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1.INTRODUCTIONThe sector of cotton cultivation in Greece and by extension cotton processing is one of the most important sectors not only for the Greek agricultural economy but also for the entire Greek Economy. According to the official data of the EU, Greece is the main cotton-growing country as it has 80% of the European cotton-growing areas, followed by Spain. The international prices of the product have experienced a recession in the markets in recent years, but it has recovered, significantly increasing the competitiveness among the manufacturing companies in the sector. On the other hand, competitiveness is a broad concept whose definition and assessment has been extensively discussed in the international literature [1]. According to the international literature, the main ways of determining and assessing competitiveness can be distinguished in two categories [2]. The first concerns Michael Porter with the famous Five Porter’s Diamond and the second is the assessment of competitiveness using numerical indicators. Therefore, the purpose of this work is to assess the competitiveness of the two largest manufacturing companies in the sector in question through the use of numerical indicators as basic tools not only for determining their financial situation but also as consulting tools for choosing the appropriate strategic stimulation of their competitiveness. In the sections that follow, a bibliographic overview of the concept of competitiveness is first made with the citation of works related to it, while the research methodology that was used, the results obtained from the estimation of the aforementioned indicators, while the discussion and conclusion close the present paper. 1.1The concept of competitiveness.The notion of competitiveness has been extensively studied by international writers and researchers [1]. The current COVID 19 health crisis has compelled all players (academics, entrepreneurs, and managers) to separate themselves from their rivals through innovation due to the instability of the economy and business environment [3]. According to Michael Porter’s definition of a five-factor model of competitiveness in Porter’s Five Diamond [4], these factors are the threat of a new competitor’s entry, the threat of substitute products, the bargaining power of suppliers and buyers, and the level of competition that currently exists. Chikan [5] created a model for evaluating both micro- and macroeconomic competitiveness, coming to the conclusion that Porter’s forces are an effective method for measuring competitiveness and bridging the gap between them. Centidamar and Klitsioglou [6] created a shared model at the micro and macro levels that identifies factors that affect competitiveness based on an approach similar to Chikan’s [5]. The authors claim that managerial practices, competitive outcomes, and business resources all have an impact on competitiveness. At the national level, a competitiveness yearbook is a helpful resource. Fischer and Schronberg define competitiveness as profitability, productivity, and market share. The UK’s beverage sector was examined between 1995 and 2002, and the researchers came to the conclusion that it was the most competitive in terms of profitability, productivity, and market share, as well as the most competitive within the EU’s 15 member states. Returning to the beverage industry and concentrating on the wine sector in particular, it is discovered that the brand is a crucial factor in determining competitiveness [7] Similar to this, ownership status, organizational structure, and communication methods are crucial competitive criteria for winemaking businesses [8]. Geographical location is another element that affects a country’s ability to compete in the global market [9]. The competitiveness of the food and beverage industries varied greatly amongst EU members during the period 2002–2007, primarily due to geographic location. Food quality and safety affect the entire supply chain, from the producer to the consumer, as well as competitiveness [10]. Productivity in the Italian food business has a significant role in determining competitiveness (Lauretti and Viviani, 2010). According to Crescimanno et al. [11], among nations like Spain, Turkey, and Italy, Turkey experienced the smallest drop in competitiveness since the economic crisis. Turkey also has the lowest per capita income. In contrast to Crescimanno et al. [11], Harvey et al. [12] contend that innovation, its application, and the creation of distinct goods foster sector competitiveness. Wijnands et al. [13] found that attaining a competitive advantage is the most crucial success element after using a variety of commercial indicators and a competitive advantage to assess competitiveness and profitability in the food business. According to Firlej et al. [14] adopting and implementing innovations, having a favorable trade balance, and exporting are all important aspects in gaining a competitive edge in the Polish food business. According to Suzanek and Kralova (2019), the competitiveness of the food industry is determined by and stimulated by consumer satisfaction, adequate product information, and corporate compliance with existing rules. The competitiveness of the Greek food and beverage industry is greatly impacted by human resource management and training [16]. According to Ragimun and Winodo [17] and Birgliadi et al. [18] increasing exports is the best way to boost the competitiveness of the Indonesian food industry and encourage the use of new technology. Tsoukatos et al. [19] assert that implementing quality management systems has a greater positive impact on manufacturing enterprises’ competitiveness in Greece than doing research and development. A global index of regional competitiveness for Italian manufacturing enterprises was also created by Vrontis et al. [20]. Their study revealed significant regional variability, highlighting the fact that Italian industry is mostly based on a small number of fiercely competitive regional systems. Additionally, Vrontis et al. [21] concluded that a variety of factors, including cause-related marketing, can contribute to international competitiveness in addition to factors like brand name and innovation in their literature review on cause-related marketing and its implications on competitiveness. Zanotti et al. [22] investigated the connection between the brewing industry’s competitiveness and operational and financial performance. The study’s method of choice was a confirmatory and exploratory factor analysis, which was followed by the use of structural equation modeling. 214 brewery businesses represented more than 12 European economies. The competitive design of the industry, according to the study, greatly influences financial performance but not necessarily operational performance. A company’s financial performance is not always correlated with its organizational structure. Kumiski et al. [23] conducted an analysis of the variables affecting the competitiveness of manufacturing firms. The following elements were examined: the size of the business, the amount of competition, the number of suppliers and customers, an evaluation of the dynamics of supplier and customer collaboration over the previous five years, and the nature of the market for the company’s products. According to the findings, there are comparatively more competitive organizations than those who have maintained their relationships throughout the previous five years. Additionally, businesses that appear to have low levels of competitiveness are among those whose relationships with suppliers have deteriorated recently. In a different study, Chikan et al. [2] linked the competitiveness of businesses from the perspectives of operations and strategic management. They investigated the Hungarian manufacturing industry using a resource-based view of the business, or RBV theories, and the measure of the Firm Competitiveness Index. The findings show that whereas regular production capabilities are not significantly connected with firm-level competitiveness, dynamic production capabilities are. Additionally, Bargoni et al. [24] discovered that building networks and clusters between small and medium-sized businesses is an effective technique for enhancing competitiveness in Italian agro-industry firms. 2.METHODOLOGYOf particular importance for the economic unit is the analysis of its efficiency. This is due to the fact that all economic units are profit-driven and therefore stakeholders attach great importance to how efficient the unit has been in terms of profits and what its prospects are for the future. The efficiency indicators combine data from the Profit and Loss Account and the Balance Sheet. The most common profitability indicators are the Gross Profit Margin, the Operating profit margin ratio and the Return on Equity ratio. The gross profit (or gross margin) ratio shows the profitability of sales, in terms of cost of sales. Through the gross margin ratio we can know both the operating efficiency of a business (relative to its cost of sales), as well as the pricing policy it pursues [25]. Operating margin is the profitability ratio used to determine the percentage of profit the company makes from its activities before deducting taxes and interest and is calculated by dividing the company’s operating profit by its net sales [26]. Return on equity is a financial indicator that shows how efficiently a company uses its capital to generate additional revenue (profits), expressed in percentage points It is used as an indicator of a company’s efficiency, showing how much profit it can generate using the available resources invested by its shareholders (equity) and its reserves. Investors usually look for companies with a high and growing return on equity [25]. Liquidity ratios are used to determine both the short-term financial position of the company and its ability to meet its shortterm liabilities. The most common indicator of a company’s liquidity is the General indicator of liquidity, which is calculated by dividing current assets by current liabilities. This indicator calculates whether the business under consideration can pay its immediate (short-term) obligations by liquidating its current assets [27]. Working Capital is also a very important indicator of liquidity and is calculated if we subtract from Current Assets the Current liabilities. Working Capital is one of the basic conditions for achieving financial equilibrium within an undertaking. The Financial equilibrium results from the correlation between the liquidity of the assets (the time required to convert the assets into cash) with the demand for sources of capital [26]. The Cash liquidity