Read through the case, identify the industry of exhibits 1, 2, 3, 4.

Thank you very much!!!

FINANCIAL STATEMENT ANALYSIS IDENTIFY THE INDUSTRY Since opportunities and constraints tend to be different across industries, companies in different indus- tries tend to make different investment, dividend, and financing decisions. Thus, firms in different industries exhibit different financial characteristics, and, hence, report different financial ratios. For example, "old economy" businesses with large amounts of tangible assets may have higher leverage ratios. Service or trading firms may have large amounts of intangible assets such as knowledge assets or a large and loyal customer base, and, hence, have low leverage ratios because "growth options" can evaporate. On the other hand, companies within the same industry tend to exhibit similar financial characteristics, as measured by financial ratios. With some knowledge of the different operating, invest- ing, and financing decisions across industries, financial ratios can be used to identify an industry (see Exhibit 1 for the definition of ratios used). Balance sheets and income statements for the most recent three years are provided for 10 compa- nies from 10 different industries. Common-sized balance sheets (all items scaled by total assets), com- mon-sized income statements (all items scaled by net sales), and selected financial ratios for the most recent three years are also provided. Since unusual deviation from target values may occur in any eren year, the values for the items were averaged over three years. The three-year average common-sized balance sheet, common-sized income statement, and financial ratios are reported in Exhibits 2, 3, and 4, respectively. The 10 companies are drawn from the following 10 different industries: Commercial airline Commercial banking (items fitted into the same categories as the non-financial firms) Computer software Integrated oil and gas IT service provider Liquor producer and distributor Mobile phone service provider Pharmaceutical preparations Retail grocery stores Semiconductor manufacturer Assignment Using the financial statement data provided in Exhibits 2, 3, and 4, match the companies with their industry. Exhibit 1 Definitions of Some Key Financial Ratios LIQUIDITY RATIOS: Cash & Marketable Securities To Total Assets (Cash + Market Securities) / Total Assets Acid Test Ratio (Cash + Market Securities + Receivables) / Current Liabilities Current ratio Current Assets / Current Liabilities ASSET MANAGEMENT Day's Receivables 365/ (Sales / Receivables) Day's Inventory 365/(Cost of Sales / Inventory) Asset Tumover Sales/Total Assets FINANCIAL LEVERAGE Long-term Debt to Total Assets Long-term Debt to Stockholders' Equity (Convertible Debt + Long-term Debt + Non-current Capital Leases + Non-current Long-term Debt To (Convertible Debt + Long-term Debt Non-curent Capitel Leases + Non-current Long-term Debt) / Stockholders' Equity (Income Before Tax + Interest Expense) / Interest Expense Coverage Ratio PROFITABILITY Gross Margin