2020. A new year, a new decade.

Let’s take stock of the situation: how do Italian companies fare at the beginning of the '20s?

We tried to understand the economic and financial situation of the Italian enterprises through a survey carried out by modefinance on a sample of 50,000 Italian SMEs based on the last financial statements available (2018).
Here are the results.

Solvency

The last decade was characterized by the banking credit crunch. In 2019 only, banking loans to business dropped by a further 6,4%. That’s to say, 45 billion credit less.

Yet, the credit crunch also reduced companies’ dependence on bank lending. In wider terms, due to the difficulties to access credit, Italian SMEs have overall downsized their reliance on external financing resources, as shown by the leverage ratio in the picture below.

Liquidity

The credit crunch also affects companies' money resources. The liquidity ratios show Italian SMEs suffer from a systematic shortage of current assets. However, it’s worth mentioning that the average DSO has fallen from 86 to 79. Italy still has the longest invoice payment terms in Europe, but the introduction of the new payment rules for the Public Administration bodes well.

Profitability

Since 2013 Italian SMEs have slowly begun to grow again. In the last 5 years median revenues have grown by +16% and in 2018 Italian companies have generated an overall turnover of € 238 million.

The revenues' increase however has not improved the value of the profitability ratios, which from 2015 onwards have undergone only a slight variation. The situation looks balanced.

Rating

In a nutshell, Italian SMEs have shown good recovery capabilities and their economic and financial situation is constantly improving. Companies’ median rating is BB and is movig more and more toward the upper classes. And it shows a growth potential that is just waiting to be tapped.