ratio is also an indicator that is often used mainly because it shows how many times a firm’s available assets cover its current and maturing liabilities and It is calculated by dividing the average cash and cash equivalents by the average current liabilities (including transitional liability accounts). Essentially indicates the ability of the firm to repay its short-term liabilities only with its liquid assets. Another very important category of indicators is the activity ratios which help analysts to identify the degree of efficient use of an enterprise’s assets. Activity ratios measure various ‘speeds’ such as circulation, collection, and payments. The Receivables collection speed ratio expresses the ability of an entity to collect its receivables in a reasonable time and thus enhance its liquidity by presenting the times its claims are collected within a management use entity under review [27]. The Inventory turnover rate allows us to see how many times the company’s stocks have been renewed in relation to its sales during the financial year. In other words, it is used to determine the speed with which stocks were disposed of and replaced during the financial year [27]. The Asset turnover ratio provides an indication of how intensively the firm uses its assets in order to make sales. It shows whether there is an overinvestment of capital in the firm in relation to tnumberunt of its sales. Of course, the figures for this indicator are largely influenced by the depreciation method used by the company ’s management, i.e. whether a policy of increasing or constant depreciation is followed. In general, the higher the ratio, the more efficiently its assets have been used. It is also useful to compare this ratio with the industry balances. [26]. Sustainability indicators are used to assess the long-term capacity of a company to meet its obligations as well as the grade of protection enjoyed by its creditors. These ratios are very important for shareholders and creditors, but the one that is used the most is the Equity to total capital ratio because it shows the percentage of the total assets of an economic unit, which has been financed by its bodies (shareholders). A high equity-to-total capital ratio implies the little possibility of financial difficulty for the repayment of obligations of an economic unit [27]. 3.RESULTS3.1Performance indicatorsTablet 1.1Performance Indicators
Gross Profit Margin Results of Firm A: The above table shows the volatility of the values of this index. All the years however, the index values are at low levels and there is also a negative one year, in 2019 with an index price of -1.2%. With this attitude and these values the indicator is considered as a bad indicator for the company. Results of Firm B: The prices at the table move all the years at low levels for the company Firm B, best year in 2020 (15.59%) and worst year in 2018 (9.04%) Operating profit margin ratio Results of Firm A: And in this indicator, the values are at very low levels and also recorded two very bad years (with a negative return). The small profits and the two years with losses form a bad indicator for the company. Results of Firm B: The index moves at low levels with a best price of 3.20% in 2019 and a worst price of 0.35% in 2018. Return on Equity ratio Results of Firm A: The high operating costs, as shown in the previous indicator, do not leave room for net profits and good returns for shareholders. And while there is a downward trend in equity, low or negative net profits after tax gives a very bad ratio which does not particularly please the shareholders of the company. Results of Firm B: The Return on Equity ratio has the same course as the other efficiency indicators examined previously. A downward trend at first and a good improvement afterwards. The encouraging thing is that this indicator is probably bad because all the years of economic crisis, gives small or larger net profits to the shareholders of the company. 3.2Liquidity ratiosTablet 1.2Liquidity ratios
General indicator of liquidity Results of Firm A: The company in the general indicator of liquidity has three good years to show, in 2016, 2017 and 2018 with prices greater than 1.5 and then two moderate years with values less than the 1.5. The downward trend from 2017 onwards observed in this indicator is due to the reduction of current assets (from 2018 onwards) and to the continuous increase in short-term liabilities. Overall it’s a good one indicator other with a downward trend Results of Firm B: This indicator shows small changes even with a better year in 2017 with a value of 1.28 and worse in 2018 with a value of 1.11. But all the years the prices are considered average or ugly, smaller than 1.5 and thus this index for the Firm B are considered average or bad. Working Capital Results of Firm A: The company Firm A in the Working Capital indicator, it has shown positive values throughout the years and thus this indicator is characterized as good for the company. There are certainly ups and downs, but these do not change the essence, that is, the company has positive working capital to serve its business purposes. Results of Firm B: The indicator has a positive value throughout the years and therefore, with these values, this indicator is characterized as a good indicator. Cash liquidity ratio Results of Firm A: The values for the cash liquidity ratio are very low. Also, the table shows a continuous increase of current liabilities against the year-to-year changes of the company’s assets. Results of Firm B: The receivables Collection Speed Index in the cash liquidity ratio does not bring good results and the index is far from good levels and good performance (0.5-1). The index over the years has performed poorly and so is a bad indicator. 3.3Activity indicatorsTablet 1.3Activity indicators
