Internal financing through depreciation
Alongside internal financing through depreciation,
retained earnings have come to play an ever-growing
role since 2001.
This occurred firstly because overall
profits grew strongly during this period , and
secondly because the distributed share of profits declined
until 2007.
Dividends as a proportion of profits fell from
a high of 92 percent in 2001 to a low of 68 percent
in 2007.
Between 2002 and 2005 the retained funds
were used above all to repay loans taken out during the
new economy boom of 1997 to 2000 to buy stakes in
foreign companies.
The global share crash of
2001 destroyed the value of these holdings, with grave
knock-on effects on equity. This is also the phase when
the rate of investment in equipment was relatively low by
German standards.
EU Forecast
euf:ba18a:117/nws-01