Ratio: Balance Sheet and Financial Results

Decent Essays
Rev. Oct. 17, 2012


Financial results and conditions vary among companies for a number of reasons. One reason for the variation can be traced to the characteristics of the industries in which companies operate. For example, some industries require large investments in property, plant, and equipment (PP&E), while others require very little. In some industries, the competitive productpricing structure permits companies to earn significant profits per sales dollar, while in other industries the product-pricing structure imposes a much lower profit margin. In most low-margin industries, however, companies often experience a relatively high rate of product throughput. A second reason for some of the
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Furthermore, they can be highlighted through the use of financial ratios. Exhibit 1 presents balance sheets, in percentage form, and

This case was prepared by Professor Mark E. Haskins, Darden Graduate School of Business Administration, and has benefited from collaborations with various colleagues over the years on earlier versions. It was written as a basis for discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright  2012 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. ◊



selected financial ratios computed from fiscal year 2011 balance sheets and income statements for 13 companies from the following industries:              airline railroad pharmaceuticals commercial banking photographic equipment, printing, and sales discount general-merchandise retail electric utility fast-food restaurant chain wholesale food distribution supermarket (grocery)
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