Identify the Industries*

IDENTIFY THE INDUSTRIES*

While companies may differ in their strategic objectives, financing mix and management approach, 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.

Required: Match each company’s data set [Exhibit 1] with the industry [Exhibit 2] in which that company operates. Be sure to keep track of the rationale you employ in forming each match.

* This case was prepared by Clark M. Wheatley, Florida International University, from the data sources listed in the case. All rights reserved to the author. Exhibit 1 Selected Balance Sheet and Financial Ratio Information* Company Number 1 2 3 4 5 Assets % % % % % Cash 0.05 0.18 0.11 0.58 0.02 Receivables 0.11 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 Investments 0.67 0.02 0.03 0.00 0.02 Other Assets 0.16 0.12 0.10 0.33 0.08 Total Assets 100% 100% 100% 100% 100% 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 Term 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 0.76 0.09 0.26 0.00 0.11 Total Liabilities 80% 46% 71% 79% 53% Preferred Stock - Total 0.00 0.00 0.01 0.00 0.00 Common Equity 0.20 0.54 0.28 0.21 0.47 Total Stockholders' Equity 20% 54% 29% 21% 47%

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 NC 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 Margin 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 10K Filings 6 7 8 9 10 11 12 13 14 % % % % % % % % % 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 0.10 0.03 0.01 0.07 0.06 0.03 0.05 0.08 0.24 100% 100% 100% 100% 100% 100% 100% 100% 100% 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 0.11 0.07 0.08 0.06 0.07 0.01 0.01 0.16 0.00 82% 71% 96% 92% 57% 57% 42% 73% 26% 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.04 0.18 0.29 0.04 0.08 0.43 0.43 0.58 0.27 0.70 18% 29% 4% 8% 43% 43% 58% 27% 74%

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 NC 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 Exhibit 2 Represented Industries

Company Number Code Industry A Airline B Bank C Brewery D Department Store E Discount Retailer F Fast Food Retailer/Franchiser G Food Products Manufacturer H Insurance Company I Internet Retailer J Internet Service Provider K Oil Company (fully integrated) L Pharmaceutical Manufacturer M Securities Brokerage N Software Manufacturer