Ratio Return on Sales Return on Assets (1) Return on Assets (2) Return on Equity Gross Profit/Sales Net Income / Sales Net Income / Total Assets (Net Income + Interest Expense) Total Assets Net Income / Stockholders' Equity DUPONT ANALYSIS Return on Equity Return on Sales * Asset Turnover Leverage (Net Income / Sales) x (Sales / Assets) x (Assets/ Stockholders' Equity) Exhibit 2 Common-Size Income Statement (percentage; averaged over three years) 9 100.00 68.43 31.57 0.00 15.56 16.01 NET SALES COST OF GOODS GROSS PROFIT R&D EXPENDITURES SELL GEN & ADMIN EXP INC BEF DEP & AMORT DEPRECIATION & AMORT NON-OPERATING INC INTEREST EXPENSE INCOME BEFORE TAX PROV FOR INC TAXES MINORITY INT (INC) INVEST GAINS/LOSSES OTHER INCOME NET INC BEFEX ITEMS EX ITEMS & DISC OPS NET INCOME 4.26 1 100.00 79.32 20.68 0.00 19.38 1.30 0.00 0.64 1.67 0.27 (0.09) 0.04 0.00 0.10 0.41 0.35 0.76 3 100.00 36.62 63.38 0.00 39.91 23.47 0.00 1.98 0.99 24.47 7.72 2 100.00 11.11 88.89 0.00 20.17 68.72 1.18 (19.23) 18.33 29.98 9.98 0.00 0.00 0.00 20.00 0.00 4 100.00 49.78 50.22 0.32 25.13 24.77 3.11 (5.09) 0.18 16.39 6.53 0.00 0.00 0.00 9.86 0.00 9.86 5 100.00 52.77 47.23 0.00 14.54 32.69 4.50 1.84 0.00 30.04 4.18 0.07 0.21 (0.21) 25.78 0.21 25.99 6 100.00 43.81 56,19 14.61 16.01 25.58 0.00 2.15 0.09 27.64 8.12 0.00 0.00 0.00 19.51 0.00 19.51 7 100.00 23.20 76.80 20.01 35.77 21.03 0.00 0.37 0.87 20.52 5.96 0.00 0.00 0.00 14.57 (0.05) 14.52 8 100.00 17.03 82.97 17.18 33.02 32.77 0.00 5.94 0.00 38.71 11.57 0.00 0.00 0.00 27.14 0.00 27.14 10 100.00 58.46 41.54 0.00 57.69 (16.14) 16.72 22.45 2.37 (12.78) 8.17 0.99 0.00 0.00 (21.94) (3.83) (25.78) 0.00 (161) 0.90 9.24 3.40 0.00 0.00 0.00 5.84 0.00 5.84 0.00 0.00 16.75 (1.85) 14.90 20.00 Source: Thorsen Banker Owentia Exhibit 3 Common-Size Balance Sheet (percentage; averaged over three years) CASH MRKTABLE SECURITIES RECEIVABLES INVENTORIES RAW MATERIALS WORK IN PROGRESS FINISHED GOODS NOTES RECEIVABLE OTHER CURRENT ASSETS TOTAL CURRENT ASSETS PROP, PLANT & EQUP ACCUMULATED DEP NET PROP & EQUIP INVEST & ADV TO SUBS OTHER NON-CUR ASSETS DEFERRED CHARGES INTANGIBLES DEPOSITS & OTH ASSET TOTAL ASSETS 1 601 000 1016 1178 (024) 000 1202 000 12.50 4044 37 33 000 3733 5.29 0.29 3.13 1298 054 100.00 2 266 20.51 45 93 16.09 0.00 0.00 0.00 0.00 0.00 85 59 064 0.00 064 008 0.00 0.00 4.66 903 100.00 3 1047 1.96 1261 2012 11.13 3.88 5.10 000 625 5141 33.72 1599 1773 063 000 166 2087 770 10000 4 14 27 0.00 13.13 4.74 0.73 0.00 401 0.00 14 33 57 119 29 5 3547 0.00 1977 000 000 0.00 000 000 6 81 6205 21.80 000 21.80 14.83 0.00 0.71 0 61 0.00 100.00 6 15.42 12.17 6.64 694 097 3.54 2.44 0.00 2.69 088 90.48 55 62 34 85 8.50 0.00 0.23 9.41 313 100.00 7 15.99 6.75 11 26 907 0 59 5.90 2.58 0.00 3.50 46 56 55.18 2198 33 23 4.03 000 3.02 0 53 1262 100.00 8 3.10 52 44 992 1 09 031 000 0.78 000 4.80 71 34 8.75 537 338 13 91 000 305 520 3.11 100.00 9 1187 3.17 193 120 120 0.00 0.00 0.00 3.14 21.31 99.65 26 90 72 75 1.56 0.00 0.00 0 16 421 100.00 10 2.90 000 360 028 000 000 028 000 031 709 11 64 0.00 11.64 16.70 Oos 030 61 39 283 100.00 52 97 9.45 0.00 0.74 0.00 327 10000 0.00 0.09 0.00 000 2.88 15 26 4 57 038 6.70 001 5.34 35.15 0.18 2336 5078 068 000 303 000 000 7786 000 0.00 000 817 000 085 1168 026 000 251 404 285 2218 0.00 1186 000 396 5. 