Accounting

1.Read the article and answer the following questions:

1.What is ratio analysis.

2.Explain different types of ratio analysis. You can use the examples from the articles to explain ratio analysis and the different types of ratio analysis.

3.From the article choose any one company from the list and the financial statements (A, B, C… ) and calculate any 4 ratio analysis (see attached, the formulas for ratio analysis). You will need to also provide one sentence explaining the results of your calculation (e.g. what do the figures mean to business financial performance.).

I chose:

• Bank. Provides comprehensive banking services, including investment banking, retail banking, commercial banking, financial transactions processing, and asset management A maximum of two pages essay ONLY.

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W25421
IDENTIFYING INDUSTRIES: FINANCIAL STATEMENT ANALYSIS AND
FINANCIAL RATIO ANALYSIS
Frank Li, Imran Yousaf, and Aaqib Nawaz wrote this exercise solely to provide material for class discussion. The authors do not intend
to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other
identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Our goal is to publish
materials of the highest quality; submit any errata to publishcases@ivey.ca. i1v2e5y5pubs
Copyright © 2021, Ivey Business School Foundation
Version: 2022-01-10
Financial statements and financial ratios can reveal industry-specific differences in financial and
operational strategies. Company fundamentals are often similar within an industry, but they may vary
significantly across industries. A manufacturing company, for example, should have higher fixed assets
(i.e., property, plant, and equipment) than a company from service industry. The number of accounts
receivable days for a bank should be higher than those for a non-financial firm, because banks offer long
term loans, whereas non-financial firms rarely offer credit over long periods.
The goal of this exercise is to improve your understanding of financial statement analysis and financial ratio
analysis by recognizing industry-specific differences. Financial information of 10 undisclosed companies
(A to J) that operate within 10 different industries has been provided, including each company’s commonsize balance sheet (see Exhibit 1), income statement (see Exhibit 2), and financial ratios (see Exhibit 3).
These 10 companies are among the largest and most well-known corporations listed on the New York Stock
Exchange. They are leading companies in their respective industries, and their financial information reflects
typical industry characteristics. Based on the financial data provided (see Exhibits 1, 2 and 3), identify the
industry that each company (A to J) operates within, based on the following 10 industry descriptions:





Restaurant chain. Operates and franchises a set of related restaurants in many different locations
worldwide.
Oil and gas. Operates internationally as an integrated corporation that explores, develops, and sells
crude oil and natural gas, and produces and trades chemicals and oil products.
Internet retail. Engages in retail e-commerce of end-user products and subscriptions
internationally; purchases merchandise and content from third-party sellers for resale through
online stores.
Airline. Provides air transport services for travelling passengers and freight; offers services for
partnerships and alliances with other airlines for codeshare agreements.
Beverage—non-alcoholic. Produces, markets, and sells a variety of non-alcoholic beverages
worldwide, including soft drinks, enhanced water, sports drinks, juice, dairy-based beverages, tea,
coffee, and energy drinks.
This document is authorized for use only by Nasser Alqahtani in PGRD495_RatioAnalysis taught by Aminah Abdullah, Al Yamamah University from Oct 2024 to Apr 2025.
For the exclusive use of N. Alqahtani, 2024.
Page 2





