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.
Due to changes in the sphere of taxation in the Northwestern Federal District, 21 644 entrepreneurs went into liquidation by their own initiative within the first two months of 2013 – that is 6% of the total number of operating individual entrepreneurs (IEs) in NWFD. Similar situation in the region occurred with farms – over 6% of the total number of farms disappeared within two months of 2013.
IA Credinform experts suppose that the biggest number of IE’s liquidations will be in the industries that require the work of wage-labourers – these are the services in catering, as well as minor construction and assembling works. Rather big number of entrepreneurs, who decided to terminate their activity, is also expected in the retailing sector. It is the increase in pension contributions for wage-labourers and for “themselves”, which is the main factor that impels small businesses to phase down production. In the small business, only those entrepreneurs will remain, who gained a stable market niche, for example, individual entrepreneurs who have chain supermarkets.
In current situation, individual entrepreneurs should carefully develop their tax policy in order to optimize budgetary payments and calculate the tax burden even in the process of establishing the business. Those entrepreneurs, who decided that such scheme would be unprofitable for them, went into liquidation at the end of 2012 and in the first months of 2013. The entrepreneurs, who did not conduct business in fact and did not provide necessary reporting, also decided officially to stop their activity. Thereby, the affect of increase in charges today may be already called a fading one. There remains a question, whether the entrepreneurs, who decided to work in shadow, would return after the change of tax rates.
It is remarkable, that according to GLOBAS-i system data, currently, there is a practically equal number of men and women registered in Russia as IE. Among entrepreneurs, around 56% are men and 44% are women. In the future, the share of women among entrepreneurs is expected to grow till 50%.