PROBLEM 11–4 Reproduced below are condensed common-size financial statements of companies operating in nine different industries. The nine industries represented are:

a. Tobacco manufacturing

d. Utilities g. Grocery stores

b. Pharmaceuticals

e. Investment advising h. Computer equipment

c. Health care

f. Breweries i. Public opinion surveys Required:

Examine the relations in these balance sheets and income statements and match the (1) through

(9) companies with the

(a) through (i) industries. It might be helpful to consult published industry ratios.

COMPANY BALANCE SHEETS*
Account (1) (2) (3) (4) (5) (6) (7) (8) (9)
Current receivables ............... 9.77% 19.20% 3.35% 25.96% 0.55% 8.10% 26.34% 17.38% 15.33%
Inventories ............................ 6.22 14.87 5.18 0.00 7.91 20.11 31.69 0.00 0.00 Plant and equipment, net...... 224.39 28.20 51.20 24.52 6.94 26.25 31.36 88.97 3.19 Other assets.......................... 46.56 29.15 5.48 26.65 3.71 18.50 16.91 24.35 219.59 Total assets........................... 286.94% 91.42% 65.21% 77.13% 19.11% 72.96% 106.30% 130.70% 238.11%
Cost of P&E (gross) ............... 279.83% 39.06% 70.33% 35.78% 9.64% 39.31% 45.91% 106.64% 6.29%
Current liabilities .................. 18.78% 22.70% 11.19% 29.92% 7.31% 13.31% 19.30% 19.33% 76.89%
Long-term liabilities.............. 158.69 9.22 26.65 10.19 6.06 16.40 4.11 73.32 72.18 Shareholders’ equity.............. 109.47 59.50 27.37 37.02 5.74 43.25 82.89 38.05 89.04 Total liabilities and equity..... 286.94% 91.42% 65.21% 77.13% 19.11% 72.96% 106.30% 130.70% 238.11%
*All numbers expressed as a percentage of total revenues.

Company Income Statements Account (1) (2) (3) (4) (5) (6) (7) (8) (9)
Revenues............................... 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of sales ......................... 49.50 31.11 67.48 63.29* 77.20 68.16 56.24 81.06* 16.55*
Depreciation expense ............ 8.36 2.26 2.47 3.51 1.14 3.50 4.76 4.33 0.81 Interest expense .................... 8.81 1.14 2.03 0.47 0.59 1.26 0.31 4.04 10.75 Advertising expense .............. 0.00 2.39 4.82 0.12 3.89 6.97 3.86 0.00 6.24 R&D expense ......................... 0.76 7.95 0.24 0.00 0.00 0.00 11.06 0.00 0.00 Income taxes ......................... 11.47 8.11 2.44 6.80 0.77 4.71 2.98 4.44 33.01 All other items (net) .............. 6.63 29.08 15.59 18.54 15.50 8.89 14.15 (0.46) 0.73 Total expenses....................... 85.53% 82.04% 95.07% 92.73% 99.09% 93.49% 93.36% 93.41% 68.09%
Net income ............................ 14.47% 17.96% 4.93% 7.27% 0.91% 6.51% 6.64% 6.59% 31.91%
* Companies (4), (8), and (9) carry zero inventory, meaning that cost of sales is primarily operating expenses.