Key Indicators

For this analysis, I use the KI table for the ESA 2010 ASA.

Debt to Equity (Stock) Ratio: An example for France

Calculating Debt

According to the ESA 2010, debt items are contained in F3 (Debt) and F4 (Loans), when classified as liabilities. Debt Items (F3) both LT and ST are measured at market value. Loan Items (F4) are recorded at nominal values.

F3 = total debt = Long term debt (F31) + Short term debt (F32)

F4 = total loans = Long term loans (F41) + Short term loans (F42)

To calculate debt, I use the formula F3 + F4.

From the Balance Sheet items for non-financial firms (table nasa_10_f_bs_s11), I used the following criteria to arrive at the value of debt items (F3) and loan items (F4):

  1. Unit = MIllions of Euro (unit = MIO_EUR)
  2. Consolidated or Non-consolidated = Non-consolidated (co_nco = NCO), in order to preserve volume
  3. Financial Position = Liability (finpos = LIAB), in order to keep only that which the firm has borrowed, not lent.
  4. Exlusion of Securities Other Than Shares, Loan (F3_F4), as it apppears to be left over from ESA 95.

Calculating Equity

According to the ESA 2010, Equity items are contained in F5.

F5 contains to following sub-categories: F5 = Equity and investment fund shares = F51 + F52 F51 = Equity = F511 + F512 + F519 F511 = Listed shares (market value - representative mid-market price) F512 = Unlisted shares (estimated value through quoted shares, value of own funds, and discounted forecast profits) F519 = Other equity (valued according to own funds) F52 = Investment fund shares/ units = F521 + F522 (when listed, market value. when unlisted, valued according to own funds) F521 = Money market fund shares /units F522 = Non-Money market fund shares /units

To calculate total equity, I simply used the entire category of F5.

From the Balance Sheet items for non-financial firms (table nasa_10_f_bs_s11), I used the following criteria to arrive at the value of equity (F5):

  1. Unit = MIllions of Euro (unit = MIO_EUR)
  2. Consolidated or Non-consolidated = Non-consolidated (co_nco = NCO), in order to preserve volume
  3. Financial Position = Liability (finpos = LIAB), in order to keep only equity which represents other’s ownership right to a share in the liquidation value, rather than equity the firm owns in other corporations either as a controlling interest or investment

Calculating Debt to Equity

I used the following equation to caluclate the D/E ratio for France:

D/E = (F3 + F4) /F5

Here is the final dataframe for France’s debt and equity under these assumptions.

fr <-readRDS('fr_de_melt1.rds')
head(fr)
##   TIME_PERIOD    DEBT  EQUITY  DE_RATIO
## 1        1995 2705019 1062127 2.5467944
## 2        1996 2698862 1416010 1.9059632
## 3        1997 2765176 1685524 1.6405441
## 4        1998 2874155 2169662 1.3247017
## 5        1999 3109096 3431038 0.9061678
## 6        2000 3410524 3511813 0.9711576
summary(fr)
##   TIME_PERIOD        DEBT             EQUITY           DE_RATIO     
##  Min.   :1995   Min.   :2698862   Min.   :1062127   Min.   :0.9062  
##  1st Qu.:2000   1st Qu.:3550569   1st Qu.:2844134   1st Qu.:1.2231  
##  Median :2006   Median :4629740   Median :3649114   Median :1.3386  
##  Mean   :2006   Mean   :4827690   Mean   :3684430   Mean   :1.3876  
##  3rd Qu.:2012   3rd Qu.:6062032   3rd Qu.:4565954   3rd Qu.:1.5006  
##  Max.   :2017   Max.   :7910674   Max.   :6780347   Max.   :2.5468