Receivables collection speed ratio Results of Firm A: The values of the indicator appear very low in the first years but there is a tendency of improvement. The increase of the index is due to the impressive increase in the sales of the company compared to the significant decrease in the average number of receivables. If these values are good for the company a comparison of these values is required with the index values of other cotton manufacturing firms. Results of Firm B: In the Receivables collection speed indicator, there are changes from year to year at the values of the indicator and If we want to discover whether and to what extent these values are satisfactory is required a comparison with the industry average. The best year is 2019 with an index value of 6,00 and the worst year is 2016 with an index value of 5,07 Inventory turnover rate Results of Firm A: A significant increase is observed (improvement) from 2016 to 2019 and the index prices from 2.78 times reaches 5.39. Then, in 2020 it falls slightly and reaches the price 4.99. The improvement is due to the increase in cost of sells against the small fluctuations of average stocks. Results of Firm B: In the Inventory Turnover Ratio cotton, are observed changes from year to year which are mainly due to corresponding changes in the company’s persuasion costs and secondly to the average inventory. A comparison of these values with prices of other companies will better present how good or not is this indicator for the company we are considering. Asset turnover ratio Results of Firm A: With values above unity (except in 2016) and with a significant upward trend, this indicator for the company is considered good or satisfactory. The significant increase is due to the large increase in net sales with a simultaneous smaller increase in the total assets of the company. Results of Firm B: In the Asset Turnover Speed indicator are observed small or larger changes but with the optimistic fact that every year the index is higher from the value 1 and thus this indicator is considered good for the company. 3.4Sustainability indicatorsTablet 1.4Sustainability indicators
Equity to total capital ratio Results of Firm A: The indicator is considered good because the first three years records desirable values, greater than 50%. But then, for the years 2019 and 2020, there is a drop and the value of the indicator is less than 50% and so the indicator for these two years is characterized as moderate. Results of Firm B: Very low values of this index throughout the years with values considerably lower than 50% which is considered the minimum good value. Fluctuations in prices are observed but overall 29.90% in 2016, after the changes it becomes 23.86% in 2020 and so overall the index is getting worse and also because of the prices it is considered a bad indicator for the company 4.Conclusions-Discussion.This study examined two of the largest companies in the cotton processing industry through the use of ratios as key tools not only for determining their financial situation but mainly for selecting the appropriate strategy to boost their competitiveness. The fact that these two companies have the largest market share in this sector can lead us to secure results for the future of cotton processing in Greece. Following the analysis carried out on the two cotton manufacturing firms, the main results of this analysis can be concluded as follows: The table of Performance indicators shows the great superiority of Firm B, with five profitable years, in this group of indicators over the competitor company “ Firm A ” which has two negative years. Gross Profit Margin: highest prices in Firm B Operating profit margin ratio: highest prices in Firm B Return on Equity ratio: highest prices in Firm B In the group of liquidity indicators, the company Firm A, achieves better values in all years and in all indicators of this group and is therefore better than the company Firm B which records bad values. General indicator of liquidity: highest prices in Firm A Working Capital: highest prices in Firm A Cash liquidity ratio: higher prices in Firm B but both have bad prices The prices of the company Firm B are good in all years and in all the indicators of the activity group, despite the variations in the prices recorded and in all years these prices are, with very few exceptions, better or higher than the prices recorded by the ginning company Firm A. Receivables collection speed ratio: highest prices in Firm B Inventory turnover rate: highest prices in Firm B Asset turnover ratio: highest prices in Firm B In the capital structure group, the company Firm A shows better results with good and average values and is better than the company Firm B ’ over the years which has average and poor values. Equity to total capital ratio: highest prices in Firm A. REFERENCESFischer, C., Schornberg, S.,
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