The relative performance of industries, like the relative performance of businesses, can be analysed using a combination of quantitative estimates (of the kind shown in earlier tables) and performance ratios. Various ratios commonly used in financial analysis are included in table 13.6. These show, for example, that in 2000-01:
- industries which converted the highest proportion of their sales into profit (as represented by the profit margin) were Finance and insurance, Communication services, Mining, and Electricity, gas and water supply
- businesses in Communication services, Retail trade and Mining reported, on average, the highest return on assets
- the industries with the highest returns on net worth were Communication services, Retail trade, Wholesale trade and Construction
- the greatest ability to service debt charges from profits (as represented by the interest coverage ratio) were recorded for Communication services, Private community services, Construction and Wholesale trade.
The derivations of the performance ratios shown in table 13.6 are as follows:
Profit margin - operating profit before tax as a percentage of sales of goods and services plus interest income plus other operating income.
Return on assets - operating profit before tax as a percentage of total assets.
Return on net worth - operating profit before tax as a percentage of net worth.
Interest coverage - the number of times that businesses can meet their interest expenses from their earnings before interest and tax.
Investment rate - the proportion of industry value added used for capital investment.
13.6 INDUSTRY PERFORMANCE RATIOS(a) - 2000-01
Return on assets
Return on net worth
|Agriculture, forestry and fishing(b)|
|Electricity, gas and water supply|
|Accommodation, cafes and restaurants|
|Transport and storage|
|Finance and insurance|
|Property and business services|
|Private community services|
|Cultural and recreational services|
|Personal and other services|
|(a) The underlying data include private employing and public trading businesses, but exclude non-employing businesses and entities in the general government sector.|
(b) The Economy Activity Survey for 2000-01 excluded data from the Agriculture, forestry and fishing industry.
(c) Investment rate for All industries excludes the Finance and Insurance industries.
Source: Business Operations and Industry Performance, Australia, Preliminary, 2000-01 (8142.0).