Archive for the ‘Debt & Borrowing’ Category

Companies are carrying less debt now as a result of the financial crisis

Thursday, October 29th, 2009

The data below show that business loans have been contracting.
The contraction is likely the result of companies paying down debt and shrinking inventories over significantly slower sales throughout the downturn. Tightened credit terms have also contributed to the trend.
The table here lists the debt to equity ratio since 2003 for the overall private sector and three large sectors, construction, manufacturing, and retail. Overall, debt to equity decreased in the private sector and in the broad manufacturing and retail trade sectors over the downturn in 2008.

Industry

Financial Metric

2003

2004

2005

2006

2007

2008

2009

Average for All Privately-Held Companies

Debt To Equity

2.6

2.64

2.69

2.71

2.72

2.57

2.56

23 - Construction  (private)

Debt To Equity

2.36

2.37

2.41

2.42

2.38

2.12

2.16

31, 32, 33 - Manufacturing  (private)

Debt To Equity

2.11

2.18

2.2

2.28

2.29

2.2

1.79

44, 45 - Retail Trade  (private)

Debt To Equity

2.41

2.6

2.63

2.65

2.59

2.7

2.26

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Posted in Construction/Real Estate, Debt & Borrowing, Economy, Employment, Privately Held Companies, Retail Trends | No Comments »

The Upside of a Down Economy

Tuesday, September 29th, 2009

Sageworks compiled this list of 4 favorable changes in the business world over the last year, showing the upside of the down economy for businesses.  The data is elaborated on by Sageworks CEO, Brian Hamilton, on this Fox Business segment.

The Upside of a Down Economy:
4 Ways Businesses Have Improved Over the Last Year
Businesses Have… Data/Reason
1. Become More Efficient Profit margins have increased in 10/15 major business sectors looking at private companies. 
2. Become Less Reliant on Debt Debt levels have decreased. The average debt/equity ratio for private companies is at its lowest levels in at least 6 years.
3. Gained Access to a Larger Pool of Talent for Recruiting There is more talent available for hire. After seeing growth greater than 10% every year from ‘04-’07, sales have been flat for employment services firms in ‘08 and ‘09. This suggests that, as we know, companies are hiring less and when they do hire, they are more easily able to find talented prospective employees on their own. 
4. Negotiated Better Deals from Suppliers Unlike many other sectors, wholesalers have seen decreased profit margins, suggesting that they aren’t making as much off of every dollar sold. Declining prices may have something to do with it. 
*Source: Sageworks, Inc. Sageworks is a financial information company. 

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Posted in Debt & Borrowing, Economy, Employment, Privately Held Companies | No Comments »

Increase in Debt of Privately Held Companies in the US

Monday, September 29th, 2008

According to Sageworks’ industry data (shown below), privately-held companies have been taking on more debt relative to their sales and assets during the time period from 2003-2008. Liabilities to sales have climbed steadily from 1.03 at the beginning of this period to 3.30 in 2008.

Year Liabilities To Sales Liabilities To Assets Sales To Assets Number of Companies
2003 1.03 70.89% 10.65 35883
2004 1.45 74.35% 5.75 53738
2005 2.13 75.81% 7.57 66176
2006 2.32 76.94% 7.62 61698
2007 2.00 77.00% 5.26 38467
2008 3.30 73.90% 3.13 5564

Sageworks Inc. collects privately-held company data from financial professionals who subscribe to its Profitcents and Sageworks Analyst programs.  When financial reports are run through these programs, the data is collected and stored in anonymity. Industry data is provided in an aggregate format only, and no individual company information is released. Over one thousand reports are run daily, and new data is incorporated into the Sageworks industry statistics each day.

For more information on the increase of business debt and the impact of debt on the economy, visit:

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