Return on assets of enterprises engaged in water gathering and distribution

Information agency Credinform prepared the ranking of enterprises engaged in water gathering and distribution.

The companies with the highest volume of revenue involved in water gathering and distribution were selected for the ranking according to the data from the Statistical Register for the latest available period (for the year 2013).

Return on assets (%) is the relation of the sum of net profit and interests payable to company’s total assets value. It shows how many monetary units of net profit were earned by each unit of total assets.

The ratio characterizes the efficiency of use by a company of its resources, the efficiency of company’s financial management.

That’s why the higher is the value of this indicator, the higher is the efficiency of business, i.e. the higher is the return on each monetary unit invested in assets. However, when drawing conclusions about financial standing of an enterprise it is necessary to consider two important points.

Firstly, comparison of companies on return on assets ratio can be correctly done only within one branch. For example, in branches with a high turnover of assets as retail trade this indicator will be significantly higher, as in industries, where asset turnover is traditionally low as in machine building industry.

Secondly, it is necessary to take into account the fact that the book value of assets may significantly not conform to their current market value. For example, under the influence of inflation the book value of fixed assets will be increasingly underestimated in the course of time, that will lead to overestimated return on assets. In other words, even within one branch an analyst should consider not only the structure, but also the age of assets.

The existing trend of this indicator also should be taken into account. Its consistent lowering points out the decline in efficiency of use of assets by business, and vice versa.

For getting of the most comprehensive and fair picture of the financial standing of an enterprise it is necessary to pay attention not only to average values of profit, but also to all presented combination of financial data.

The revenues of the largest Russian enterprises involved in water gathering and manufacture (TOP-10) according to the last published annual financial statement (for 2013) made 85,2 bln RUB, that is by 8,4% higher, than in the previous period.

Picture. Return on assets and revenues of the largest enterprises engaged in manufacture and distribution of water (TOP-10)

The return on assets of all organizations of the TOP-10 is in the positive zone, that on its own is a good indicator for enterprises of housing and utility sector (the majority of companies have a negative ratio). In other words, the leaders finished the year with net profit.

The assets are the most effectively used by Samarskie kommunalnye sistemy LLC: return on its assets is 13,1%, that is well over, than the indicator of Mosvodokanal OJSC, Moscow (0,04%) – the production being largest on revenues. 

According to the independent estimation of the Information agency Credinform, all participants of the TOP-10 got high and the highest solvency index. This fact points to the ability of market players to pay off their debts in time and fully, while risk of default is minimal.