Bus349: Corporate Finance 2021: Identifying a company
The Financial Criteria
- Must be profitable
Check net income to make sure it's more than 0.
- At least 20% of assets must be fixed assets
Look for Property, Plant, and Equipment on the company balance sheet. Compare that number to the company's total assets.
- Capital structure must consist of both equity and long-term debt
Check the balance sheet for assets and liabilities
- Mergent Online This link opens in a new windowYou can check all this financial information for a company here in Mergent -- go to Financials and then click on Analysis for the simplest balance sheet that contains this info.
- Factiva This link opens in a new windowFactiva also includes all the needed financial info, in a slightly different interface.
Choosing a company operating in a single industry
Should primarily operate in a single industry (should not be a conglomerate).
- Mergent Online This link opens in a new windowAfter looking up your company, go to the Supply Chain tab to check out the sectors where the company is active. You're seeking a pure-play or focused company, one that has all or most of its activity in a single sector.
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