Activity trends of the companies of real economy of Nizhniy Novgorod in crisis years

trends 18/09/2020

Information agency Credinform has prepared a review of the activity trends of the companies of real economy of Nizhniy Novgorod during the financial crisis of 2008 – 2009 years.

The largest enterprises (TOP-1000) in terms of annual revenue were selected for the analysis according to the data from the Statistical Register for the period of 2006 – 2011 years. The analysis was based on the data from the Information and Analytical system Globas.

The number of active companies
From 2006 to 2011, the number of active companies increased, but the growth rates decreased especially during the acute phase of the crisis and the period of recovery.

Picture 1. Change in the number of active companies in 2006 – 2011 Picture 1. Change in the number of active companies in 2006 – 2011

Net assets are total assets less total liabilities. This indicator reflects the real value of the property of an enterprise. When the company’s debt exceeds the value of its property, the indicator is considered negative (insufficiency of property).

The largest company of real sector of economy in Nizhniy Novgorod in term of net assets was JSC TRANSNEFT – VERKHNYAYA VOLGA, INN 5260900725. In 2011, net assets value of the company amounted to 53 billion RUB. In 2019, the figure increased to 143 billion RUB.

The lowest net assets value among TOP-1000 was recorded for LLC SLADKAYA ZHIZN N.N., INN 5257041777. In 2011, insufficiency of property of the company was indicated in negative value of -1,5 billion RUB. In 2019, this indicator became positive 4,5 billion RUB.

In 2006-2011, the average net assets values of TOP-1000 had a trend to increase, and the growth rates were decreased during the acute phase of the crisis (Picture 2).

Picture 2. Change in average net assets value in 2006 – 2011 Picture 2. Change in average net assets value in 2006 – 2011

The shares of TOP-1000 companies with insufficient property have trend to decrease in 2006-2011(Picture 3).

Picture 3. Shares of companies with negative net assets value in TOP-1000 in 2006 – 2011 Picture 3. Shares of companies with negative net assets value in TOP-1000 in 2006 – 2011

Sales revenue
The largest company of the real sector of economy in Nizhniy Novgorod by revenue was LLC KOMMERCHESKIE AVTOMOBILI – GRUPPA GAZ, INN 5256051148. The revenue volume exceeded 52 billion RUB in 2011, and decreased to 4 billion RUB in 2019.

In general, there was a trend to increase in revenue with increasing growth rate (Picture 4).

Picture 4. Change in average revenue in 2006 – 2011 Picture 4. Change in average revenue in 2006 – 2011

Profit and loss
The largest company in term of net profit was JSC TRANSNEFT – VERKHNYAYA VOLGA, INN 5260900725. The company’s profit slightly exceeded 6 billion RUB in 2011, and decreased to 941 million RUB in 2019.

During the period of 2006 – 2011, the average profit figures of TOP-1000 companies had a trend to decrease with the losses during the acute phase of the crisis and the period of recovery (Picture 5).

Picture 5. Change in average profit (loss) in 2006- 2011 Picture 5. Change in average profit (loss) in 2006- 2011

In 2006 – 2011, the average net profit figures of TOP-1000 companies had a trend to increase with the increasing net loss. Maximum losses were recorded during the acute phase of the crisis and the period of recovery (Picture 6).

Picture 6. Change in average net profit and net loss of ТОP-1000 in 2006 – 2011 Picture 6. Change in average net profit and net loss of ТОP-1000 in 2006 – 2011

Key financial ratios
In 2006 – 2011, the average values of the current liquidity ratio were above the recommended one – from 1,0 to 2,0, with a trend to increase. (Picture 7).

Current liquidity ratio (current assets to short-term liabilities) shows the sufficiency of company’s assets to repay on short-term liabilities.

Picture 7. Change in average values of current liquidity ratio in 2006 – 2011 Picture 7. Change in average values of current liquidity ratio in 2006 – 2011

At the period of 2006 – 2011, there was a general trend to decrease in the average ROI values (Picture 8).

ROI ratio is calculated as net profit to sum of shareholders equity and long-term liabilities, and shows the return of equity involved in commercial activities and long-term borrowed funds.

Picture 8. Change in average values of ROI ratio in 2006 – 2011 Picture 8. Change in average values of ROI ratio in 2006 – 2011

Assets turnover ratio is the ratio of sales revenue and company’s average total assets for a period. It characterizes the effectiveness of using of all available resources, regardless the source of their attraction. The ratio shows how many times per year the full cycle of production and circulation is performed, generating the corresponding effect in the form of profit.

In 2006 – 2011, there was a trend to decrease of this ratio, especially during the acute phase of the crisis and the period of recovery (Picture 9).

Picture 9. Change in average values of assets turnover ratio in 2006 – 2011 Picture 9. Change in average values of assets turnover ratio in 2006 – 2011

Small enterprises
77% companies of TOP-1000 are registered in the Register of small and medium-sized enterprises of the Federal Tax Service of the Russian Federation. Their share in total revenue of TOP-1000 was 13% in 2011 (Picture 10).

Picture 10. Shares of small and medium-sized enterprises in 2011 Picture 10. Shares of small and medium-sized enterprises in 2011

Financial position score
According to the assessment, the financial position of most of TOP-1000 companies is average in 2020 (Picture 11).

Picture 11. Distribution of TOP-1000 companies by financial position score in 2020 Picture 11. Distribution of TOP-1000 companies by financial position score in 2020

Solvency index Globas
In 2020, most of TOP-1000 companies got Superior / High and Strong / Medium index Globas. This fact shows their ability to meet their obligations fully and by the due date (Picture 12).

Picture 12. Distribution of TOP-1000 companies by solvency index Globas Picture 12. Distribution of TOP-1000 companies by solvency index Globas

Conclusion
Complex assessment of activity of the largest companies of real economy sector of Nizhniy Novgorod, taking into account the main indexes, financial ratios and indicators, demonstrates the prevalence of positive trends in 2006 - 2011 (Table 1).

Table 1. Positive and negative trends, evaluation factors, possible development forecast at the period of crisis
Trends and evaluation factors Relative share of factor, % Possible forecast
Dynamics of the number of active companies up10  
Rate of growth of the number if active companies down-10 During the acute phase of the crisis and the period of recovery, rate of growth of the active companies may be decreased
Dynamics of the average net assets value up10  
Rate of growth (decline) in the average size of net assets down-10 During the acute phase of the crisis and the period of recovery, rate of growth of the active companies may be decreased
Increase / decrease in the share of enterprises with negative values of net assets up10  
Dynamics of the average revenue up10  
Rate of growth (decline) in the average size of revenue up10 During the acute phase of the crisis, rate of growth of the active companies may be decreased.
Dynamics of the average profit down-10 During the acute phase of the crisis, the average profit may be decreased
Growth / decline in average values of companies’ net profit up10  
Growth / decline in average values of companies’ net loss down-10 During the acute phase of the crisis and the period of recovery, net loss may be increased
Increase / decrease in average values of total liquidity ratio up5  
Increase / decrease in average values of return on investment ratio down-10 During the acute phase of the crisis and the period of recovery, return on investment ratio may by decreased
Increase / decrease in average values of asset turnover ratio, times down-10 Business activity may by decreased during the acute phase of the crisis, and will be slowly increased during the period of recovery
Share of small and medium-sized businesses in terms of revenue being more than 20% down-10  
Financial position (the largest share) up5  
Solvency index Globas (the largest share) up10  
Average value of relative share of factors up0,6  

Up positive trend (factor), Down negative trend (factor).