2023 BAST Report Reveals Rising Profitability Among TKC Member Companies

Insights from the 2023 BAST Report

The TKC National Association, under the leadership of President Takashi Sakamoto, has recently unveiled the 2023 edition of the management indicators report, BAST (Business Analysis by TKC). This groundbreaking report, published online on June 2, analyzes the financial performances of small and medium-sized enterprises (SMEs) utilizing the TKC financial system over the previous year (January to December 2025). With data from over 262,244 firms across 1,201 industries, it provides a comprehensive look at the health of SMEs in Japan.

Key Highlights of the 2023 BAST Report

1. Rising Profitability: The report reveals that 58.1% of companies using the TKC system reported profits, which is a 1.1% increase from the previous year. In comparison, the overall profitability rate among all companies surveyed in the report stands at 54.8%, also up by 0.9%.

2. Sales Growth: The average sales per company have seen continuous growth for four consecutive years, surpassing 245.5 million yen, reflecting an increase of 3.4% compared to last year.

3. Increase in Operating Income: The average operating income has also risen for five consecutive years, reaching 9.584 million yen, which is an increase of 7.7% year-on-year.

4. Increased Productivity: Both revenue and personnel costs per employee have increased for four consecutive years. The average revenue per employee reached 17.869 million yen, up by 363,000 yen compared to last year, while average personnel costs also rose to 4.122 million yen.

5. Boost in Cash Reserves: The report indicates a consecutive increase in cash reserves over the last two years, with cash flow from operating activities surpassing investment cash outflows, demonstrating improved liquidity and financial health among these enterprises.

Sector Breakdown of Profitability

The report also provides insights into the profitability rates across different sectors. Notably, the accommodation and food services industry continues to exhibit lower profit margins, with a 36.4% profit rate despite a 0.7% increase from the previous year. In sharp contrast, the construction sector reported the highest profitability rate at 58.2% among the major industries analyzed.

The Significance of BAST

The BAST report classifies companies into various categories based on profitability and financial health, using robust criteria to identify 'excellent companies.' These criteria include compliance with the Tax Accountant's Act, adherence to accounting standards, and consistent growth in both operating income and equity ratio, among others. As the report reveals, the BAST serves as an essential foundation for assessing the viability and sustainability of SMEs in Japan's complex economic landscape, particularly as businesses navigate the post-COVID recovery phase.

Financial Institutions’ Utilization of BAST

The TKC National Association continues to collaborate with 363 financial institutions, actively promoting the BAST report as a vital tool for supporting SMEs’ growth and sustainability. The report has gained traction among various banks, enabling them to enhance their lending evaluations and support initiatives aimed at improving SME management practices. The increasing number of institutions leveraging BAST illustrates its growing importance in the financial ecosystem for SMEs.

A Word from an Expert

Professor Yoshiyasu Ienomoto from Kobe University has endorsed the 2023 BAST report, commending the TKC National Association's efforts in fostering management innovation and improvement amongst small business owners. Citing the challenges faced in the ever-evolving economic landscape—ranging from labor shortages to rising costs—he emphasizes the crucial role of reliable financial information to propel companies towards sustainable growth.

Accessing the BAST Report

For those interested in delving deeper into the BAST report and analyzing its findings further, the TKC group provides a summary version accessible through their official website. This initiative aims to equip more business leaders with insights for conducting in-depth analyses and making informed management decisions.

Explore the official TKC page here.

As the business environment becomes ever more intricate, ongoing efforts by the TKC National Association to produce reliable financial insights through the BAST report will play a pivotal role in fostering the success of Japan's SMEs for years to come.