FIU ACG 6175 Financial Reporting and Analysis

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Overview 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 companys industry, and as such can be used as benchmarks in evaluating a companys 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 companys 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.

Week 4Identify the Industries

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Exhibit 1Selected Balance Sheet and Financial Ratio Information*Company Number 1 2 3 4 5Assets % % % % %

Cash 0.05 0.18 0.11 0.58 0.02Receivables 0.11 0.09 0.06 0.00 0.10Inventory 0.00 0.07 0.00 0.05 0.06PP&E Net 0.01 0.49 0.64 0.05 0.70Intangibles 0.00 0.02 0.03 0.00 0.00Investments 0.67 0.02 0.03 0.00 0.02Other 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 0.01Notes Payable 0.00 0.00 0.00 0.00 0.04Accounts Payable 0.01 0.09 0.14 0.17 0.09Taxes Payable 0.00 0.01 0.00 0.00 0.01Other Current Liabilities 0.00 0.14 0.17 0.07 0.06Total Long Term Debt 0.02 0.07 0.12 0.54 0.05Deferred Taxes 0.01 0.05 0.02 0.00 0.14Minority Interests 0.00 0.00 0.00 0.00 0.02Other 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 0.00Common Equity 0.20 0.54 0.28 0.21 0.47

Total Stockholders' Equity 20% 54% 29% 21% 47%

Selected Financial RatiosLiquidity

Current Ratio 11.85 1.43 0.73 2.63 0.91Quick Ratio 11.85 1.00 0.56 2.31 0.57

Asset ManagementReceivables Turnover 2.88 15.13 15.03 NC 9.96Inventory Turnover NC 9.97 NC 24.25 14.27Days Inventory 0.00 36.09 0.00 14.85 25.23Total Asset Turnover 0.31 1.32 1.03 1.53 1.07

DebtLong-term Debt to Common Equity 12.20 13.55 44.30 250.92 10.35Total Debt to Total Assets 2.85 9.93 13.09 53.79 9.48

ProfitabilityNet Profit Margin 12.73 3.57 7.08 (20.42) 6.40Return on Total Assets 3.76 4.64 6.78 (19.21) 6.94Return on Common Equity 19.11 8.75 24.61 (89.77) 14.70Gross Profit Margin 19.05 45.09 18.06 23.53 21.41

* Balance Sheet data is expressed as percentage of Total AssetsNC = Cannot be calculatedSource: 1998 Compustat Reported 10K Filings

FIU ACG 6175 Financial Reporting and Analysis

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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 0.620.14 0.22 0.34 0.59 0.19 0.02 0.05 0.09 0.070.09 0.12 0.36 0.00 0.24 0.34 0.01 0.00 0.000.57 0.39 0.01 0.01 0.44 0.52 0.70 0.16 0.070.08 0.01 0.02 0.01 0.00 0.05 0.03 0.17 0.000.00 0.01 0.03 0.19 0.00 0.00 0.07 0.21 0.000.10 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 0.000.12 0.14 0.47 0.15 0.03 0.00 0.00 0.00 0.000.08 0.03 0.22 0.62 0.11 0.21 0.06 0.04 0.030.01 0.08 0.00 0.00 0.00 0.01 0.00 0.00 0.040.13 0.19 0.00 0.00 0.09 0.10 0.08 0.36 0.180.32 0.19 0.16 0.09 0.26 0.19 0.24 0.17 0.000.05 0.00 0.00 0.00 0.00 0.00 0.03 0.00 0.000.00 0.01 0.00 0.00 0.00 0.04 0.00 0.00 0.000.11 0.07 0.08 0.06 0.07 0.01 0.01 0.16 0.0082% 71% 96% 92% 57% 57% 42% 73% 26%

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.040.18 0.29 0.04 0.08 0.43 0.43 0.58 0.27 0.7018% 29% 4% 8% 43% 43% 58% 27% 74%

0.87 1.33 1.27 0.93 2.19 1.26 1.26 1.04 2.770.48 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 11.876.78 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 0.001.36 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 0.0044.26 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 31.009.95 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 28.5255.57 81.05 60.21 60.48 38.37 22.36 26.95 38.12 95.38

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Exhibit 2 Represented Industries Complete the chart.

Company Number Code Industry Rationale

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

Overview