Credinform Information Agency prepared a ranking of asset turnover of major car dealers in Russia. The selection of companies from GLOBAS-i system included organizations with maximum revenue in this type of business rated upon decreasing asset turnover.
Asset turnover ratio is calculated as the ratio of product sales revenue to the total assets of the balance. This indicator characterizes the efficiency of use of all available resources by the company, independently from their generation source, i.e. it shows, how many times – in our case, within 2011 – there occurs a complete production and circulation cycle, which ensures profit for the company, or how many monetary units of sold products were provided by each monetary unit of assets.
|N||Name||INN||Turnover in 2011, ml rub.||Asset turnover||Solvency index|
|1||FC Germanika Sever LLC||730569850||2,926.46||6.33||290 (high)|
|2||Trade-Avto LLC||5024106559||3,290.58||5.73||281 (high)|
|3||Kan-Avtovaz LLC||1657056820||3,507.48||5.56||250 (high)|
|4||ArtCar LLC||5262212308||2,980.14||5.08||276 (high)|
|5||Izmailovo LLC||7716521818||5,201.35||3.74||286 (high)|
|6||KuzbassBelAvto LLC||4205182782||12,621.24||2.04||245 (high)|
|7||AMKapital LLC||7708607959||25,871.82||1.95||238 (high)|
|8||Nizhegorodets Trading Company LLC||5254017367||4,373.05||1.89||233 (high)|
|9||Seyho-Motors LLC||7453048035||4,194.86||1.67||223 (high)|
|10||Saturn-R LLC||5902809279||3,718.48||1.38||212 (high)|
One should note that all companies included to the top-ten with highest turnover were assigned by Credinform Agency with high solvency index, which proves the capability of these car dealers to repay their liabilities timely and in full.
Companies that occupy first four lines in the ranking, use the invested funds in the most efficient way. That is, 1 ruble invested in assets of these enterprises in the preceding period provided from 5.08 to 6.33 rubles of revenues.
Other six companies used the invested funds less efficiently, but also received revenue within the range between 1.38 rub. and 3.74 rub. per 1 rub. of investments.
Therefore, the higher is the value of current asset turnover, the better is the use of floating assets. Its increase means the release of funds from the turnover that allows the organization to get along with a smaller sum of floating assets for securing release and sale of products or – with the same amount of them – to increase volume and improve quality of manufactured products.
Credinform Information Agency prepared a ranking “Absolute liquidity ratio of travel agencies in the Russian Federation”. For this ranking, experts selected travel agencies with highest revenues in Russia, and then, these companies were rated upon “absolute liquidity ratio” indicator.
Absolute liquidity ratio shows, what part of short-term liabilities may be covered by cash money and its equivalents in the form of market securities and deposits, i.e. almost absolutely liquid assets.
Absolute liquidity ratio is a variation of two other more popular liquidity ratios – current liquidity ratio and quick asset ratio. In calculation of this index, only the most quickly saleable (liquid) assets are used.
Liquidity ratios are interesting not only the enterprise’s management, but also for external subjects of analysis for suppliers of raw and other materials.
Absolute liquidity ratio is a financial coefficient, which is calculated as the ratio of monetary funds and short-term financial investments to short-term liabilities (current liabilities). Standard limit > 0.2 means that not less than 20% are subject to everyday payment. This standard limit is used in foreign practice of financial analysis. However, there is no precise explication, why ensuring normal liquidity level of Russian companies requires that the amount of monetary funds should cover 20% of current liabilities.
Taking into account heterogeneity of short-term liabilities structure and terms of their repayment, which are typical for Russian practice, this target value shall be considered as obviously insufficient. Therefore, for many Russian companies, the target value of absolute liquidity ratio shall be > 0.2-0.5. Too high coefficient value means unreasonably high volume of monetary funds, which might be used for development of business.
|N||Name||INN||Turnover in 2011, ml rub.||Absolute liquidity ratio||GLOBAS-i® Solvency Index|
|3||Neva Company||7813034418||3,684.07||0.0071||255 (high)|
|4||DANKO Travel Company||7704524814||1,004.09||0.0103||310 (satisfactory)|
|6||Yuzhny Krest Travel||7707650655||2,169.56||0.0257||257 (high)|
|10||VodokhoD-Saint Petersburg||7811150151||718.54||15.3424||307 (satisfactory)|
Analysis of Credinform’s ranking table shows that only the absolute liquidity ratio of Sirena-Travel matches with standard indicators applied to Russian companies. VodokhoD and VodokhoD-Saint Petersburg have the ratio over 0.2, which is normal in theory. However, the deviation of this ratio at VodokhoD-Saint Petersburg is rather significant.
High volume of short-term liabilities in comparison with volume of liquid assets of companies resulted in absolute liquidity ratios substantially lower than the norm at companies: CitiTour-Info, Solvex-Turne, Neva Company, DANKO Travel Company, Versa and Yuzhny Krest Travel. Akademservis has relatively insignificant deviation from the norm.
Therefore, in order to retain financial stability, the companies need, on the one hand, to possess sufficient amount of liquid assets, and on the other hand, to avoid big volumes of short-term liabilities, i.e. to manage their debt burden more efficiently.