Equity turnover ratio of the largest Russian motor freight companies

Information Agency Credinform has prepared the ranking of the largest Russian motor freight companies by equity turnover ratio. The largest enterprises (TOP-10) in terms of revenue were selected according to the data from the Statistical Register for the latest available period (for the year 2014). Then, the companies were ranged by equity turnover ratio for a year (Table 1).

Equity turnover ratio (times) is calculated as a ratio of revenue to yearly average sum of equity and demonstrates the company’s usage rate of total assets.

Equity turnover ratio reflects the turnover rate of own capital. The higher is the ratio value, the better the enterprise uses its own funds. Accordingly, low ratio value indicates about inaction of the part of own funds.

Too high equity ratio or, in other words, significant excess of the sales level over invested capital leads to growth in credit resources. The creditors’ risk is also growing and the enterprise may meet serious difficulties due to decrease in income. 

For the most full and fair opinion about the company’s financial position, not only compliance with standard values should be taken into account, but also the whole set of financial indicators and ratios.   

Table 1. Net profit, revenue, equity turnover ratio, solvency index Globas-i of the largest Russian motor freight companies (TOP-10)
Name, INN, Region2014 netprofit, mln RUB2014 revenue, mln RUB2014/2013 revenue, %Equity turnover ratio, timesSolvency index Globas-i
INN 3123282167
Belgorod region
18,1 1 677,2 117 101,19 252 High
INN 7838384830
14,0 1 269,4 82 11,07 220 High
INN 7414006930
Chelyabinsk region
4,9 2 066,9 112 4,61 231 High
INN 4217104669
Kemerovo region
126,4 2 870,4 101 4,40 227 High
INN 6663006255
Sverdlovsk  region
-124,3 3 084,4 85 2,64 288 High
INN 8603104188
Khanty-Mansi Autonomous Okrug - Yugra
16,6 1 646,0 57 2,18 223 High
INN 2457063821
Krasnoyarsk Territory
59,3 4 147,5 100 2,05 223 High
INN 7734032873
382,1 1 917,8 84 1,15 164 The highest
INN 4212005449
Kemerovo region
38,0 2 709,0 111 -44,78 303 Satisfactory
INN 1106022790
The Komi Republic
-71,7 2 147,7 105 -121,19 325 Satisfactory

Equity turnover ratio of the largest motor freight companies varies from 101,19 times (LLC MALINOV YAR), to a negative value -121,19 times (USINSK UPRAVLENIE  TEHNOLOGICHESKOGO TRANSPORTA). Equity turnover ratio of the largest enterprise by annual revenue LLC NORILSK PROMYSHLENNYI TRANSPORT is 2,05 times per period. 

2 participants from the TOP-10 list PAO UPRAVLENIE PO PROFILAKTIKE I REKILTIVATSII and LLC USINSK UPRAVLENIE TEHNOLOGICHESKOGO TRANSPORTA have negative equity ratio; that indicates about difficult financial position and low solvency level. The available funds, short-term financial investment and accounts receivable don’t cover their accounts payable.  These enterprises have satisfactory solvency index Globas-i, in particular, due to the loss in the balance structure; this fact confirms the risk of non-fulfillment of financial obligations.

Other participants of TOP-10 have the highest and high solvency index Globas-i, that shows their stable financial position.

Picture 1. 2014 revenue and equity turnover ratio of the largest Russian motor freight companies (TOP-10)

2014 revenue and equity turnover ratio of the largest Russian motor freight companies

According to 2014 results, the annual revenue of TOP-10 enterprises amounted to 23,5 bln RUB, that is 6% lower than total revenue in 2013. 4 participants demonstrated decrease in 2014 revenue and 7 companies showed decrease even in net profit.

Taking into account the difficult economic situation of business loss, the trucking industry as a whole has some difficulties. This testifies the data from the Federal State Statistics Service on freight turnover of motor transport in Russia (Picture 2).

Picture 2. The freight turnover of motor transport (bln tkm, ratio value for the year)

The freight turnover of motor transport

This data demonstrates the maximum freight turnover in 2013 and subsequent decrease in 2014 and 2015.  In comparison with 2013 the decrease in 2015 freight turnover amounted to almost 7%.

Cargo transportations are characterized by relatively equal concentration of enterprises across the country with reference to large industrial centers and regions with developed mining industry. This fact is confirmed by the data from the Information and analytical system Globas-i® on distribution across the country of 100 largest registered companies of the industry in terms of 2014 revenue (TOP-12 of Regions):

RegionNumber of registered companies
Saint-Petersburg 11
Moscow 8
Kemerovo region 7
Sverdlovskregion 6
Bryanskregion 3
Krasnoyarsk Territory 3
Leningradregion 3
Moscow region 3
Nizhny Novgorod region 3
Omskregion 3
Smolensk region 3
Khanty-Mansi Autonomous Okrug 3
The procedure for obtaining Russian citizenship for foreign businessmen will be simplified

By the Federal Law as of 01.05.2016 №124-FZ “On introducing amendments to articles 14 and 30 of the Federal Law “On citizenship of the Russian Federation” the amendments concerning simplified procedure of citizenship obtaining were being made. Under this procedure the permanent residence of citizen in Russia over a distance of more than five years is not needed.

According to amendments to the law, the individual entrepreneurs and investors operating in Russia for more than three years are falling into the category of citizens aspiring to the simplified procedure for obtaining Russian citizenship.

At the same time it is essential for individual entrepreneurs to pay taxes and charges, insurance deductions to the Pension Fund of the RF amounting to no less than 1 million RUB in each calendar year.

The essential condition for investors is participation in the authorized (contributed) capital of the Russian legal entity of no less than 10% and within the period of no less than three years running. The authorized capital of such legal entity is to total no less than 100 million RUB and the amount of taxes and charges as well as insurance deductions to the Pension Fund of the RF is to be no less than 6 million RUB in each calendar year.

This Federal Law will come into force on the expiry of ninety days after the day of its official publication. 

According to experts, such innovations can exert a certain influence on attraction of foreign investment to Russia considering its tax system as one of the most liberal in the world. 

The relevancy of the taken measures and efficiency of activity of enterprises with foreign participation may be estimated after getting acquainted with corresponding data of the Federal State Statistics Service (Rosstat) (Figure 1).

Figure 1. Number of enterprises (including micro-enterprises); Turnover (revenue without VAT, excise and similar statutory charges); Average number of employees.

Number of enterprises Turnover Average number of employees

The data analysis shows that enterprises with foreign participation in the period from 2011 to 2014 increased the revenue by 28% while the number of such enterprises decreased by 2% and average number of their employees increased by 1%.