Financial Statement Analysis Report Sample/Example


As the opportunities and limitations for every industry vary businesses in each industry face different risks and therefore the decisions to be made also vary. Therefore every industry’s ratio analysis and financial report depict a different scenario altogether. Businesses that are part of the same industry and in the same area have the same types of risks and opportunities so the comparative financial ratios have to be assessed for a fair comparison to be made. The report shows financial informed decisions for identification of the industry of the firm. The justifications for financial statements to pick 10 different businesses and their profiles with corresponding industry areas are below:

  • Commercial airline: the fourth business falls in the category of commercial airline because looking at its property, plant, and equipment which is of the highest value and even its accumulated depreciation is also the highest value showing that it is a commercial airline. It also is capital-intensive and has significant amounts of debt.
  • Commercial banking (items fitted into the same categories as the non-financial firms): The eighth business is a regional bank as it has a very huge %age of accounts payable and that is to be paid back to the depositors on their request. These banks usually have high leverage and the stockholder's equity is very low
  • Computer software: The 5th business is likely to be part of the computer software industry as it is one with zero inventory, denoting that there is no sale of goods, rather it is giving a service.
  • High receivables. Since customers usually pay for service after use, not before.
  • Integrated oil and gas: The Oil and Gas Company is almost certainly to possess a high cost of goods sold and a lower net income value. Therefore it is expected that the first business is in the oil & gas industry. As per the balance sheet, one can say that the oil and Gas Company presumably has a high value in finished goods and a relatively high property, plants, and equipment. The business is presumably to have a big long-term debt and a rising capital surplus. The figures demonstrate that corporation 1 has a cost of goods of 79.32%, which is a huge worth, and a net income of 0.76% of sales, which demonstrates lesser profit for the corporation. The balance sheet shows that the corporation has 12.02% of whole assets as finished goods, with 37.33% of property, plant, and equipment. For the liabilities part, the corporation has an extremely high long-run debt of 25.09% of whole liabilities and equity which proposes that the funds were taken as a loan to begin the venture. The corporation has an extremely high capital surplus and negative retained earnings too, which suggests that the corporation is going through losses in the previous years which have accrued as retained earnings. Each of the ratios also proposes that the corporation is probably to be an integrated oil and gas company.
  • IT service provider: The sixth business can be an IT service provider because it has a low inventory in terms of service providers and also nonfinished goods. It has no mortgages and no minority interest as a liability however cost of goods sold is moderate with good profits. Since it's a service industry therefore there is no depreciation and amortization like in the manufacturing business.
  • Liquor producer and distributor: the ninth business is producer and distributor as it has a huge number of machinery, plants, and equipment. Since 4th business also has a huge amount it’s for commercial airlines so the ninth one is for this industry.
  • Mobile phone service provider: The second business is expected to be a mobile phone service provider because it has 11.11% of the sales at the cost of goods sold suggesting that it's not a manufacturing business but a service in business. There are huge account receivables showing that credit sales are provided and lesser investment towards property and equipment. All these things so that there hasn't been a huge investment turn towards the property plant and equipment therefore it's a service industry.
  • Pharmaceutical preparations: the seventh business is having a high plant-equipment ratio with a high cost of Research and development. This is the business where preparing pharmaceuticals needs research to be carried out for the business, with high investments.
  • Retail grocery stores: The third company is expected to be a retail and grocery business because lot of factors. It has a huge cost of goods sold and lower net income. As per the balance sheet, it can be stated that retail and grocery business is usually the one which has higher value in terms of finished goods and quite high property plants and equipment. There would be the biggest long-run debt among all of the businesses with a huge capital surplus. It is easy to justify the high daily receivables and use daily inventory with 79.32% as the cost of goods sold with huge words and net income of 0.76% of the sales therefore the company has low profits and 12.02% of the total assets to be the finished goods and 37.33% as property plant and equipment. When looking at the balance sheet with the liability side, there is a long-term debt of 25.09 % of entire equity and liabilities suggesting that the funds borrowed for starting up the business and huge capital surplus and negative retained earnings show that the business faced losses in the past few years which have been accumulating as the retained earnings. All these ratios show that it is expected to be a retail grocery store.
  • Semiconductor manufacturer: Since the depreciation and amortization on the tenth business is high, therefore the chances are high that it’s a manufacturing business with 62% as the asset turnover. Hire an expert from 'Assignment Help'.

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