Ratios Tell a Story—2019

1 Pages Posted: 13 Sep 2020

See all articles by Mark E. Haskins

Mark E. Haskins

University of Virginia - Darden School of Business

Abstract

This short case challenges students to review an array of corporate financial metrics and to match them to one of 13 listed industries. As such, students must use their intuition and common sense pertaining to the distinctive characteristics of, and the key differences between, the 13 named industries, and then identify the financial metrics that are most indicative of those traits.

Excerpt

UVA-C-2438

May 21, 2020

Ratios Tell a Story—2019

As a child, Jillian Herbert had enjoyed spending many summer afternoons on her grandparents' front porch listening to her grandfather's countless stories. Some were family histories, and some were fictitious yarns that his creative mind wove together. In that realm, she recalled sitting enraptured by the exploits of courageous heroes and heroines, the adventures of travelers (who sounded a lot like her siblings) to mysterious faraway lands, and the mischievous antics of her talking pets brought to life in make-believe tales. In fact, even as an adult, she believed in the power of stories to captivate, enlighten, create connections, facilitate memory, and foster understanding.

As head of talent development at a major commercial bank, she knew financial information was invaluable in understanding numerous aspects of a business. In her opening remarks at this month's basic financial statement analysis seminar for her new commercial lending hires, she had noted that ratio-focused combinations of key financial data could actually convey a richer story about a company beyond the isolated component parts of the company's balance sheet or income statement. Indeed, she had made the analogy to some parallels in everyday life. For example, a person's ratio of weight and height could convey a story of obesity or not. Grocery store prices were often displayed, in addition to the total purchase price for an item, in terms of price per ounce or per pound. The speed of a car was denominated as miles per hour or kilometers per hour. And an elementary school's students-to-teacher ratio, in part, conveyed information about the instructional attention each student was likely to receive at that school.

. . .

Keywords: accounting, financial statements, corporate financing, balance sheets, financial analysis, ratios, DuPont model

Suggested Citation

Haskins, Mark E., Ratios Tell a Story—2019. Darden Case No. UVA-C-2438, Available at SSRN: https://ssrn.com/abstract=3614445

Mark E. Haskins (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924 -4826 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/haskins.htm

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