Current economic situation
The current economic environment is subject to some trends that strongly influence the operation of companies. During the Corona crisis, many companies had to draw on their reserves. They are now confronted with, among other things, increased labour costs and very expensive energy. This puts many companies in trouble. Companyweb investigates which companies are best equipped to weather this crisis.
Which companies are best equipped?
Companies with sufficient reserves as shown in the annual accounts are more resilient to survive a period of sharply increased costs.
However, not all companies are in a comparable situation. Here too, sectoral differences remain and some industries that were already vulnerable in 2021 will come under further pressure. Their exposure to trends naturally varies according to the sector in which they operate. On one hand, both the energy intensity and the relative labour costs differ from sector to sector ( see study National Bank of Belgium).
On the other hand, not all companies are able to pass on the cost increase to the same extent in their prices. The extent to which companies can pass on costs depends, in addition to the sector in which they are active, also on their size (personnel, revenue, balance sheet total). Small companies are in general more vulnerable for this. This is clearly shown in the annual bankruptcy data published by Statbel.
Companyweb examines to what extent companies:
- have sufficient reserves (liquidity buffer)
- are vulnerable related to their size (company size)
- are active in a sector where current trends have a major impact (sector sensitivity)
The combination of these 3 parameters results in additional insights.
Attention: Degree of immunity versus Health Barometer
The health barometer is calculated on the basis of the company as a “going concern”.
This looks at the general state of health of a company and many parameters are taken into account: profitability, debt ratio, liquidity, evolution of accumulated profit/loss, evolution of cash flow ... and non-financial indicators such as: Late filing of the annual accounts, NSSO summonses, arrears to the tax authorities and NSSO, previous bankruptcies of one or more directors, judicial reorganisation etc.
The degree of immunity assumes an “economic standstill” for a limited period of time and examines whether an enterprise can survive this period.
The degree of immunity can therefore display a different picture from the health barometer and help in assessing any support to the affected company (instalment plan, payment deferment, ...).
The degree of immunity is also an evolving factor, depending on the duration of the crisis, the support measures taken, credit facilities, moment of restart of some sectors ...