The financial health of firms within different sectors can vary widely. In this analysis, we look at how sector classification (SBI) relates to equity and balance sheet total. A particular focus is on the number of firms with negative equity and its implications.
1. Sectors with the highest percentage of negative equity
The data shows that the beverage manufacturing sector has the highest percentage of firms with negative equity (50.38%). This means that more than half of the companies in this sector have a negative balance sheet. This may be due to high investment costs and a relatively low profit margin per product. In addition, seasonal fluctuations and strict regulations around alcohol production may also play a role.
Other sectors with a high percentage of companies with negative equity are extraterritorial organisations and bodies (40%) and gambling and betting (36.4%). Gambling and betting are highly dependent on regulation and can face high levies and licence fees. The high volatility in this sector can contribute to business instability.
The garment manufacturing sector (35.2%) also has a high proportion of companies with negative equity. This can be explained by intense competition and low profit margins. Many garment companies have to compete with cheap imports from abroad and invest in sustainability and technological innovations to stay afloat.
The hospitality sector, especially food and beverage outlets (32.9%), has a relatively high proportion of businesses with negative equity. This is not surprising, given that the sector traditionally has low profit margins and high operating costs. Staff costs, rent and fluctuating demand play an important role here.
2. Relationship between balance sheet total and equity
One of the main indicators of financial stability is the ratio of total assets to equity. The distribution of these two values by SBI category gives a picture of the financial structure within sectors.
Our analysis shows that sectors with higher balance sheet total also tend to have higher equity, but there are clear exceptions. For example, the beverage manufacturing sector has a relatively high balance sheet total but a significant percentage of companies with negative equity. This indicates a capital-intensive sector in which investments in equipment and inventory play a major role, while turnover and margins can fluctuate widely.
The transport and logistics sector also has a considerable spread in balance sheet totals and equity. This can be explained by the varying capital intensity within the sector: while some companies operate with a small fleet and have few fixed assets, larger transport companies require heavy investments in trucks, ships or aircraft.
3. The number of companies by SBI category
Besides financial indicators, the size of sectors is also relevant. The number of businesses within an SBI category gives an indication of how widespread the sector is. The data show that eating and drinking establishments comprise by far the most businesses, followed by other service sectors such as retail and business services.
Within the retail sector, we see a high spread in financial health. This is partly due to the shift from physical shops to e-commerce. Small retailers with physical shops often struggle to compete with large online platforms, resulting in lower margins and an increased risk of negative equity.
Conclusion
The analysis of SBI in relation to equity and balance sheet total shows a varied picture. Certain sectors, such as the beverage and gaming industries, have a remarkably high percentage of firms with negative equity, which can be attributed to investment costs, regulation and market dynamics. The relationship between balance sheet total and equity suggests that high assets do not necessarily indicate a healthy financial position.
For companies, investors and policymakers, it is essential to understand these figures and apply them in the context of their sector. Understanding these ratios can help inform strategic decisions. Sectors with a structurally high percentage of companies with negative equity may require more attention in terms of financing and risk management.
