Information agency Credinform prepared а ranking of leverage ratio of tobacco production manufacturers. The ranking list includes industry’s largest companies and is based on turnover as stated in the Statistics register, with the reference period of 2012. The first 10 companies, selected by turnover, later were ranked by increase of leverage ratio value.
Leverage ratio is calculated as the relation of borrowed and own funds of enterprise financing. The ratio belongs to a group of indicators, characterizing the structure of company’s capital. In other words, it helps to estimate the degree of company’s independence from loans. Ratio’s recommended value shouldn't exceed unity, otherwise speaking, borrowed funds shouldn't exceed the own funds. Many economists believe, that the optimal ratio’s value is 0,5 - when borrowed and own funds are equal. Thereby too low ratio’s value is considered as the missed opportunity of company’s capital profitability improving by attraction of third-party sources of financing.
|№||Legal form of organization Name INN||Region||Turnover 2012, mln. RUB.||Leverage ratio, (х)||Solvency index GLOBAS-i®|
|Moscow||18 493||0,27||207 (high)|
|2||LLC Cres Neva
|Leningrad region||3 886||0,34||204 (high)|
|3||CJSC Imperial Tobacco Yaroslavl
|Yaroslavl region||3 241||0,74||225 (high)|
|4||CJSC Philip Morris Izhora
|Leningrad region||59 299||0,75||159 (the highest)|
|5||LLC Imperial Tobacco Volga
|Volgograd region||8 012||1,03||203 (high)|
|6||JSC Donskoy tabak
|Rostov region||8 927||1,16||205 (high)|
|7||JSC Philip Morris Kuban
|Krasnodar region||9 912||1,36||211 (high)|
|8||ZAO Donskoy tabak
|Rostov region||3 079||4,62||258 (high)|
|9||CJSC British American Tobacco-SPb
|Saint-Petersburg||31 932||13,3||196 (the highest)|
|Bryansk region||1 460||85,99||269 (high)|
According to experts, about 86% of Russian tobacco market is controlled by multinational corporations. The share of domestic manufacturers is small and their main activity is – production of economy brands.
According to 2012 results, the first place of ranking list takes CJSC Liggett-Ducat with the leverage ratio of 0,27. The company’s management, with rather low share of borrowed funds, has managed to become the third within the industry. Perhaps, increase in the share of third-party sources of financing will promote the improvement in financial results. The company has the high solvency index GLOBAS-i®. That characterizes it as financially stable.
The second place of ranking list takes LLC Cres Neva with the leverage ratio of 0,34. Despite the fact, that the company is in the TOP-10 list of the largest companies in terms of turnover and it has the high solvency index GLOBAS-i®, the company’s management should think about growth of borrowed funds share in order to increase profitability.
Probably the most interesting situation has industry’s leaders - CJSC Philip Morris Izhora and CJSC British American Tobacco-SPb. The companies show essentially different attitude to business source of funding organization, having the highest rates of revenue for 2012, 59 299 and 31 932 mln. RUB. respectively. Thus, the industry’s leader in terms of turnover - CJSC Philip Morris Izhora has the leverage ratio of 0,75, that corresponds to the standard recommendations. The second industry’s company in terms of turnover - CJSC British American Tobacco-SPb has the leverage ratio of 13,3. That is much more than 1 and testifies of overabundance of borrowed funds in company’s sources of financing structure and dependence of such business on external sources of loans. However, both companies have the highest solvency index GLOBAS-i®. The risk of debt default is - minimum. Thus, for comprehensive and full assessment of the company’s financial position, you should consider the total number of various financial and non-financial factors. It should be noted, that the assessment, based only on 1 indicator, would be incomplete and biased.
In the light of recent cases of license revocations in Russian bank system, the legislators suggest limiting of deposit insurance payments in the weak banks. The heart of the problem is that some dishonest depositors, being aware of bad condition of a credit organization, open there deposit accounts that meet the sum of deposit insurance payments – to 700 thousand rubles. As a rule, in order to get more clients, these banks fix the higher rate of interest on deposits. At the time of occurrence of the insured event, the depositor gets not only all the sum of deposit, but also the interest earned on it. As to prevent corresponding scheme, there was an idea to refund only the assets that were carried on deposit initially, not considering the interest on it, stated Natalya Burykina, the head of the committee on financial market of the State Duma.
However, corresponding initiative seems to be a point of much controversy, as it will also affect honest depositors that don’t set themselves a goal to make money out of unreliable banks. For the majority of depositors, especially senior citizens, leave their deposits in the bank for years. There is no point to make savings, as no one is proof against insured event and correspondingly against non-payment of interest on deposits.
Besides, the Central Bank of Russia was just recently entitled the right to limit the deposit rates at its discretion, and consequently the regulator may stop agiotage on the high interests in the weak banks.
Thus, suggested legislative initiative seems to be a feedback on the situation with «Master-bank», when due to license revocation deposit insurance system is to pay depositors record for Russian bank system 30 billion rubles.
Information agency Credinform is preparing to issue an independent methodology for identification of the credit organizations financial stability that will help users to estimate the risks of partnership with a certain bank.