Identify the Industries
1. Retail grocery stores —-Specialty retailer Industry 2. Commercial banking —-Commercial banks Industry 3.
Pharmaceutical preparations —-Pharmaceuticals Industry 4. Commercial airline —-Aerospace and defense Industry 5. Computer software —-Network & other comm. Equip. Industry 6. IT service provider —-Internet services and retailing Industry 7. Liquor producer and distributor —-Beverages Industry 8.
Integrated oil and gas —-Mining and oil production Industry 9. Mobile phone service provider —-Telecommunications Industry 10. Semiconductor manufacturer —-Motor vehicles and parts Industry The procedure to find the answers: (Just compare the data of the exhibit 4 in the ITI with the data on page 12 of the “An overview of financial statement analysis: the mechanics”) ?Industry 1 has the lowest Return on Sales, thus is Retail grocery stores. ?Industry 2 has the lowest Asset turnover rate, so it is Commercial bank. Industry 5 has the highest ROA, which Network & other comm. Equip usually has, thus it is Computer software. ?Industry 8 has the highest Return on Sales, so it is the Industry of Oil production. ?Industry 9’s Return on Sales, Return on Assets, Return on Equity, Asset turnover, and Leverage are all the same as the Telecommunications line’s data, thus it is Mobile phone service provider. ?Industry 10 has negative Return on Sales, Return on Assets, hence it is semiconductor manufacturer.
We’ve figured out the industries of 1,2,5,8,9,and 10 already. The 3,4,6,and 7 are left. ?Compare the data of the industries 3,4,6 and 7. We found that the Asset turnover of industry 4 is extremely high, thus it is the commercial airline. ?The Inventory in industry 6 is the lowest among industry 3,6,and 7. So it is the IT service provider. ?Compare the Industry 3 and 7, 7’s Return on Assets, Return on Equity are lower, Leverage is higher. So Industry 7 is Liquor producer, and Industry 3 is Pharmaceutical Industry.