Real sector debt accelerates faster than its equities


We’ll examine the 12-year change in companies’ equity, debt, revenue, profit, and financing expenditures from 2009-2022, according to the Central Bank’s company balance sheet data. As the number of firms changes over years, we’ll see how the average figures change per company.

►The 12-year average equity hike per company is 196% and the surge in foreign resources is 589%.

►Considering the fact that consumer inflation (CPI) is 302% and domestic producer inflation (D-PPI) is 523% by the end of the same period, the real loss in equities is 26.4% according to CPI and 52.6%, according to D -PPI.

►The 12-year average current assets hike is 500% per firm. The hike in fixed assets is 318%. The current hike in the value of facilities, machinery, and equipment is 184%, below inflation. So, assets for production lost value against inflation.

►The surge in financial liabilities is 882% per company. The 12-month surge in TRY financial liabilities is 700% while the increase in FX debts reached 1,027%.

►This situation has made real sector companies vulnerable to interest rate and FX rate hikes.

►Net sales, cost of sales, and operating expenses rose by 479%, 481%, and 318%, respectively, per firm. The 12-year CPI increase is 242% and the D-PPI increase hovers around 351% based on the 12-month average.

►The hike in real operating profit reached 801% due to the lowering of operating expenses. The profit hike from other operations jumped 1,522%. Both figures are higher than inflation.

►The surge in net profit is 218%, below CPI and D -PPI. The real loss is higher based on D -PPI.

►The fact that operating profit is higher than inflation, but profit is lower than inflation stems from the surge in financing expenditures due to over-borrowing. The surge in financing expenditures is 1,198%, on average, per company.

►Financing expenditures of an average company in the real sector brought 50.6% of its real operating profit in 2009. This figure rose by 22.3 points to 72.8% in 2021 as compared to 2009. This rate has been on a chronically high course since 2013.

To continue and carry these imbalances seem impossible. The low-interest rate loan policy is the only solution introduced to date. Although this postpones a possible shock, it doesn’t solve the main structural problem. On the contrary, it increases the problem by raising indebtedness and raises vulnerability further.

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