Posted: September 13th, 2017

Identify the Industries

Identify the Industries

Project description
read “Identify the Industries,” instructions After reading the document, complete the matching exercise and note why you made your decisions. Use this text book as reference:Business Analysis Valuation: Using Financial Statements [PH] Krishna G. Palepu, Paul M. Healy Cengage Learning, 4th Edition, 2012 and two other references of your choice.
Instruction files.

While companies may differ in their strategic objectives, financing mixes, and management
approaches, they, nevertheless, share common characteristics with other firms in their industry.
These characteristics result from the operational realities of a company’s industry, and as such
can be used as benchmarks in evaluating a company’s financial position.

The attached exhibits contain selected balance sheet data, financial ratios, and a list of industry
groups for 14 companies. The financial data were gathered from the companies’ 1998 10-K
filings as reported by Compustat.

Directions

Match each company’s data set (Exhibit 1, pp. 2 and 3) with the industry (Exhibit 2, p. 4) in
which that company operates. Be sure to keep track of the rationale you employ in forming each
match.

Exhibit 1
Selected Balance Sheet and Financial Ratio Information‘
Company Number 1 g Q 5
Assets
Cash 0.05 0.18 0.11 0.58 0.02
Receivables 0.1 1 0.09 0.06 0.00 0.10
Inventory 0.00 0.07 0.00 0.05 0.06
PP&E Net 0.01 0.49 0.64 0.05 0.70
Intangibles 0.00 0.02 0.03 0.00 0.00
lnvestrnents 0.67 0.02 0.03 0.00 0.02
Other Assets 9.15 0.1.2. 0.1.9. 0.3.3 0%
Total Assets 19.0% 10.0% :ll1D.‘l.’a .1.QD.‘1’n 1.00%
Debt – Current Portion 0.00 0.00 0.01 0.00 0.01
Notes Payable 0.00 0.00 0.00 0.00 0.04
Accounts Payable 0.01 0.09 0.14 0.17 0.09
Taxes Payable 0.00 0.01 0.00 0.00 0.01
Other Current Liabilities 0.00 0.14 0.17 0.07 0.06
Total Long Tenn Debt 0.02 0.07 0.12 0.54 0.05
Deferred Taxes 0.01 0.05 0.02 0.00 0.14
Minority Interests 0.00 0.00 0.00 0.00 0.02
Other Liabilities Q16 we 0_26 _(_).()_0 9_._1_1
Total Liabilities 30% 55% fl_°(., 29% 51%
Preferred Stock – Total 0.00 0.00 0.01 0.00 0.00
00100100 Eql-litl! DA). 9.-5.4. LN 922.1. 0_.4l
Total Stockholders‘ Equity 29% 55% 22% 21% 11%
Selected Financial Ratios
Liquidity
Current Ratio 11.85 1.43 0.73 2.63 0.91
Quick Ratio 11.85 1.00 0.56 2.31 0.57
Asset Management
Receivables Turnover 2.88 15.13 15.03 NO 9.96
Inventory Turnover NC 9.97 NC 24.25 14.27
Days Inventory 0.00 36.09 0.00 14.85 25.23
Total Asset Turnover 0.31 1.32 1.03 1.53 1.07
Debt
Long-term Debt to Common Equity 12.20 13.55 44.30 250.92 10.35
Total Debt to Total Assets 2.85 9.93 13.09 53.79 9.48
Profitability
Net Profit Margin 12.73 3.57 7.08 (20.42) 6.40
Return on Total Assets 3.76 4.64 6.78 (19.21) 6.94
Return on Common Equity 19.11 8.75 24.61 (89.77) 14.70
Gross Profit Magin 19.05 45.09 18.06 23.53 21.41
Balance Sheet data is expressed as percentage of Total Assets
NC = Cannot be calculated
Source: 1998 Compustat Reported 1oK Filings

9 1 9 2 E 1.1. H 1.1: 1.4.

0.03 0.20 0.24 0.13 0.08 0.04 0.09 0.29 0.62
0.14 0.22 0.34 0.59 0.19 0. 02 0.05 0.09 0.07
0.09 0.12 0.36 0.00 0.24 0.34 0.01 0.00 0.00
0.57 0.39 0.01 0.01 0.44 0.52 0.70 0.16 0.07
0.08 0.01 0.02 0.01 0.00 0.05 0.03 0.17 0.00
0.00 0.01 0.03 0.19 0.00 0.00 0.07 0.21 0.00
9.19 999 99.1 9.01 999 M9 995 999 9-2.9.

199% 1.99% 199% 199% 199% 1.99% 1.99% 1.99% 1.99%
0.00 0.00 0.05 0. 00 0.02 0.02 0.00 0.00 0.00
0.12 0.14 0.47 0.15 0.03 0.00 0.00 0.00 0.00
0.08 0.03 0.22 0.62 0.11 0.21 0.06 0.04 0.03
0.01 0.08 0.00 0.00 0.00 0.01 0.00 0.00 0.04
0.13 0.19 0.00 0.00 0.09 0.10 0.08 0.36 0.18
0.32 0.19 0.16 0.09 0.26 0.19 0.24 0.17 0.00
0. 05 0.00 0.00 0.00 0.00 0.00 0.03 0.00 0.00
0. 00 0.01 0.00 0.00 0.00 0.04 0.00 0.00 0.00
E M E M M 0.19 E 9.1.9 999
92% 7.1% 9.6% 92% 51% 51% 42% 73% 26%
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.04
gm & Qfl 9.99 M23. & oi Q 0._m
1.9% 29% 1% 9% 13% 9.9% 5.9% 22% 14%
0.87 1.33 1.27 0.93 2.19 1.26 1.26 1.04 2.77
0.48 0.96 0.78 0.93 1.08 0.18 1.02 0.93 2.69

10.56 4.22 0.40 0.21 8.21 131.46 22.22 18.09 11.87
6.78 1.54 0.13 NC 4.02 6.37 73.17 NC NO

53.06 233.54 2718.66 2.94 89.65 56.56 4.92 0.00 0.00
1.36 0.92 0.12 0.13 1.72 2.89 1.03 1.70 0.79

181.45 66.78 478.79 109.46 61.13 45.50 41.76 62.21 0.00

44.26 33.40 67.41 23.86 30.40 21.23 24.56 16.80 0.00
7.43 22.52 3.53 12.82 4.03 3.22 6.33 3.54 31.00
9.95 19.65 0.41 1.18 6.64 8.86 6.71 4.16 19.96

56.48 67.96 12.57 15.19 15.70 20.98 11.55 15.38 28.52

55.57 81.05 60.21 60.48 38.37 22.36 26.95 38.12 95.38

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