55 94 NOTES PAYABLE ACCOUNTS PAYABLE OUR LONG TERM DEBT CUR PORT CAP LEASES ACCRUED EXPENSES INCOME TAXES OTHER CURRENT LIAB TOTAL CURRENT LIAB MORTGAGES DEFERRED CHARGES INC CONVERTIBLE DEBT LONG TERM DEBT NON-CUR CAP LEASES OTHER LONG TERM LIAB TOTAL LIABILITIES MINORITY INT (LIAB) PREFERRED STOCK COMMON STOCK NET CAPITAL SURPLUS RETAINED EARNINGS TREASURY STOCK OTHER EQUITIES SHAREHOLDER EQUITY TOT LIAB & NET WORTH 0.00 3.45 338 351 0.00 732 1.79 0.70 20.16 0.00 5.18 0.00 17 54 000 6.17 49 06 0.00 0.00 074 1.37 54 55 5.80 (011) SO 94 100.00 274 000 0.00 0.00 0.02 1.93 1.79 0.01 6.11 000 093 10 79 0.00 3.41 0.00 9.66 0.08 1.31 25.09 6.93 683 76 82 0 31 2 28 1 81 63 20 144 84) 0.00 044 445 004 000 819 340 126 1778 000 126 437 (116) 000 0.74 23.00 000 000 001 1394 62.90 000 013 7700 100.00 225 313 1.79 0.00 230 446 11 73 2565 000 187 0.00 19.14 0.00 7.39 5406 0.00 000 298 14.11 43 22 0.43 (1394) 000 298 000 000 3.46 293 1461 23.98 000 222 0.00 000 0.00 5.52 3171 000 000 7662 000 (999) 000 1.66 68 29 10000 0.00 4.06 207 007 9.24 1.98 506 2247 283 15.45 000 882 0.50 207 5214 000 0.00 6.20 4.70 33 37 117 4.76 47 86 10000 526 91.28 000 0.13 879 4569 182 000 25 000 78 79 2807 074 524 10000 25.36 0.62 008 381 000 531 000 1048 872 10000 0.24 107 138 2.93 57 19 0.00 025 72.82 00.00 304 86.45 (36 41) 3.56 24 08 74.02 100.00 2287 100 00 100 00 Source: Thomson Banker One Analytics Exhibit 4 Selected Financial Ratios (averaged over three years) 1 2 3 4 5 6 7 8 9 10 LIQUIDITY RATIOS Cash & Market Sec to Total Assets Acid Test Ratio Current Ratio 0.06 0.47 1.15 0.23 0.89 1.10 0.12 1.25 2.61 0.14 1.24 1.51 0.35 2.13 2.40 0.28 1.94 2.48 0.23 1.33 1.83 0.56 3.01 3.26 0.15 0.76 0.95 0.03 0.61 0.67 ASSET MANAGEMENT Day's Receivable Day's Inventory Asset Turnover 16.66 24.18 2.24 2,540.75 #DIV/0! 0.07 59.22 260.56 0.78 29.54 21.55 1.63 71.39 #DIV/0! 1.01 32.25 76.73 0.75 66.25 230.14 0.62 67.01 40.77 0.53 11.99 10.79 0.59 62.12 8.37 0.21 0.38 0.09 0.21 0.03 0.00 0.03 0.21 0.00 0.11 0.12 FINANCIAL LEVERAGE Long-term Debt to Total Assets Long-term Debt to Stockholders' Equity Coverage Ratio 1.71 0.76 1.01 4.05 0.43 23.92 0.06 134.15 0.00 #DIV/0! 0.04 358.14 0.46 35.70 0.00 #DIV/0! 0.24 18.15 0.16 (6.49) PROFITABILITY Gross Margin Ratio Return on Sales Return on Assets (1) Return on Assets (2) Return on Equity 0.21 0.01 0.02 0.05 0.07 0.89 0.20 0.01 0.03 0.15 0.63 0.15 0.11 0.12 0.22 0.50 0.10 0.16 0.16 0.31 0.47 0.26 0.26 0.26 36 0.56 0.20 0.15 0.15 0.19 0.77 0.15 0.09 0.10 0.20 0.83 0.27 0.15 0.15 0.23 0.32 0.06 0.03 0.04 0.07 0.42 (0.26) (0.06) (0.06) (0.09) 0.15 0.20 DUPONT ANALYSIS Return on Equity Return on Sales Asset Turnover Leverage 0.15 0.07 0.01 2.24 4.43 0.20 0.07 11.53 0.22 0.15 0.78 1.98 0.31 0.10 1.63 1.91 0.36 0.26 1.01 1.38 0.19 0.20 0.75 1.30 0.23 0.27 0.53 1.49 0.07 0.06 0.59 2.09 (0.09) (0.26) 