European Community, commonly referred to as NACE (from the French term “Nomenclature statistique des Activités économiques dans la Communauté Européenne”), from the perspective of their financial performance. We analyse the main profitability and structural ratios for firms in the present-day 27-country European Union (EU 27) using multivariate statistical techniques for dimension reduction, establishing the key factors inherent in their financial structure and forming homogeneous groups for the various subsectors grouped under code 591. The results highlight the diverse nature of the sector and the differences between the various subsectors.