Study on Performance of Offices of Dentists

Abstract

The offices of the dentists' sector are burdened with high debt levels in the capital. Still, due to interest coverage, the sector can comply with debt obligations. The industry is good with fixed asset turnover rates; however, lower utilization of intangible assets resulted in lower asset utilization. The sector has strong potential with increasing profit margins in the future.

The study finds that firms with an asset size lower than USD 2 million have lower receivables, payables, and higher dependency on external debts. Simultaneously, these firms are also found to have higher profit margins and asset returns, reflecting higher asset utilization. Whereas, the firms with asset size greater than USD 2 million have higher receivables, payables, owner funds, and lower dependency on the external debts. However, they are found to have a lower return on assets even though they can generate profit margins similar to small-sized asset firms. The study recommends that the large-sized firms need to increase asset utilization to achieve higher profit margins. Small-sized firms need to decrease the dependency on external debts by either infusing owners' funds or plowing back profits for reinvestment in the firm.