Steven Zhou

Professor Lowell DSouza

FINA-3301

Assignment #3: Ratios Tell a Story

I think the 1st industry represents a fast-food restaurant chain. I think this is the case because of
the high inventory and asset turnover and relatively high inventory turnover. The 1st industry also
has low accounts receivable.

I believe the 2nd industry is the computer software development because it is one of two
industries with zero inventory. Furthermore, the second industry also has a R&D ratio of 20.39%
while the other industry with zero inventory does not have a R&D ratio. Additionally, the second
industry has the least accounts payable among all the other industries.

I believe the 3rd industry is the airline industry. I feel this way because of the extremely highest
total liabilities. Most of its debt is long term as opposed to short term. Because the airline
industry is backed by so much long term debt, it also is the most financially leveraged industry
out of the others listed.

I think the 4th industry represents the advertising agency services industry because there is no
inventory turnover, gross margin and R&D. Additionally, the 4th industry possesses the second
highest goodwill which could be contributed to the employees great customer service,
management or expertise within the field.

I believe the 5th industry is the railroad industry because it has the highest net PP&E value. It also
has nonexistent values for inventory turnover and gross margin which would make sense for a
railroad industry because it is a service industry.

I think the 6th industry represents a supermarket (grocery) chain due to it having the highest
inventory percentage. Additionally, it has the second highest asset turnover and inventory
turnover which would make sense for a supermarket chain.

I believe the 7th industry represents a wireless communications hardware, software and services
industry. I feel this way because of the high total current assets and the somewhat high current
liabilities.

I think the 8th industry shows the electric utility industry. I think this is the case because this is
the only company that has negative ROS, ROA, ROE, gross margin and revenue growth.
Additionally, they also have the second highest R&D ratio.

The 9th industry depicts a pharmaceutical company. I believe this is true because it has the third
highest R&D ratio while having the greatest intangibles percentage. The intangibles likely
include the numerous patents, copyrights, trademarks that a typical pharmaceutical company has.
I think the 10th industry shows a discount general merchandise retail industry because of the low
amounts of cash but high accounts receivable and inventory. Additionally, there is a relatively
high inventory turnover as well.

The 11th industry shows the commercial banking industry. You can tell by their extremely high
accounts receivable, accounts payable and receivables collection number relative to the other
industries.

I think the 12th industry represents the wholesale food distribution. I think this because they have
one of the highest net PP&E values and the highest inventory turnover percentage. A wholesale
food distributor needs to have a plants, delivery trucks and more. They also need to quickly get
rid of their inventory and then quickly replenish it in order to do well.

I believe the last industry represents an internet retailing industry because of the low inventory
and current assets but the high gross margins.