One of the most talked-about topics recently is the case of Nordis Management SRL, a company within the Nordis group, known for its luxury real estate projects. The investigation published by Recorder revealed serious misconduct, showing how the real estate business defrauded hundreds of people. The company is now undergoing insolvency, which has a significant impact on the Romanian real estate market. Although it's too late for those who trusted this project and paid considerable deposits, a closer look at the company’s financial indicators could have raised red flags long before the insolvency. Simplifying the analysis, we see that Nordis was over-leveraged, with a debt ratio of nearly 100% over the past five years. Moreover, the company did not have bank financing and relied mainly on advances from clients, barely managing to close sales, and the profitability marked at sale was very low. These factors should have been a warning sign for any cautious investor. Comparing these figures with the sector average for CAEN code 4110 – Real Estate Development (promotion), we observe that the debt ratio of companies in the same field is around 68%. The average inventory turnover period in this sector is about one year, meaning that most companies complete and sell their projects within a relatively short period. In contrast, Nordis never managed to turn over its inventory in less than two years, and in 2021, this duration reached even 8 years, signaling major resource management issues and significant delays. What indicators should we watch to avoid such situations? Many investors wonder how they can prevent a similar situation and what financial indicators they should monitor. First, it’s important to focus on risk or “going concern” indicators, with an emphasis on the debt ratio. Another critical indicator is DIH (Days Inventory Held), which measures how quickly a company sells its inventory. High DIH values indicate that stocks remain unsold for long periods, which can lead to liquidity problems. An increase in this indicator or surpassing the sector average may indicate cash flow blockages and resource management difficulties. Additionally, profitability indicators are essential to evaluate how efficiently a company manages its resources. Low profit margins or constant losses indicate operational efficiency problems. Lastly, it is crucial to check bankruptcy risk to get a clear picture of a company's financial health. How can MetricBiz help you avoid such situations? All this essential information about companies in Romania can be obtained instantly through the MetricBiz platform. With access to detailed financial indicators and company data, users can quickly assess a firm’s financial health and make informed decisions. MetricBiz offers a comparative analysis with sector averages so you can understand how a company stands against its competitors. The platform also allows you to track the historical evolution of indicators to identify trends and anticipate potential problems. In short, MetricBiz is the perfect tool to avoid the pitfalls of risky businesses. Whether you are an investor, business partner, or simply want to check a company’s health, MetricBiz provides all the data you need to make informed choices and avoid unpleasant surprises.
