142 Corporate Finance
Chapter 6
23. A Case Study: Bermuda Airways
and Industry Structure
OBJECTIVES
Introduce students to the art and science of financial statement analysis.
Demonstrate how financial statements reflect industry characteristics.Bala Balasubramani, after graduating from a premier business school, joined a prominent investment bank
as an equity analyst. In the first year of training he was given an assignment on financial statement analysis.
He was given the financial statements of six companies drawn from six different industry groups. Exhibit 6.1
presents the balance sheets (in percent form) and select financial data. He was then asked to match the six
companies with the (six) set of financial data. The companies in the set belong to one of the following
groups:
- Advertising
- Airline
- Software
- Commercial banking
- Utility
- Pharmaceuticals
He was told that in order to disguise the identity of the bank, loans/advances were classified as receivables
and deposits as accounts payable.
Your assignment is to help Bala identify the companies.