Finance 425-Section 2.
Instructor: Nathan Walcott.
RATIOS TELL A STORY-2011
The case “Ratios tell a story-2011” represents the variation to the characteristics of the industries in which companies operate. The differences in financial results and conditions among companies are the result of management philosophy and policy. Some industries reduce their manufacturing capacity to match more closely their sales prospects right away, while others carry excess capacity to be prepared for future sales growth. Some industries are more sensitive to the macroeconomic conditions than others reflect to the financial statements. From financial ratios, we can find out the efficiency or inefficiency of a firm in order to make the decisions for management and the health of the firm or analyze for investments. From the balance sheet and income statements for 13 companies from following industries: Electric utility: 1
Computer software development: 2
Photograph equipment, printing, and sales: 4
Commercial Banking: 6
Supermarket (Grocery) chain: 7
Fast- Food restaurant chain: 8
Wholesale food distribution: 10
Advertising agency service: 11
Internet retailing: 12
Discount general-merchandise retail: 13
I saw two industries with the same acct. Receivables ratio is 4% are Internet retail and Electric utility, and the industry has higher total current assets is Electric utility as number 1. Then, internet retail matches with number 12. I chose two industries with the highest R&D ratio are pharmaceutical and software development. The one with no inventory is software development as number 2 and pharmaceutical matches with number 9. Airline industry is selected number 3 with highest ROE ratio. Fast food, Wholesale food distribution, and Supermarket (Grocery) chain are three of the industry has the lowest receivables collection. The industry with the highest current asset is super market and...