Finance Detective

(Financial Statement Analysis, A Strategic Perspective, Clyde P. Stickney/Amos Tuck School of

Business Administration, Darthmouth College)

Effective financial statement analysis requires an understanding of the economic characteristics of

the firm being analyzed. Many of these economic characteristics are captured in the relationship

between various financial statement items. The exhibit presents condensed financial statement

information for firms in 13 different industries. Balance sheet and income statements items are

expressed as a percentage of total revenues (that is, all amounts are divided by total revenues for

the year). The 13 companies (all corporations except the professional basketball franchise) shown

represent the following industries:

1. Advertising agency

2. Aerospace manufacturer (significant government contracts)

3. Beer brewery

4. Computer manufacturer

5. Department store chain

6. Distiller of hard liquor

7. Electric utility

8. Finance company (also involved in leasing)

9. Grocery store chain

10. Life insurance company

11. Pharmaceutical company

12. Professional basketball franchise (a partnership)

13. Steel manufacture

Use whatever clues that you can to match the companies in the exhibit with the industries listed

above.

Exhibit - Data for Ratio Detective Exercise Exhibit - Data for Ratio Detective Exercise