A multivariate analysis of the financial structure of selected industries

The major hypothesis of this dissertation is that an industry has a distinct financial structure which would justify the use of a unique subset of financial ratios to describe differences within an industry over time and between companies. A secondary consideration is to evaluate the application of present multivariate methods within financial analysis, especially in regard to variable selection. A selection of 29 financial ratios which are most common to the literature, simplest to calculate, and the most meaningful to financial information users is drawn from the ratio categories of liquidity, activity, profitability, leverage, and miscellaneous. These ratios are computed for firms in the following six industries: crude-oil producing, textile apparel, chemical, electronic components, auto parts and accessories, and retail-food. The data for the six selected industries are taken from the Standard & Poor's Compustat Tapes. A screening of the data revealed that there were missing values, data irregularities, outliers, and unusual financial circumstances such as negative common equity which had to be resolved before the data were usable for analysis. ..