Credinform Information Agency presents its own rating of most sustainable regions of Russian Federation in 2012. This rating is based on Solvency Index GLOBAS-i®* of companies registered in these areas.
According to Credinform specialists, a prevailing number of companies with the best Solvency Index are registered in Moscow — 3,171, followed by the Moscow region with 1,368 companies and there are 1,129 companies in St. Petersburg. There is almost no business with a minimal credit risk in Agin-Buryat region of Zabaykalsky Krai, The Republic of Ingushetia and The Tyva Republic. This distribution is not surprising simply because the business is concentrated in more economically developed parts of Russia.
Most of the companies with minimal credit risk (1.53%) to the total of registered, are located in Chukotka Autonomous region and Nenets Autonomous region (0.8%). Interestingly, St. Petersburg is only 71 on this list of 85 regions with 0.21% of solvent companies and Moscow has even less — 0.19%. The Republic of Kalmykia with 0.04% and The Republic of Ingushetia with 0.06% are at the very end of the list.
More than half of the total companies (57.66%) in Altai Republic are unlikely to handle their debts due to either insolvency or inactivity. They have an insufficient Solvency Index. A similar situation is observed in the Agin-Buryat region of Zabaykalsky Krai (57.61%) and Tver region (55.06%). Moscow is rated 13 with 46.08% and St.Petersburg is 31 with 40.3%. The most sustainable businesses are located in Moscow and the Kostroma regions with only 22.34% and 23.02% of companies who are insolvent.
The Agency experts have listed the most sustainable regions by number of registered companies in different solvency groups. Each region was assessed according to the rate of companies with insufficient solvency index and the most credit worthy companies. Cumulative assessment of the companies in each region allowed showing Russian regions with a minimum of insolvent companies and maximum of reliable businesses. Moscow region with the most favorable balance of high and insufficient solvency index is on the top.
|Score||Region||% of companies||Number of registered companies|
|Best Solvency Index||Best Solvency Index|
|1||Moscow region||0,51%||22,34%||266 753|
|2||Khanty - Mansi Autonomous region||0,58%||27,43%||47 901|
|3||Novgorod region||0,60%||30,00%||15 599|
|4||Krasnodar Krai||0,61%||31,52%||155 370|
|5||Leningrad region||0,53%||31,20%||49 766|
|6||Belgorod region||0,50%||30,47%||34 566|
|7||Nenets Autonomous Region||0,80%||35,33%||1 002|
|8||Orel region||0,47%||30,49%||17 109|
|9||Stavropol region||0,56%||34,90%||68 349|
|10||Rostov region||0,73%||36,42%||112 899|
Interestingly, both capitals didn't receive a high score: St. Petersburg is listed 72 when Moscow is only 80. It is a result of wide liquidation of companies and great number of short-lived companies in large cities.
The distribution of companies by industry is not surprising. Wholesalers along with car and motorcycle repair stores have highest Solvency Index (7,539 companies from total amount of companies in wholesales, retail sales and auto repair industry). It should be noted that the leading group in the rating is on the top of other Solvency Index groups. Wholesale and retail sale industry is the largest one in Russia and that might explain why companies of that industry are also leading in highest and medium credit risks groups.
|Score||Region||% of companies||Number of companies in the industry|
|1||Production and distribution of electricity, gas and water||2,17%||41 097|
|2||Fossil fuel production||1,59%||10 850|
|3||Chemical production||0,79%||23 586|
|4||Production of electrical, digital and optical equipment||0,79%||52 993|
|5||Production of coke and refined petroleum||0,70%||4 165|
However, there are only 0.25% of wholesale companies in minimal credit risk group. Most reliable companies with lowest credit risk level are electricity, gas and water producers and distributors (2.17%). Other manufacturers, including furniture, jewelry and toys producers, have only 0.06% in total.
|Score||Region||% of companies||Number of companies in the industry|
|1||Production of leather, leather products and footwear||44,45%||5 703|
|2||Agriculture, hunting, forestry||43,51%||349 244|
|3||Wood manufacturing||42,15%||60 337|
|4||Machinery and equipment||41,55%||85 301|
|5||Production of coke and refined petroleum||40,65%||4 165|
It appears from Table 3 that leather and footwear producers are less likely to meet their debt obligations. There are 44.45% of insolvent companies in that market. Only 18 companies from a total in the industry were granted with high Solvency Index.
Companies that provide educational services are on the bottom of this list with only 6.82% level of insolvency.
More information on current financial status of a company might be found in the GLOBAS-i® database. Reports on different market sectors and industries are available upon request. Please, contact our specialist for details.
*Solvency Index GLOBAS-i® is a ratio that determines the solvency and the financial stability of legal entities. It has been developed by Credinform Information Agency in accordance with international standards as well as with consideration of the current Russian economy. It is a measurement of the company’s ability to pay their long term debt and the likelihood of debt refunding.
The Index is based on past and current financial data and it shows the dynamic of financial flows of the company. The values of the Index vary from - 100 points, which means that a company is financially solid, to 600 points - which indicates the highest credit risk. All companies in the Credinform database are divided into 5 solvency groups, from reliable in terms of partnership to those that will unlikely meet their debt obligations.
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.