Chapter 14: Industry classification Flashcards

1
Q

List the ten industry groups used in the FTSE industry used the FTSE classifcation systems

A
  • Financials
  • Technology
  • Basics materials
  • Utilities
  • Consumers goods
  • Industrials
  • Consumers services
  • Health care
  • Oil and Gas
  • Telecommunications
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2
Q

Define the oil and gas economic group

List four typical characterics of such compoanies

A

Oil and Gas

  • Involved in the extraction and suuply of oil and gas products

Key characteristics

  • Large
  • Commodity Price dependent
  • high risk
  • Global
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3
Q

Describe the types of companies in the consumer goods sector

List 6 features of such companies

A
  • Manufacture consumer durables (cars, furniture, televisions and white goods) and non - durables (food and drink pharaeuticals, tobacco, health and household products, beverages and packaging)

Six features

  • Cyclical (durables) non cyclical (non durables)
  • increasingly capial intensive
  • moderate to high intensive
  • moderate to high gearing
  • low profit margins - due to extreme compeition
  • importance of brand names
  • increasingly international
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4
Q

List the types of companies found in the consumer services sector.

State three key features of such companies

A
  • Consumer service companies include food, drug and general retailers, transport, hotel and media companies, distributors, restaurants and pubs and support services

Three key features

  • Labour intensive
  • more defensive companies in the group have high gearing
  • domestic market is most important
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5
Q

Describe the type of companies found the utilities sector

List 6 key features of such companies

A

Supply continously demanded services to households and business premises, eg electricity, water and distribution

6 features

  • Vulnerable to political risk, price controls and changes in regulations under which they operate
  • requrie extensive physical infrastructure; hence capital intensive
  • mostly nature monopolies
  • generally have low growth prospects/ leads to high gross dividend yield
  • despoite stable demand and large capital requirements, financial gearing is low
  • largely dependent on domestic market, although some companies diversifying internationally
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6
Q

Describe the compaies found in the financial sector

A
  • Includes banks, general insurance companies,life assurance companies, investment trusts and real estates companies
    • Tend to be capital intensive, otherwise
      • Bank’s highly geared and have volatile profits
      • General insurers have volatile profits and virtually no borrowings
      • Life iinsurers have stable profits and low gearing
      • Labour costs important for many companies in group
      • Domestic market most important but increasing globalisation
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7
Q

Describe the companies found in the technology sector

A
  • Companies involved in hardware, software and provision of computer services
  • Many companies yet to make profit or pay dividends
  • Dividend yields on are therefore low, and assets can be largely intangible
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8
Q

Describe the companies found in the healthcare sector

A
  • Companies involved in providing healthcare, medical equipment and supplies, as well as pharaceuticals
  • Tend to be non - cyclical
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9
Q

Describe the companies found in the telecommunications sector

A

Companies involved in fixed line and mobile telephone services

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