What industry has most debt?

newsletter 04/10/2012

A study conducted by CredInform experts has shown that companies within two industries have greatest payable and receivable accounts. Those companies are retail and wholesale traders and repair service providers. The total amount of their A/P in 2011 is as large as 9,2 billion rubles and the total A/R is 9,8 billion rubles. 

According to the study, construction business is in second place with 5,1 billion rubles in loans, which is 1.8 times less than the amount owned by leaders. Their receivables however are in the average range and are 3,4 billion rubles. The third and largest group is manufacturing companies that own almost a half less than the first group. Their amount to pay is 4,9 billion and these companies are to receive 4,7 billion rubles from their debtors. It is worth mentioning that the ability to maintain positive correlation between these two amounts is very important for a company's financial stability. If payables significantly exceed receivables, a company has to raise bank loans. An opposite situation, when a company has a large credit that cannot be covered with money from debtors, leads to reduction of revenues, part of which has to be paid as an interest on loan. 

All the industries in 2011 were experiencing increase in debt compared to 2010 except of one. Only companies providing house cleaning services and small households that are hiring individuals for such work could lower their A/P from 10,350 million rubles in 2010 to 1,109 million in 2011, or for almost 9 times. A/R has also dropped down from 66.007 million rubles to 1,409 million, that is about 2% from amount owned in 2010. 

In order to obtain most reliable results, CredInform experts have defined 17 types of industries in accordance with OKVED (Classifier of economic activities). After that all the companies operating within Russian Federation were classified by its activity and listed in one of 17 categories, from companies with greatest debt to companies with least. 

For better understanding of industries debt CredInform experts also studied debt ratio information. First CredInform experts defined a total amount of net debt, which the sum of current liabilities and long-term liabilities. Then the debt ratio was defined as a sum of net debt and total assets. 

As shown in Chart 2, manufacturing companies had largest debt in 2011. However, their debt ratio was 2.95, which means that these companies will not have problems meeting their debt obligations. It is the opposite for companies doing financial operations. Despite the fact that with their net debt they are only on the 4th place, their debt ratio is 36.53, which is highest among the others. The higher the ratio, the greater the debt burden on companies and the lower the likelihood that they will be able to meet their obligations in time. 

Public administration and defense companies with compulsory social security business and education industry are at the end of the list. Negative net debt indicates greater amount of funds that debt and negative debt ratio means no loss in this type of business. 

You may request information on current financial status of a company from our daily updated CredInform Information Database Globas-i®. Analytic reports on Russian market sectors are also available.