The Game of Financial Ratios

 Gupta, Pooja;  Sethi, Madhvi , Darroch A. Robertson. "The Game of Financial Ratios", 2017
Issues: financial analysis, ratio analysis, financial statement
Disciplines:  Accounting,  International
Setting: India, Large, 2013
Length: 3 pages (1 page of text)
Intended Audience: Undergraduate/MBA
Publication Date: January 16, 2017

his exercise revolves around the rivalry between two financial analysts. Upset by their constant game of one-upmanship, an advisor to the governor of the Reserve Bank of India came up with a challenge for them to prove who was better. He provided them with financial data for the financial year ending March 2014 from 10 anonymous companies and asked them to match the financial data with specific industries given in a list. The challenge was timed, and the winner was to be determined on the basis of who could come up with the right combination first.

Learning Objective:
The case can be taught in a financial accounting or financial management course of an MBA program. It provides students with an exercise in which, with the help of ratio analysis, they identify the industries to which companies belong. It helps students identify unique patterns of operations and asset structures in different industries. After working through the case and the assignment question, students will be able to:
debate the importance of liquidity and how stock exchanges compete for liquidity;
  • understand and interpret financial data from different publicly listed firms in India;
  • infer operating cycles and cash cycles of specific industries in India using information about business operations of different industries; and
  • use financial ratios and pattern analysis to identify industries in India.