Unit II Case Study
Industry-Specific Ratios
There are many ways of using standardized financial information beyond those discussed in this unit. The usual goal is to put firms on an equal footing for comparison purposes. For example, for auto manufacturers, it is common to express sales, costs, and profits on a per-car basis. For each of the following industries, give an example of an actual company, and discuss one or more potentially useful means of standardizing financial information:
public utilities,
large retailers,
airlines,
online services,
hospitals, and
college textbook publishers.
Once you identify the company for each industry, select a particular firm, and calculate four ratios of your choice for 2 consecutive years. Once computed, then provide a 2-year trend analysis. Finally, discuss whether you would or would not invest in this company, including an explanation of why that involves the ratio analysis.