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Three
Most Common Business Questions:
Ratios, Market Share, and Demographics
an
adaptation from a Rob Sage presentation |
Question #1: Ratios
What is a ratio?
•Oxford
Reference Online’s Dictionary of Banking and Finance
defines
Ratio Analysis as:
“The use of ratios to evaluate a company's operating performance and
financial stability. In conducting an analysis comparisons will be made with
other companies and with industry averages over a period of time. The
analysis of ratios indicates how well a company is run, the risks of
financial insolvency, and the financial returns provided.”
•Some
commonly used ratios include:
- Current Ratio (Current
assets/Current liabilities)
- Return on Assets (Net
Profit/Total Assets)
- Sales Per Person
(Annual Revenue/Total FTE)
- Quick Ratio (Cash+
Marketable Securities + Accounts Receivable/Current liabilities)
- Cash Ratio (Cash+ Short
Term marketable securities/current liabilities)
•If
you want to know if a student is looking for up-to-date or historical ratios,
never
ask “ Are you looking
for current ratios?”, since there may be confusion about whether you are asking
about the specific current ratio of a company or industry or up-to-date ratios
as a whole.
•I
usually ask “Are you looking for the most up-to-date ratios or older ratios?”
Where are
company ratios found?
-
Mergent Online is
the best source. It includes the most up-to-date ratios and goes back 15
years.
- Other sources for
ratios include
SEC 10-K
Annual Reports, Factiva, and Value Line.
Where are
Industry ratios found?:
- Industry Ratios may be
found in one of three annual print editions, all kept on
Reference
- –Standard
and Poor’s Industry Norms and Key Business Ratios
- –RMA
Annual Statement Studies
- –Troy’s
Almanac of Business and Industrial Financial Ratios
-
Factiva is the only
electronic source we own that contains industry ratios. It includes only
the most up-to-date ratios.
(Click
on
Companies/Markets>click
on
company-type
in
company
name >click
on
reports-click
on
ratio
comparison reports)
Hint
on ratios
- Some ratios or other
business formulas are not readily available and must be calculated by the
students.
- If you do not see the
ratio the student asks for, consult
Business Ratios And Formulas: A Comprehensive Guide
by Steven M. Bragg. It is available in reference at HF5691 .B73 2002
Question #2:
What is Market Share?
The Oxford
Dictionary of Business
defines Market Share as “ The share of the total sales of all brands or products
competing in the same market that is captured by one particular brand or
product, usually expressed as a percentage.” A company or a
brand will have shares in a variety of markets.
Hint on
Market Shares:
- If a student asks a
question like “What is the market share of Starbucks”? Make sure to find
out the share of what market the student is referring to.
- If the student doesn’t
understand, Show some of the various possibilities by doing a search in
Tablebase.
- If the student still
isn’t sure, the student should be referred back to the professor to find
out.
Where can I find market
shares?:
Print Sources
- •Market
Share Reporter and
Business Rankings Annual
are annual editions that compile market shares from a variety of sources
- •Organization
is similar to
Statistical Abstract of the U.S.
Look up the company,
industry, or topic in the index, the index will refer you to a table number.
- •Available
on the business tables.
Sample screen,
searching for market share in ABI/Inform
Question #3: What are Demographics
The
Oxford Dictionary of Business
defines Demography as “The
Study of Human Populations, including their size, composition (by age, sex,
occupation, etc.), and sociological features (birth rate, death rate, etc.)
Some
real
questions about demographics include:
- –What
is the market for cosmetics in China?
- –What
are the top 10 websites visited by 18-24 year olds?
- –How
many fast food restaurants are located near hotels in the United States?
Hints on
searching demographics
Students
almost never ask a question like...What demographic
goes on cruise vacations the most?” In fact, a student
will rarely, if ever, use the word
demographic.
Listen for key terms to
indicate that what the student is looking for is demographic information:
Instead they ask for:
- –Market
(without the word share or size) - “What is the Market for cruise
vacations?”
- –A
country or
region
– “ How many people in Japan take cruise vacations?”
- –An
age group – “Do
people under 30 take many cruise vacations?”
- –An
ethnic group – “Do
Hispanics take many cruise vacations?”
•MRI+
is a database that provides detailed information about:
- –Which
demographics are using a particular product or service
- –Which
demographics are most likely or least likely to use a particular product
or service
- •IMPORTANT:
MRI+ provides information only on the U.S.
sample screen from MRI+
Article Databases
that offer demographics
-
•All
of the major business databases, (ABI/Inform, Business Source Premier,
Business Full-Text) have
Demographics
as a
subject.
-
•In
Lexis-Nexis, search for
Demographics in
Indexing – All References.
-
•In
Factiva, Add
Demographics in
subject indexing.
Sample screen: demographics
search, ABI/Inform
Sample
screen: Demographics, Lexis-Nexis
Sample
screen: Demographics, Factiva
Prepared by Cynthia Bruns
An administrative page of the Paulina June & George Pollak Library at California State University, Fullerton.
(c) 2006-2010 California State University, Fullerton. All rights reserved.
Last Updated: 7/7/2009
