Financial decisions and performances of companies are affected by various factors such as macro- economic conditions, industry dynamics, and management philosophy. The industry in which a company operates is one of the main reasons for this variation. Some industries may require a large amount of investments in property, plant & equipment while some rely on intangible assets. Some industries are labor intensive, while some require relatively lesser. In some industries, the profit margins are high. On the contrary, some companies operate in low profit-margin industries with a high turnover rate. In sum, we can conclude that the industry of the company plays an important role on its financial decisions and performance. Therefore, the firms within the same industry are likely to have similar balance sheet and income statement structures, which lead to similar financial ratios. Based on this, I kindly ask you to understand and analyze Table 1, which presents a brief summary of balance sheets (in percentage form) and some key financial ratios of 5 listed companies in 5 industries. Each column in Table 1 represents the data of a firm within an industry from the list below: Sports Club Fast-food restaurant chain Computer software Steel producer Utilities Brief information about the companies The Sports Club operates as a professional football club. It generates revenue from the sale of tickets, sponsorship activities, sale of advertising space, licensing of television and media rights.

Fast-food Restaurant Chain generates revenue through company-owned restaurants, franchise royalties, and licensing pacts. Restaurants offer a uniform value-priced menu with some regional variations. The company operates in 120 countries.

Computer Software Company is a global provider of software, hardware, and services.

Steel Producer is an integrated steel producer with millions tons of steelmaking capacity. The company produces flat-rolled and tubular products for a wide variety of end markets and applications.

Utilities Company is an electric and natural gas utility company. The firm primarily uses hydroelectric, thermal, and wind energy to generate power. You need to analyze both the balance sheet data and financial ratios in order to match the company data with its industry. There are 5 companies that must be matched with 5 industries. Please make sure no industry is left out. For any pairing, you have to explain your detailed reasoning by using the data

from the balance sheet and financial ratios [(Each correct pairing 2 points x 5 =10 points, each correct explanation 10 points x 5=50 points)] Pairing table Industry Explanation / discussion Sports Club Fast-food restaurant chain Computer software Steel producer Utilities

Definition of ratios Gross Margin = (Gross Profit) / (Sales) = (Sales Cost of Goods Sold) / (Sales) Operating Margin = (Operating Income) / Sales = (Gross Profit Operating Expenses) / (Sales) Net Margin = (Net Income) / Sales Asset turnover = (Sales / Total Assets) and it represents how many dollars in revenue a company has generated per dollar of assets. Return on asset = net income / total assets Financial Leverage = Total Assets / Equity (The higher the ratio, the more debt a company uses in its capital structure) R&D / Sales = Research and Development Expenses / Sales (This ratios shows how much a company focuses on research and development in its operations) Inventory turnover = (COGS) / (Inventory) (It is a ratio showing how many times a company's inventory is sold and replaced over a period of time) Receivables collection = The average number of days required to collect receivables from customers.

Table 1. Balance Sheet Data (in percentages) (31.12.201x) and Financial Ratios of 5 Companies