Business ReferenceBeth Kaylor -- Faculty Development -- October 31, 2008

Public, private or non-profit

Private is less than 300 shareholders The majority of companies are private –

about 98% To quotes Forbes: “Private means private!” No reporting requirements Little information is available If a public company chooses to “go private”

the old filings will remain available through the SEC

What can you find for private?

Hoover's Handbook of Private Companies – Reference HG4057 .A286213

Databases– BSP– ABI– Mergent

Local business journals Secretary of State (required filing)

Non-profit organizations

More of an industry than a category of “company.” Very little information available about the financial

operations Don’t have required government filings

– Chairman of the Board letter – Description of the charity, causes, actions,

accomplishments, etc. of the organization – Directors and Officers – Financial statement

CPA Opinion letter, Income statement, Balance sheet, footnotes

Databases?

Databases

SIC and NAICS

SIC– Standard Industrial Classification– Last updated in 1987– New technologies do not fit

NAICS– North American Industrial Classification– Same number across countries – last four

change

SIC and NAICS

Hierarchy Where to find them Easy? Mergent or BSP Census Bureau webpage C Manual -Ready Ref HF1042 .N67 2007 Conversion – Census Bureau C

– No search for SIC and NAICS 2007 – have to use 2002

– Ohio Labor Market Crosswalk O

Resources for Financial Ratios

3 main sources for industry ratios Shelved together in Reference Each gets their information from different

sources Numbers will be different but can be used

together to get a complete picture of the industry

Grouped by product code

RMA Annual Statement Studies

Reference HF5681.B2 R6 Contains composite financial data on

manufacturing, wholesaling, retailing, service, and contracting lines of business.

comparative data Comes directly from the financial statements

of small and medium-size business customers of RMA’s member institutions

Industry Norms and Key Business Ratios

Reference HF5681.R25 I53 Dun and Bradstreet Line of Credit business reporting Helps one understand the true performance

of a company, by benchmarking it against its industry peers

14 key business ratios cover all critical areas of business performance—solvency, efficiency and profitability

Almanac of Business and Industrial Financial Ratios

Reference HF5681.R25 T68 Provides financial ratios for companies in

various asset ranges by SIC code Data reported are based on aggregate

numbers from IRS records.

Other Ratio Sources

Mergent Business Source Premier Lexis-Nexis Academic

Ratios? What do they mean?

Liquidity ratios– Most commonly used– Show the ability of the organization to quickly

generate cash Current Ratio – current assets/current liabilities Quick Ratio – same as above but subtracts inventory

from current assets How well can an organization meet its short-term

obigations

Ratios? What do they mean?

Efficiency Ratios determine how efficiently a business uses its

assets, and where there's room for improvement

Inventory turnover, asset turnover etc…

Ratios? What do they mean?

Profitability Ratios assess the profitability of a business and

changes in its profit performance These ratios are probably the most important

indicators of a business's financial success.– Gross profit margin– Net profit margin– ROA – return on assets– ROE – return on equity

Ratios? What do they mean?

Solvency Ratios designed to help one measure the degree of financial risk

that a business faces "Financial risk," in this context, means the extent to which

the organization has debt obligations that must be met, regardless of cash flow.

assess the level of debt and decide whether this level is appropriate for the company– Debt to Equity– Debt to Assets– Coverage of Fixed Costs– Interest Coverage

Company Analysis

Public or private? Start with Mergent and then BSP Corporate affiliations Value Line Lexis-Nexis Send them to me

Industry Survey

Standard and Poor’s NetAdvantage– Or print Industry Surveys– Reference HC106.6 .S74 

IBIS World Business Source Premier ABI Statistical Universe Send them to me

Business Plans

What is a business plan? Why write one? Many resources in Reference and General

Collection SBA Small Business Planner - SBA My Own Business M SCORE S

Corporate Affiliations

Lexis-Nexis Corporate Affiliations– Who owns whom– HG4057 .A219 – 2006 v.1-8; Current 1 year in Ready

Reference, previous 1 year in Reference, and earlier volumes in the General Collection

– Most recent is 2008

SBBI Databook

Stock Bonds Bills and Inflation Yearbook– REF HG 4501 .S7949 2007– History of the returns on the capital markets

in the US 1926-2006– Includes

Large and small company stocks Long term corporate and government bonds Intermediate term government bonds US T-bills Consumer Price Index

Questions?