Session 14: Equity Analysis and Valuation Reading 59: Introduction to Industry and Company Analysis
LOS b: Compare and contrast the methods by which companies can be grouped, current industry classification systems, and classify a company, given a description of its activities and the classification system.
Auto manufacturers and home builders would most likely be grouped together in an industry classification system based on:
A) |
sensitivity to business cycles. | |
B) |
type of business activity. | |
|
Auto manufacturing and home building are both cyclical industries. An industry classification system based on business cycle sensitivity would be the most likely to group firms from these industries together. |