Philip Fisher Investing Legend, Founder of Fisher & Co.

Born in San Francisco in 1907, Philip Fisher was one of the first investment "philosophers" to focus almost exclusively on qualitative and growth factors. He is widely regarded as one of the early seminal thinkers in the evolution of growth stock investing.

Philip Fisher's career began in 1928, when he dropped out of the newly created Stanford Graduate Investment program to take a job as a securities analyst for the Anglo-London bank in San Francisco. Four years later, he founded Fisher & Co., the investment counseling firm he managed until retiring in 1999 at the age of 91.

The author of three books, a Financial Analysts Federation (now the CFA Institute) monograph and the subject of many articles, Philip Fisher's investment principles have been studied and used by countless contemporary finance professionals. Philip Fisher was the first to contribute an analytical framework within which to judge a growth stock and contemplate its potential in growth instead of just price trends and absolute value. He was also a seminal proponent of what are now called concentrated portfolios. His principles espoused identifying long-term growth stocks and their emerging value through the analysis of quality as opposed to choosing short-term trades for initial profit.

At a time when many investment professionals sought profits by betting on business cycles, Philip Fisher favored holding stocks of firms that were well-positioned for long-term growth. This positioning could best be determined by examining factors that are difficult to measure through ratios and other mathematical formulations - the quality of management, the potential for future long-term sales growth, and the firm's competitive advantage.

Philip Fisher outlined his philosophy for the average investor in his book Common Stocks and Uncommon Profits, published in 1958, which became the first investment book to make the New York Times best seller list. He later expanded upon his work in Conservative Investors Sleep Well and Paths to Wealth through Common Stocks, and went on to write, Developing an Investment Philosophy. All his writings, with the exception of Paths to Wealth, have been republished in Common Stocks and Uncommon Profits and Other Writings by Philip Fisher, which is listed under the John Wiley & Sons Publishers Investment Classics publications.

Philip Fisher passed away in San Mateo, CA in March 2004 at the age of 96.

http://www.fisher-investments-press.com/authors/philip-fisher-biography.aspx

Comparative Industry and Company Financial Ratios

Just looking at a single ratio does not really tell you much about a company.  You also need a standard of comparison, a benchmark.   There are three principal benchmarks used in ratio analysis.

Financial ratios can be compared to the:

1. ratios of the company in prior years, 
2. ratios of another company, and
3. industry average ratios.

1.  Historical comparison.

The first useful benchmark is history.

• How has the ratio changed over time?
• Are things getting better or worse for the company?
• Is gross margin going down, indicating that costs are rising faster than prices can be increased?
• Are receivable days lengthening, indicating there are payment problems?

2.  Competitor comparison.

The second useful ratio benchmark is comparing a specific company ratio with that of a competitor.

• For example, if a company has a significantly higher return on assets than a competitor, it strongly suggests that the company manages its resources better.

3.  Industry comparison.

The third type of benchmark is an industry-wide comparison.

• Industry-wide average ratios are published and can give an analyst a good starting point in assessing a particular company's financial performance.  Click here for a chart showing various ratios for a variety of companies in different industries:

  Comparative Industry and Company Financial Ratios

Note that there can be large differences in ratio values between industries and companies.

Review the chart.  What do the ratios tell us about companies and industries?

Your special industry number: Every industry has at least one.

Your special industry number

Every industry has at least one. Here are some examples:

Restaurants: covers per night, wastage.
Services: staff utilisation rates.
Hotels: occupancy rates.
Builders: work in progress, progress payments due.
Retail: sales per metre of floor space.

Knowing the benchmark indicators for your industry can help you compare yourself with your peers, measure your business’s success, and identify any problems.


http://www.commbank.com.au/business/betterbusiness/growing-a-business/five-numbers/default.aspx