Companies are carrying less debt now as a result of the financial crisis
October 29th, 2009 | by:
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 |
Tags: banks, debt, debt to equity, lending, loan officer, small business, tightened credit terms