The Development of Equity Ratios for Firms in the Swedish Industry for Wooden Single-Family Houses

On the Swedish market for single-family houses, wood traditionally dominates with around 90 % market share. Due to the economic crisis, the number of prefabricated wooden single-family houses decreased from about 12 100 units in 2007 to 4 800 units in 2012. Firms in the industry struggled with a 60 % decrease of order intake. These firms compete with relatively low margins, and many faced economic losses. Such losses negatively affect the firms’ equity ratio, describing the share of assets that are financed by own capital. This negative effect defines the firms’ long-term ability to pay its depths. The longer such an effect lasts, the more it threatens the firms’ future, potentially leading to bankruptcy. This study is aiming at describing the development of the equity ratio from 2010 to 2014 for 52 Swedish firms producing wooden single-family houses. This will be done by collecting and analyzing those firms’ annual reports and the required financial numbers. The results show on the one hand how an average equity ratio for the whole industry developed within the chosen five-year period. On the other hand, the development of each firm’s equity ratio within that period is mapped, indicating, which firms potentially might face problems if no appropriate actions will be taken