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Balance Sheet Analysis

Balance Sheet Analysis
 
Ian Jermin, Analyst at John East & Partners Limited part of the Merchant Securities Group, commented on the UK recruitment sector:
"Our initiation of a balance sheet health check of the UK recruitment sector ascertained how many companies at the time of their last announcement enjoyed a net cash position and how many were still encumbered by debt. Of the 30 listed companies in the sector 13 were in a net cash position and 17 in net debt. Aggregate net cash balances were 114m while aggregate net debt stood at 290m.
 
A year earlier there were only 10 companies reporting net cash balances with the total being 77m against 20 companies with a total net debt of 358m so there has been significant improvement in the intervening twelve months and we predict this trend will continue.
Of course this is a picture at a single point in time and can be volatile depending on the particular point in the working capital cycle and will also be influenced by exchange rates. But if, as we suspect, activity levels for staffing companies continue to contract through 2009 we would expect many more companies to move to a net cash position and those companies already in net cash to increase their funds."

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