Industry Analysis

Financial statement analysis usually involves an analysis of the income statement, balance sheet, cash flow statement and several ratios that are calculated from those statements. An exceptional analysis involves the comparison of an individual company with the industry averages to give the sense of how those companies are performing. Each industry has its unique set of values that differs them from other industries. An airline company, for example, has a lot of debt borrowings, whereas, grocery stores do not generally use debt financing to raise capital. This essay will look at several companies and try to pair each industry with a company using the financial statements and several ratios.

The financial statements show 10 different company’s profiles and each correspond with an industry. The company 1 is most likely to be an integrated oil and gas company. Many factors led to the pairing of these numbers to the company. Oil and Gas Company is most likely to have a high cost of goods sold and a less net income value. From the balance sheet, one can say that oil and gas company is most likely to have a higher value in finished goods and a relatively higher property, plants and equipment. The company is most likely to have the highest long term debt among all companies with a high capital surplus. Negative retained earnings might also be justified because of the high initial costs that these kinds of companies face. The numbers show that company 1 has a cost of goods of 79.32%, which is a high value, and a net income of 0.76% of sales, which shows low profit for the company. The balance sheet suggests that the company has 12.02% of total assets as finished goods, and 37.33% of property, plant and equipment. In the liabilities section, the company has a very high long term debt of 25.09% of total liabilities and equity which suggest that the money was borrowed to start up the enterprise. The company also has a very high capital surplus and negative retained earnings...