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Bookstore chain. Operates retail bookstore chains; also sells and rents new and used print and
digital textbooks.
Pharmaceutical. Discovers, develops, mass-produces, markets, and sells biopharmaceutical
products globally; serves wholesalers, retailers, hospitals, clinics, pharmacies, government, and
agencies.
Technology—software. Develops, licenses, and supports software solutions worldwide; provides
consulting services to assist clients in developing, deploying, and managing server and desktop
solutions; trains and certifies information technology professionals.
Grocery store chain. Operates retail food and drug stores that offer a full line of groceries, meat,
and produce as well as cosmetic and drug products.
Bank. Provides comprehensive banking services, including investment banking, retail banking,
commercial banking, financial transactions processing, and asset management.
This document is authorized for use only by Nasser Alqahtani in PGRD495_RatioAnalysis taught by Aminah Abdullah, Al Yamamah University from Oct 2024 to Apr 2025.
11.56
2.63
1.24
81.47
100.00
192.33
13.57
17.87
−153.24
100.00
59.65
—
0.64
—
0.29
—
100.00
34.64
10.13
4.66
5.24
10.21
8.55
100.00
—
—
1.39
1.70
3.84
3.56
28.55
3.32
0.11
0.04
11.57
—
9.29
0.25
2.60
2.87
9.00
4.26
8.11
8.08
B
A
10.39
17.67
5.40
27.55
100.00
35.35
—
—
3.64
43.44
8.35
—
—
5.45
—
100.00
16.02
8.40
9.24
9.10
—
—
C
13.75
9.44
23.94
23.80
100.00
12.47
—
3.54
15.30
57.24
15.16
8.00
—
6.82
—
100.00
4.47
—
6.36
0.00
1.96
—
D
31.85
0.00
12.46
24.42
100.00
12.39
1.18
17.65
0.00
12.55
19.41
11.58
23.01
7.03
2.79
100.00
7.50
5.44
4.60
3.91
2.18
—
E
3.54
0.00
5.66
47.63
100.00
32.61
—
10.57
0.00
11.60
0.50
20.61
0.26
4.54
—
100.00
1.48
—
9.71
49.39
1.91
—
F
EXHIBIT 1: COMMON-SIZE BALANCE SHEET (%)
21.47
7.24
11.14
37.88
100.00
4.36
1.62
9.67
6.62
8.34
35.02
21.12
10.23
2.66
3.05
100.00
0.78
5.09
4.95
7.21
—
1.57
G
23.26
12.49
4.31
35.71
100.00
5.25
2.38
1.92
14.66
15.30
14.67
2.70
0.92
5.14
—
100.00
3.96
42.74
10.30
0.72
—
3.54
H
31.67
0.00
10.33
20.55
100.00
15.90
0.00
8.28
13.27
56.76
8.10
3.30
—
3.50
—
100.00
1.13
3.10
4.17
17.96
1.55
0.44
I
13.17
1.57
0.87
9.38
100.00
56.06
8.89
1.47
8.60
0.93
1.91
—
25.04
—
8.55
100.00
22.80
5.01
33.97
0.00
—
1.79
J
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Note: — = not separately disclosed
Source: Financial information for each company (A to J) compiled by the case authors with information from Yahoo! Finance; for the purposes of this exercise, detailed
reference information was omitted to avoid revealing the 10 company names.
Current Liabilities
Accounts Payables
Pension and Post-Retirement Benefits
Current Debt
Other Current Liabilities
Non-Current Liabilities
Long-Term Debt
Long-Term Capital Lease Obligation
Other Non-Current Liabilities
Total Equity
Total Liability and Equity
Company
Current Assets
Cash and Cash Equivalents
Other Short-Term Investments
Accounts Receivable
Inventory
Prepaid Asset
Other Current Assets
Non-Current Assets
Net Property, Plant, and Equipment
Goodwill
Other Intangible Assets
Investments and Advances
Other Non-Current Assets
Other Investment
Total Assets
Page 3
For the exclusive use of N. Alqahtani, 2024.
This document is authorized for use only by Nasser Alqahtani in PGRD495_RatioAnalysis taught by Aminah Abdullah, Al Yamamah University from Oct 2024 to Apr 2025.
12.07
Operating Expenses
43.36
1.04
44.40
27.34
27.17
54.51
0.00
0.05
54.56
0.01
0.17
2.96
3.14
57.70
42.30
100.00
B
4.00
0.85
4.85
0.07
0.27
5.19
0.07
12.81
8.58
21.46
26.65
73.35
100.00
C
10.15
3.04
13.19
0.25
0.64
14.08
3.77
—
4.24
8.01
22.09
77.91
100.00
D
20.69
4.83
25.52
1.71
1.03
28.26
0.03
—
32.48
32.51
60.77
39.23
100.00
E
-1.20
−0.64
-1.84
3.23
0.48
1.87
3.24
—
20.83
24.07
25.94
74.06
100.00
F
EXHIBIT 2: COMMON-SIZE INCOME STATEMENT (%)
11.76
2.67
14.43
9.87
2.60
26.90
8.91
16.71
27.73
53.35
80.25
19.75
100.00
G
25.77
3.53
29.3
2.71
2.13
34.14
—
13.41
18.35
31.76
65.90
34.10
100.00
H
-0.73
0.74
0.01
1.64
0.51
2.16
—
2.03
17.49
19.52
21.68
78.32
100.00
I
31.51
7.02
38.53
4.83
0.00
43.36
−3.36
—
41.13
37.76
81.12
18.88
100.00
J
W25421
Note: — = not separately disclosed
Source: Financial information for each company (A to J) compiled by the case authors with information from Yahoo! Finance; for the purposes of this exercise, detailed
reference information was omitted to avoid revealing the 10 company names.
Net Income
Taxes
Earnings before Taxes
6.40
0.50
Non-Operating Interest Expenses
Other Expenses
51.30
—
Other Operating Expenses
Operating Income
—
Research and Development
12.07
63.37
Gross Profit
Selling, General, and Administrative
36.63
100.00
A
Cost of Goods Sold
Total Revenue
Company
Page 4
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This document is authorized for use only by Nasser Alqahtani in PGRD495_RatioAnalysis taught by Aminah Abdullah, Al Yamamah University from Oct 2024 to Apr 2025.
0.71
0.90
Acid Test Ratio
Current Ratio
18
Days Sales in Inventory
0. 43
63
−1.31
2.00
0.55
58
0.16
0.13
0.96
30
12
45
6.77
4.49
0.14
B
0.05
27
0.38
0.10
1.25
36
10
27
1.10
0.65
0.16
C
0.13
22
0.73
0.17
0.73
—
—
38
0.41
0.35
0.04
D
E
0.26
61
2.03
0.50
0.43
84
4
39
0.76
0.39
0.08
EXHIBIT 3: FINANCIAL RATIOS
−0.02
26
0.30
0.14
2.15
113
3
16
1.45
0.26
0.01
F
66
0.29
0.14
0.71
0.25
0.44
18
21
86
2.53
0.59
0.04
H
80
0.83
0.31
0.31
431
1
58
0.88
0.26
0.01
G
0.00
22
1.93
0.40
3.18
26
14
5
0.76
0.14
0.01
I
0.39
81
1.56
0.15
0.04
—
—
2,988
0.85
0.76
0.23
J
W25421
Note: — = not available or applicable
Source: Financial information for each company (A to J) compiled by the case authors with information from Yahoo! Finance; for the purposes of this exercise, detailed
reference information was omitted to avoid revealing the 10 company names.
Return on Sales
Gross Margin (%)
Profitability Ratios
Debt to Equity
Debt to Total Assets
Financial Leverage Ratios
1.45
20
Inventory Turnover
Asset Turnover
23
Accounts Receivable Days
Efficiency Ratios
0.12
A
Cash Ratio
Liquidity Ratios
Company
Page 5
For the exclusive use of N. Alqahtani, 2024.
This document is authorized for use only by Nasser Alqahtani in PGRD495_RatioAnalysis taught by Aminah Abdullah, Al Yamamah University from Oct 2024 to Apr 2025.