Cost of Capital and Return on Assets of Commercial Micro, Small, And Medium Enterprises (MSMEs) in Bogotá

This study aims to analyze the cost of capital and asset returns among MSMEs in Bogotá's commercial sector from 2011 to 2021. The objective is to establish a foundation for financial decision-making, both retrospectively—evaluating if profitability during the study period was adequate—and prospectively, by assessing the financial viability of future investment projects. The research draws on theoretical concepts related to the cost of capital and return on assets, employing the Weighted Average Cost of Capital (WACC) to determine capital costs and the Capital Asset Pricing Model (CAPM) for equity costs. Asset profitability is measured using pre-tax operating profit and operating assets. This quantitative study examines a sample of 362 commercial MSMEs in Bogotá, excluding microenterprises, with findings indicating an average annual capital cost of 11.6% and an asset return of 7.8%. Notably, only in 2021 did asset profitability surpass capital costs.