RECENT POSTS
Monday, January 21, 2019
Differences in Earnings Releases and 10-Ks

Wednesday, January 16, 2019
The Importance of Textual Analysis

Tuesday, January 8, 2019
A Look at Climate Change Disclosures

Wednesday, January 2, 2019
Quants: Point-in-Time Data for Backtesting

Friday, December 28, 2018
Now Showing: Controls & Procedures

Thursday, December 27, 2018
A Reminder on Non-GAAP Reporting Rules

Monday, December 17, 2018
Researching PG&E’s Wildfire Risk

Wednesday, December 12, 2018
Tracking Brexit Disclosures

Thursday, December 6, 2018
Campbell Soup: Looking Behind the Label

Sunday, December 2, 2018
SEC Comment Letters: The Amazon Example

Wednesday, November 28, 2018
Measuring Big Pharma’s Chemical Dependency

Monday, November 26, 2018
Analysts, Can You Relate? A True Story

Monday, November 19, 2018
Digging Up Historical Trend Data: Quest Example

Sunday, November 11, 2018
Cost of Revenue, SG&A: Q3 Update

Monday, November 5, 2018
Lease Accounting: FedEx vs. UPS

Saturday, November 3, 2018
New Email Alerting Powers

Wednesday, October 31, 2018
PTC and Two Tales of Revenue

Tuesday, October 30, 2018
10-K/Q Section Text Change Detection

Sunday, October 28, 2018
Finding Purchase Price Allocation

Sunday, October 21, 2018
Charting Netflix Growth in Three Ways

Archive  |  Search:
How to Review a Whole Industry
Tuesday, May 17, 2016

Now that Calcbench has a substantial number of first-quarter 2016 filings in our database (4,847 as of May 17), we thought we might use them to demonstrate how Calcbench databases can give you a sense of an industry’s overall health. We’ll use the oil & gas industry since, for better or worse, its overall health has moved in one clear direction: downward.

We started with the Data Query Tool, one of the most versatile pages on our website. First we had to select our industry. That’s easy: just press the Choose Companies button on the upper-left portion of the screen, and a light-box opens to let you choose your population of companies. We have a few standard groups (Dow Jones Industrial Average, S&P 500), and a flock of standard industry sectors on the left side of the box. (See figure 1 below.) Go to the Mining sector, and that will open four sub-sectors, including oil & gas extraction. Click on oil & gas, and you get a group of 539 companies.

Next we need to decide what data to pull for those 539 oil & gas companies. Scroll down to the bottom of the Data Query page, and you’ll find several lists of financial ratios. For our study here, we picked all the Liquidity Ratios. (See figure 2.)

Finally we need to set parameters for the data we want. Over at the top of the page on the right (see figure 3), we set the period type to “quarterly,” and the date range type to “single period” for 2016 and the first calendar quarter. And because we want to get a sense of the industry as a whole, on the Standard Export line, we need to check the “Average” box—which will give us the average ratios for the whole industry, but only those averages. We won’t get results for any specific company. (If you want that, leave the “Average” box blank.)

And then in the bottom left corner, hit the Export to Excel button. That’s it. Your data will zip directly to your desktop in a few seconds.

In our case, we ran this study of liquidity ratios for first quarter 2015 and 2016, to see how the oil & gas industry has changed in the last 12 months. (That’s easy enough to do, just set the date range to 2015 and re-run the exact same search.) The results we get are these:

Cash Ratio Current Ratio Accts Receivable Turnover Cash-to-Cash Cycle Operating Cash Flow Ratio Working Capital Turnover
Q1-2015 2.36 4.50 12.47 -392.90 2.32 5.96
Q1-2016 2.62 3.69 9.52 -1,645.44 0.58 -2.26

The six ratios above are only a sample, but as you can see, the numbers are not good. We’re especially struck by the negative working capital turnover ratio for 2016. That can only happen when working capital is negative (because the ratio is sales divided by working capital, and sales cannot be a negative number), and working capital only turns negative when your current liabilities are greater than current assets.

Negative cash-to-cash is another fairly rare bird to see in financial reporting. Typically this means Company A buys goods from Company B, but won’t pay Company B (or many other suppliers, probably) until Company A has actually sold those goods itself.

Most troubling is the operating cash flow ratio, which fell below 1 for first quarter 2016. That should set off alarm bells in the financial office, since it indicates that the industry generated less cash in the first three months of the year than it needed to pay off short-term liabilities. That can force companies to raise more capital, via bond offerings, equity sales, lines of credit, and like.

So, overall—not good times for oil & gas these days. We knew that already; Calcbench data just brings it into painfully sharp relief.


FREE Calcbench Premium
Two Week Trial

Research Financial & Accounting Data Like Never Before. More features and try our Excel add-in. Sign up now to try the Premium Suite.