0.21 1.36 0.62 2.18 Source The Best Our Anahti FINANCIAL STATEMENT ANALYSIS IDENTIFY THE INDUSTRY Since opportunities and constraints tend to be different across industries, companies in different indus- tries tend to make different investment, dividend, and financing decisions. Thus, firms in different industries exhibit different financial characteristics, and, hence, report different financial ratios. For example, "old economy" businesses with large amounts of tangible assets may have higher leverage ratios. Service or trading firms may have large amounts of intangible assets such as knowledge assets or a large and loyal customer base, and, hence, have low leverage ratios because "growth options" can evaporate. On the other hand, companies within the same industry tend to exhibit similar financial characteristics, as measured by financial ratios. With some knowledge of the different operating, invest- ing, and financing decisions across industries, financial ratios can be used to identify an industry (see Exhibit 1 for the definition of ratios used). Balance sheets and income statements for the most recent three years are provided for 10 compa- nies from 10 different industries. Common-sized balance sheets (all items scaled by total assets), com- mon-sized income statements (all items scaled by net sales), and selected financial ratios for the most recent three years are also provided. Since unusual deviation from target values may occur in any eren year, the values for the items were averaged over three years. The three-year average common-sized balance sheet, common-sized income statement, and financial ratios are reported in Exhibits 2, 3, and 4, respectively. The 10 companies are drawn from the following 10 different industries: Commercial airline Commercial banking (items fitted into the same categories as the non-financial firms) Computer software Integrated oil and gas IT service provider Liquor producer and distributor Mobile phone service provider Pharmaceutical preparations Retail grocery stores Semiconductor manufacturer Assignment Using the financial statement data provided in Exhibits 2, 3, and 4, match the companies with their industry. Exhibit 1 Definitions of Some Key Financial Ratios LIQUIDITY RATIOS: Cash & Marketable Securities To Total Assets (Cash + Market Securities) / Total Assets Acid Test Ratio (Cash + Market Securities + Receivables) / Current Liabilities Current ratio Current Assets / Current Liabilities ASSET MANAGEMENT Day's Receivables 365/ (Sales / Receivables) Day's Inventory 365/(Cost of Sales / Inventory) Asset Tumover Sales/Total Assets FINANCIAL LEVERAGE Long-term Debt to Total Assets Long-term Debt to Stockholders' Equity (Convertible Debt + Long-term Debt + Non-current Capital Leases + Non-current Long-term Debt To (Convertible Debt + Long-term Debt Non-curent Capitel Leases + Non-current Long-term Debt) / Stockholders' Equity (Income Before Tax + Interest Expense) / Interest Expense Coverage Ratio PROFITABILITY Gross Margin Ratio Return on Sales Return on Assets (1) Return on Assets (2) Return on Equity Gross Profit/Sales Net Income / Sales Net Income / Total Assets (Net Income + Interest Expense) Total Assets Net Income / Stockholders' Equity DUPONT ANALYSIS Return on Equity Return on Sales * Asset Turnover Leverage (Net Income / Sales) x (Sales / Assets) x (Assets/ Stockholders' Equity) Exhibit 2 Common-Size Income Statement (percentage; averaged over three years) 9 100.00 68.43 31.57 0.00 15.56 16.01 NET SALES COST OF GOODS GROSS PROFIT R&D EXPENDITURES SELL GEN & ADMIN EXP INC BEF DEP & AMORT DEPRECIATION & AMORT NON-OPERATING INC INTEREST EXPENSE INCOME BEFORE TAX PROV FOR INC TAXES MINORITY INT (INC) INVEST GAINS/LOSSES OTHER INCOME NET INC BEFEX ITEMS EX ITEMS & DISC OPS NET INCOME 4.26 1 100.00 79.32 20.68 0.00 19.38 1.30 0.00 0.64 1.67 0.27 (0.09) 0.04 0.00 0.10 0.41 0.35 0.76 3 100.00 36.62 63.38 0.00 39.91 23.47 0.00 1.98 0.99 24.47 7.72 2 100.00 11.11 88.89 0.00 20.17 68.72 1.18 (19.23) 18.33 29.98 9.98 0.00 0.00 0.00 20.00 0.00 4 100.00 49.78 50.22 0.32 25.13 24.77 3.11 (5.09) 0.18 16.39 6.53 0.00 0.00 0.00 9.86 0.00 9.86 5 100.00 52.77 47.23 0.00 14.54 32.69 4.50 1.84 0.00 30.04 4.18 0.07 0.21 (0.21) 25.78 0.21 25.99 6 100.00 43.81 56,19 14.61 16.01 25.58 0.00 2.15 0.09 27.64 8.12 0.00 0.00 0.00 19.51 0.00 19.51 7 100.00 23.20 76.80 20.01 35.77 21.03 0.00 0.37 0.87 20.52 5.96 0.00 0.00 0.00 14.57 (0.05) 14.52 8 100.00 17.03 82.97 17.18 33.02 32.77 0.00 5.94 0.00 38.71 11.57 0.00 0.00 0.00 27.14 0.00 27.14 10 100.00 58.46 41.54 0.00 57.69 (16.14) 16.72 22.45 2.37 (12.78) 8.17 0.99 0.00 0.00 (21.94) (3.83) (25.78) 0.00 (161) 0.90 9.24 3.40 0.00 0.00 0.00 5.84 0.00 5.84 0.00 0.00 16.75 (1.85) 14.90 20.00 Source: Thorsen Banker Owentia Exhibit 3 Common-Size Balance Sheet (percentage; averaged over three years) CASH MRKTABLE SECURITIES RECEIVABLES INVENTORIES RAW MATERIALS WORK IN PROGRESS FINISHED GOODS NOTES RECEIVABLE OTHER CURRENT ASSETS TOTAL CURRENT ASSETS PROP, PLANT & EQUP ACCUMULATED DEP NET PROP & EQUIP INVEST & ADV TO SUBS OTHER NON-CUR ASSETS DEFERRED CHARGES INTANGIBLES DEPOSITS & OTH ASSET TOTAL ASSETS 1 601 000 1016 1178 (024) 000 1202 000 12.50 4044 37 33 000 3733 5.29 0.29 3.13 1298 054 100.00 2 266 20.51 45 93 16.09 0.00 0.00 0.00 0.00 0.00 85 59 064 0.00 064 008 0.00 0.00 4.66 903 100.00 3 1047 1.96 1261 2012 11.13 3.88 5.10 000 625 5141 33.72 1599 1773 063 000 166 2087 770 10000 4 14 27 0.00 13.13 4.74 0.73 0.00 401 0.00 14 33 57 119 29 5 3547 0.00 1977 000 000 0.00 000 000 6 81 6205 21.80 000 21.80 14.83 0.00 0.71 0 61 0.00 100.00 6 15.42 12.17 6.64 694 097 3.54 2.44 0.00 2.69 088 90.48 55 62 34 85 8.50 0.00 0.23 9.41 313 100.00 7 15.99 6.75 11 26 907 0 59 5.90 2.58 0.00 3.50 46 56 55.18 2198 33 23 4.03 000 3.02 0 53 1262 100.00 8 3.10 52 44 992 1 09 031 000 0.78 000 4.80 71 34 8.75 537 338 13 91 000 305 520 3.11 100.00 9 1187 3.17 193 120 120 0.00 0.00 0.00 3.14 21.31 99.65 26 90 72 75 1.56 0.00 0.00 0 16 421 100.00 10 2.90 000 360 028 000 000 028 000 031 709 11 64 0.00 11.64 16.70 Oos 030 61 39 283 100.00 52 97 9.45 0.00 0.74 0.00 327 10000 0.00 0.09 0.00 000 2.88 15 26 4 57 038 6.70 001 5.34 35.15 0.18 2336 5078 068 000 303 000 000 7786 000 0.00 000 817 000 085 1168 026 000 251 404 285 2218 0.00 1186 000 396 5. 