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How do company assets change across industry sectors?

Updated: Mar 5

An interactive visualisation of how assets on the balance sheet compare across sectors.

 

Please note: The information and discussion below is not intended as investment advice.


Relevance

As a manager, director, corporate adviser, or institutional investor it’s likely that part of your role is to consider balance sheet structure and the asset base of the business. Perhaps you’ve had to think about:

  • How has capital been deployed within the business?

  • How does the asset base of our business compare to others in the sector?

  • Within a large multi-business group or investment portfolio, what should our expectations be for the assets within each business line?

  • For new business ventures where will we need to invest capital?

  • When considering an acquisition - what can the balance sheet tell us?


Interactive chart - choose a sector in the drop-down menu to see it for yourself

The interactive graphic below provides a high-level view of the proportion of asset types across industry sectors (read below for directions and further discussion).

Instructions:

  • Please use the drop-down menu at the top to choose the sector of most interest and to see how the proportions change across sectors.

  • The horizontal bar chart shows the average % proportions and the subsequent break-down as you consider current and long-term asset types (per the legend).

  • Roll your mouse over the bar chart to see a pop-up of the % figures.

  • The table shows the companies included in this analysis for the selected sector.

  • This analysis only considers the assets on the balance sheet (not liabilities or equity).


Some points of interest (use the drop-down to see this for yourself)
  • Cash & investments as a % of Total Assets is highest for the Health Care sector (39%), followed by the Information Technology sector.

  • Net Property Plant & Equipment (Net PPE) is 50% of Total Assets in the Materials sector, but the proportion is even higher in the Energy sector (57%).

  • As you’d probably expect the majority of Utilities is Long-term assets.

  • Consumer Discretionary shows an equal average proportion for Net PPE and Total Intangibles (perhaps due to goodwill arising from acquisitions).

  • The proportion of receivables and inventory is higher in Consumer Staples (12% & 18%) than the Consumer Discretionary sector (8% & 14%).

  • The proportion of intangibles is dominant for Communication Services (perhaps an indication of goodwill arising from acquisitions, long term commercial contracts and developed IP).


So what?

Sector averages can vary widely across constituent companies, so keep in mind that when considering a specific case it would be preferable to review a carefully selected sample group. However, the graphic above does make the point that the balance sheet can look markedly different across industries, something which is perhaps overlooked when companies seek to integrate vertically or diversify their operations. Much focus is given to the P&L (e.g. revenue growth, margins, etc) and valuation multiples (p/e, EV/EBITDA). Those viewpoints are important, but don't forget to consider the balance sheet and cash-flows.


For more information

If you’re interested in this subject, the capability of presenting interactive charts, or have an idea for a post that you think would be of wide interest - please feel free to contact me directly at: james.obrien@pointvalue.com.au

 
Notes
  • The Financial and Real Estate sectors have not been included in this initial version since their asset bases are fundamentally different than most industry sectors (please get in contact if you would like to see these added).

  • Data drawn from Australian companies publicly listed on the ASX.

  • Total Intangibles includes Goodwill and Other Intangibles.







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