High liability to asset ratios and low inventory turnover signal "solvency concerns" for PV companies

Share

Just over a week after Yingli Green Energy issued a SEC filing detailing the extent of its indebtedness, analysis shows the PV manufacturing giant to have a very high – 95% – liability to asset ratio and low inventory turnover – 6.85% (based on 2014 figures).

In her "Notes from the Solar Underground", Paula Mints of SPV Market Research analyzed 14 PV companies’ liability to asset ratios and inventory turnover. As she explains, a high ratio "indicates potential solvency concerns," while a low turnover points towards inefficient use of inventory. She further told pv magazine that a healthy ratio would be below 50%.

Although Yingli refuted liquidation reports and, in a separate statement released two days after the filing, said it had taken positive steps to assuage debt and doubt over its finances, there is no doubt the company is currently in a very shaky position. The news of its financial problems wiped one-third of its value from the stock market.

It seems unlikely, however, it will be left to fail. In an interview with Bloomberg, Hong Kong-based solar company United PV said it, along with other state-backed firms or solar companies, is mulling over the possibility of offering a lifeline to Yingli.

The Chinese PV module manufacturer is not the only company to be presenting a worrying picture. Based on Mints’ analysis, nine of the leading solar companies have liability to asset ratios above 50%, and low inventory turnovers. The healthiest company analyzed was thin film’s First Solar. See table below for an overview:

Liability/Asset 2014

Inventory Turnover 2014

First Solar

25%

29.34

Gintech

40%

10.82

Solartech

40%

12.31

SunEdison

41%

6.88

NeoSolar

42%

13.49

JA Solar

62%

5.99

SunPower

63%

14.51

Trina Solar

69%

6.51

SolarWorld

74%

3.85

Jinko Solar

74%

5.28

Motech

89%

8.09

Renesola

92%

4.37

Yingli Solar

95%

1.64

Canadian Solar

101%

6.85

This article was amended on May 31. It previously read: Based on Mints’ analysis, none of the leading solar companies have liability to asset ratios above 50%, and low inventory turnovers." This has been corrected to "…nine of the leading solar companies…"

This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.

Popular content

Switzerland authorizes removable PV plant on railway track

04 October 2024 Swiss startup Sun-ways is planning to build a 18 kW pilot PV system between the racks of a 100-m linear section of a railway line in the Swiss canton...

Share

Leave a Reply

Please be mindful of our community standards.

Your email address will not be published. Required fields are marked *

By submitting this form you agree to pv magazine using your data for the purposes of publishing your comment.

Your personal data will only be disclosed or otherwise transmitted to third parties for the purposes of spam filtering or if this is necessary for technical maintenance of the website. Any other transfer to third parties will not take place unless this is justified on the basis of applicable data protection regulations or if pv magazine is legally obliged to do so.

You may revoke this consent at any time with effect for the future, in which case your personal data will be deleted immediately. Otherwise, your data will be deleted if pv magazine has processed your request or the purpose of data storage is fulfilled.

Further information on data privacy can be found in our Data Protection Policy.