55 94 NOTES PAYABLE ACCOUNTS PAYABLE OUR LONG TERM DEBT CUR PORT CAP LEASES ACCRUED EXPENSES INCOME TAXES OTHER CURRENT LIAB TOTAL CURRENT LIAB MORTGAGES DEFERRED CHARGES INC CONVERTIBLE DEBT LONG TERM DEBT NON-CUR CAP LEASES OTHER LONG TERM LIAB TOTAL LIABILITIES MINORITY INT (LIAB) PREFERRED STOCK COMMON STOCK NET CAPITAL SURPLUS RETAINED EARNINGS TREASURY STOCK OTHER EQUITIES SHAREHOLDER EQUITY TOT LIAB & NET WORTH 0.00 3.45 338 351 0.00 732 1.79 0.70 20.16 0.00 5.18 0.00 17 54 000 6.17 49 06 0.00 0.00 074 1.37 54 55 5.80 (011) SO 94 100.00 274 000 0.00 0.00 0.02 1.93 1.79 0.01 6.11 000 093 10 79 0.00 3.41 0.00 9.66 0.08 1.31 25.09 6.93 683 76 82 0 31 2 28 1 81 63 20 144 84) 0.00 044 445 004 000 819 340 126 1778 000 126 437 (116) 000 0.74 23.00 000 000 001 1394 62.90 000 013 7700 100.00 225 313 1.79 0.00 230 446 11 73 2565 000 187 0.00 19.14 0.00 7.39 5406 0.00 000 298 14.11 43 22 0.43 (1394) 000 298 000 000 3.46 293 1461 23.98 000 222 0.00 000 0.00 5.52 3171 000 000 7662 000 (999) 000 1.66 68 29 10000 0.00 4.06 207 007 9.24 1.98 506 2247 283 15.45 000 882 0.50 207 5214 000 0.00 6.20 4.70 33 37 117 4.76 47 86 10000 526 91.28 000 0.13 879 4569 182 000 25 000 78 79 2807 074 524 10000 25.36 0.62 008 381 000 531 000 1048 872 10000 0.24 107 138 2.93 57 19 0.00 025 72.82 00.00 304 86.45 (36 41) 3.56 24 08 74.02 100.00 2287 100 00 100 00 Source: Thomson Banker One Analytics Exhibit 4 Selected Financial Ratios (averaged over three years) 1 2 3 4 5 6 7 8 9 10 LIQUIDITY RATIOS Cash & Market Sec to Total Assets Acid Test Ratio Current Ratio 0.06 0.47 1.15 0.23 0.89 1.10 0.12 1.25 2.61 0.14 1.24 1.51 0.35 2.13 2.40 0.28 1.94 2.48 0.23 1.33 1.83 0.56 3.01 3.26 0.15 0.76 0.95 0.03 0.61 0.67 ASSET MANAGEMENT Day's Receivable Day's Inventory Asset Turnover 16.66 24.18 2.24 2,540.75 #DIV/0! 0.07 59.22 260.56 0.78 29.54 21.55 1.63 71.39 #DIV/0! 1.01 32.25 76.73 0.75 66.25 230.14 0.62 67.01 40.77 0.53 11.99 10.79 0.59 62.12 8.37 0.21 0.38 0.09 0.21 0.03 0.00 0.03 0.21 0.00 0.11 0.12 FINANCIAL LEVERAGE Long-term Debt to Total Assets Long-term Debt to Stockholders' Equity Coverage Ratio 1.71 0.76 1.01 4.05 0.43 23.92 0.06 134.15 0.00 #DIV/0! 0.04 358.14 0.46 35.70 0.00 #DIV/0! 0.24 18.15 0.16 (6.49) PROFITABILITY Gross Margin Ratio Return on Sales Return on Assets (1) Return on Assets (2) Return on Equity 0.21 0.01 0.02 0.05 0.07 0.89 0.20 0.01 0.03 0.15 0.63 0.15 0.11 0.12 0.22 0.50 0.10 0.16 0.16 0.31 0.47 0.26 0.26 0.26 36 0.56 0.20 0.15 0.15 0.19 0.77 0.15 0.09 0.10 0.20 0.83 0.27 0.15 0.15 0.23 0.32 0.06 0.03 0.04 0.07 0.42 (0.26) (0.06) (0.06) (0.09) 0.15 0.20 DUPONT ANALYSIS Return on Equity Return on Sales Asset Turnover Leverage 0.15 0.07 0.01 2.24 4.43 0.20 0.07 11.53 0.22 0.15 0.78 1.98 0.31 0.10 1.63 1.91 0.36 0.26 1.01 1.38 0.19 0.20 0.75 1.30 0.23 0.27 0.53 1.49 0.07 0.06 0.59 2.09 (0.09) (0.26) 0.21 1.36 0.62 2.18 Source The Best Our Anahti