- Financial Statements: The Elements of Managerial Finance (HBS course materials)
- Financial Statement Analysis: Identify the Industry (HBS course materials)
In this Sudoku-like exercise, income statements, balance sheets, and selected financial ratios from ten companies, drawn from ten different industries, are presented.
- Match the ten firms operating in the ten industries with the ten sets of financial data presented in the case. The objective is to understand how the strategy of a business is reflected in its financial statements.
- Why does each of the industries have the patterns of asset use revealed in Exhibits 2-4?
- What questions would you have if a company's financials were "outliers"--that is, not fitting the industry norm?
For this exercise, work with the study group
(4-6 students) that you joined last week. Multiple inputs will improve your accuracy.
- Financial Industry - For the purposes of this case, loans are classified as receivables and deposits are classified as payables.
- Retail Industry - Look for high inventory and high asset turnover. Would a grocery store have a high return on sales?
- High-Tech Industry - These companies will have high investment in R&D.
- Service Industry - Look for low inventory.
- Day's Inventory is the number of days that an item is held as inventory before it is sold.
- Day's Receivables is the number of days it takes a company's customers to submit payment.