Plimsoll Produces Tyre Prosperity League Table
A new league table from leading financial analysts Plimsoll Publishing aims to provide an answer to that age-old question in the Tyres, Exhausts & Batteries market: Why do some companies fail and others prosper?
The equation is not as simple as strong sales equals survival. Nor is the success rate of a firm automatically affected by market conditions. Instead, they say, it depends on the ingredients in a finely-balanced recipe that includes good margins, low borrowing, responsible management and foresight.
Plimsoll’s new analysis of the market weighs all these ingredients and turns them into a unique one-page snapshot of each company’s prospects. From that, it establishes a league table based on 1000 leading firms that looks like this: 278 companies are in a strong position, with a pre-tax margin of 10 per cent; 116 are in the good sector, on 4 per cent margins; 160 are rated as mediocre, on 3 per cent; 272 are in the “caution” category and 174 are in the “danger” range.
Nearly nine out of 10 UK companies currently in receivership were rated in the lowest two categories by Plimsoll in the two years before their demise. Its senior analyst David Pattison says: “205 of the 278 companies in the strong section are there for the second year running, proving that if you have a solid business where management is in control, you can maintain success irrespective of market conditions. The most successful firms are also largely free of debt.
“At the other end of the scale, there is no doubt in my mind that if the pundits are right and the UK market tightens towards the end of the year, then the 174 companies in the danger category will take the brunt of the downturn.”
The Plimsoll analysis looks at the financial strength of each company based on four years’ figures. Tyres & Accessories readers can claim a reader discount of 20 per cent by quoting the following discount code – PR05.