Identify Industry

•  Retail Industry -  Retail Grocery Store

•  High-technology industries -  Computer Software -  Pharmaceutical Preparations -  Semiconductor Manufacturer

•  Service Industry

IT Service Provider Mobile phone service provider Commercial airline Integrated Oil and Gas Liquor producer and distributor

•  Capital Intensive Industries

Detailed Financial Characteristics of each industry

•  Financial Industry High Receivables (Loans) High Payables (Deposits) Large ratio of assets to shareholders’ equity (du Pont leverage) Low Asset turnover ratio May have high G P Ratio (GP = Net Interest Margin = Interest revenue less interest income) -  Little inventory

•  So 2 seems to be Commercial banking industry

Detailed Financial Characteristics of each industry

•  Retail Industry o  Low GP Ratio o  Low Returns on Sales o  High Asset Turnover Ratio

•  1, 4 & 5 -  Lots of inventory

•  So 1 seems to be Retail Grocery Industry

Detailed Financial Characteristics of each industry

•  High technology Industries – Software, pharmaceutical & semiconductor -  High R & D expenditure

•  6, 7 & 8 -  High day’s inventory (high WIP)

•  7 -  Between Software & semiconductor – high Fixed Assets (PPE) 

•  Semiconductor

•  6 -  So 8 is Computer Software

Detailed Financial Characteristics of each industry

•  Now 3, 4, 5, 9 & 10 remain unidentified

•  Service industry – IT service provider & Mobile phone service provider o  Little Inventory

•  5, 9 & 10 -  High current receivables

•  5 & 10 -  So these seem to be the 2 service industry – Who will have more receivables as proportion to assets ?

•  IT service provider

•  So 5 is IT service provider -  So 10 is Mobile phone service provider

Detailed Financial Characteristics of each industry

•  Now 3, 4, & 9 remain unidentified

•  Industries left are -  Commercial airline -  Integrated oil and gas -  Liquor producer and distributor

•  Liquor industry? -  High inventory (spirits age with time)

•  261 days – 3 -  High selling and administrative expenses

•  What is left? -  4 & 9

•  Who will have more inventories? -  Oil & Gas

•  Who will have more PPE? -  Usually airline

•  So, 4 is oil and gas industry -  9 is commercial airline

Company 1

  • Retail Grocery Store Royal Ahold NV
  • International Supermarket Operator based in Netherlands

Company 2

  • Commercial Banking
  • Bank of America Corp

Company 3

  • Liquor Producer and distributor Brown Forman Corp One of the largest
  • American-owned company in the Wines & Spirits business

Company 4

  • Integrated Oil and gas
  • Exxon Mobil Corp

Company 5

  • IT services
  • Infosys Technologies Ltd

Company 6

  • Semiconductor manufacturer
  • Intel Corp

Company 7

  • Pharmaceutical preparations
  • Eli Lilly & Co

Company 8

  • Computer software
  • Microsoft Corp

Company 9

  • Commercial airline
  • Southwest Airlines Co

Company 10

  • Mobile phone service provider
  • Vodafone Group plc