Effective financial statement analysis requires an understanding of a firm€™s economic characteristics. The relations among various financial statement items provide evidence of many of these economic characteristics. Exhibit 7.28 presents common-size condensed balance sheets and income statements for 12 firms in different industries. These common-size balance sheets and income statements express various items as a percentage of operating revenues (that is, the statement divides all amounts by operating revenues for the year). A dash for a particular financial statement item does not necessarily mean that the amount is zero. It merely indicates that the amount is not sufficiently large for the firm to disclose it. The 12 companies, the country of their headquarters, and a brief description of their activities are as follows.
(1) Accor (France): World€™s largest hotel group, operating hotels under the names of Sofitel, Novotel, Motel 6, and others. Accor has grown in recent years by acquiring established hotel chains.
(2) Arbed-Acier (Luxembourg): Offers flat-rolled steel products, primarily to the European automobile industry.
(3) Carrefour (France): Operates grocery supermarkets and hypermarkets in Europe, Latin America, and Asia.
(4) Deutsche Telekon (Germany): Europe€™s largest provider of wired and wireless telecommunication services. The telecommunications industry has experienced increased deregulation in recent years.
(5) Fortis (Netherlands): Offers both insurance and banking services. Operating revenues include insurance premiums received, investment income, and interest revenue on loans. Operating expenses include amounts actually paid or amounts it expects to pay in the future on insurance coverage outstanding during the year.
(6) Interpublic Group (United States): Creates advertising copy for clients. Purchases advertising time and space from various media and sells it to clients. Operating revenues represent the commission or fee earned by Interpublic for advertising copy created and media time and space sold. Operating expenses include compensation paid to employees. Interpublic acquired other marketing services firms in recent years.
(7) Marks & Spencer (United Kingdom): Operates department stores in England andother retail stores in Europe and the United States. It offers its own credit card for customers€™ purchases.
(8) Nestl̩ (Switzerland): World۪s largest food processor, offering prepared foods, coffees, milk-based products, and mineral waters.
(9) Roche Holding (Switzerland): Creates, manufactures, and distributes a wide variety of prescription drugs.
(10) Sun Microsystems (United States): Designs, manufactures, and sells engineering workstations and servers used to maintain integrated computer networks. Sun outsources the manufacture of many of its computer components.
(11) Tokyo Electric Power (Japan): Provides electric power services, primarily to the Tokyo community. It maintains almost a monopoly position in its service area.
(12) Toyota Motor (Japan): Manufactures automobiles and offers financing services to its customers. Use whatever clues you can to match the companies in Exhibit 7.28 with the companies and industries listedabove.

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Data for Ratio Detective Exercise EXHIBIT 7.28 (Problem 30) 11 12 1. 2. 5. 9. 6. BALANCE SHEET AT END OF YEAR Cash and Marketable Securities 4.7% 16.7% 16.1% 21.3% 72.0% %E'Y 10.5 338.8% ..... %6'8 Receivables 8.5 6'SI 2.8 16.5 27.6 6'5E 6.4 17.7 81.1 29.6 24.0 533.4 ... Inventories 6'S 9.9 5.8 25.7 1.3 20.0 66 Property. Plant, and Equipment Cost Accumulated Dep mciation Property, Plant, and Equi pment, Net. . 40.8 23.0 0'65 (16 (33.2) 969 (17.8) 6'OEL (50s) (67.7) E'E8 (1125) 110.3 535.4 15.3 602 E'88 6822 (15.0) (11,8) (35.5) (35.2) (284.9) (12.9) ... 11.8 25 8 63.2 991 22.4 11.2 250,5 l'9 7.7 2.4 LE Intercorporate Investments Other Assets.. 14.3 O'E 11.7 18.8 10.3 1.3 10.7 9'0 6'91 6'19 15.0 6'01 72.1% 7.1 63.5 6'I 126.2% 42.1 69.1 E'99 6 19 Total Assets 67.9% 122.7% %8'SL 29.7% 97.8% 173.2% 179.8% 240.9% %8'992 280.1% 51.3% 37.3% % 8L6 Curent Liabilities 25.5% 42.7% %0'901 22.7 %E'8 95.8 %I'99 %8 028 Long-Term Debt 9'6 10.9 12.0 6.1 22.2 23.3 I'6 2.3 167.7 6'9L 42.2 Other Noncurrent Liabilities 2.1 1.8 4.2 17.2 10.6 24.5 278 24.7 Shareholders' Equity Total Liabilities and Shareholders' Equity 16.5 38.7 33.6 0'09 %8'SL 97.8% 9'ES 122.7% 33.9 54.2 111.7 100.6 38.5 %6'29 72.1% 126.2% Z'ELT 179.8% 240.9% %8'992 280.1% 978.4% INCOME STATEMENT FOR YEAR Opeating Revenues. Other Revenues.... 100.0% 100.0% L0001 %L'O 57.3 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% %0'00t 2.7% 0.2% 0.7% %6'T 55.3 %E'O 75.5 % ET 45.0 Cost of Goods Sold 87.8 45.2 44.5 999 3.2 O'18 5.3 32.6 O'89 Depreciation and Amortization Expense Seling and Administrative Expense 3.0 4.1 6'5 16.4 7.1 9.9 23.9 19.9 24.8 38.9 24.3 13.6 27.8 8.1 15.2 7.3 22.5 Interest Expense. . Research and Development Expense Income Tax Expense 1.3 3.5 3.0 5.2 8.6 8.6 'SE 9.8 13 3.7 13.8 1.3 5.8 3.1 0.3 6'5 0.7 3.7 2.8 2.2 6'E All Other Items (net). (8'0) %0'66 2. 1% (2.1) 9'0 97.2% ... 80 9'0 Total Expenses 96.1% %S26 3.2% 93.7% %8'56 4.5% 100.5% 95.9% %6'06 %L'96 %9'TOT Net Income 11.8% 13.3% 4.1% LE'9 %L'O 42'8 %SE %9'S