final project

Equity Analysis and Valuation
Martin Fischer ole-martin.fischer@ttu.edu
David Henley david.e.henley@ttu.edu
Brian Hutchins brian.hutchins@ttu.edu
Jon Lowe jonathan.lowe@ttu.edu
Sam Moore sam.mcwhorter.moore@ttu.edu
Michael Schroeder michael.schroeder@ttu.edu

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Table of Contents
COMPA NY OVERVIEW............................................................................................................................................................4
WATER SYSTEMS SEGMENT.........................................................................................................................................................4
FUEL SYSTEMS SEGMENT .............................................................................................................................................................5
INDUSTRY OVERVIEW...........................................................................................................................................................5
PORTERS FIVE FORCES MODEL .......................................................................................................................................6
RIVALRY AMONG EXISTING FIRMS ..............................................................................................................................................6
THREAT OF NEW ENTRANTS ......................................................................................................................................................11
THREAT OF SUBSTITUTES...........................................................................................................................................................12
BARGAINING POWER OF SUPPLIERS..........................................................................................................................................12
BARGAINING POWER OF CUSTOMERS.........................................................................................................................................13
PORTER’S FIVE FORCES CONCLUSION......................................................................................................................14
KEY SUCCESS FACTORS ......................................................................................................................................................14
FRA NKLIN’S STRATEGIES FOR COMPETITIVE A DVA NTA GE .........................................................................15
ACCOUNTING ANALYSIS ..............................................................................................................................................................17
TYPE 1 ACCOUNTING DISCLOSURES..........................................................................................................................................17
CUSTOMER RELATIONSHIPS............................................................................................................................................................17
LOW DISTRIBUTION COSTS .............................................................................................................................................................19
CONCLUSION.................................................................................................................................................................................20
TYPE 2 ACCOUNTING DISCLOSURES ..........................................................................................................................................20
RESEARCH AND DEVELOPMENT.......................................................................................................................................................20
HEDGING AND FOREX RISK.............................................................................................................................................................21
DERIVATIVES ARE A COMMON PRACTICETHATINTERNATIONAL COMPANIES USETO HEDGETHEIR FOREIGN CURRENCYRISK.FRANKLIN
ELECTRIC DOES NOTUSE DERIVATIVES TO HEDGE THE CURRENCYRISK ITS OPERATIONS ARE EXPOSED TO.THEY ALSO DO NOTHEDGEIN
RAW MATERIAL COMMODITIES OR ENERGY. THE ONLYTIMETHE COMPANYBOUGHTDERIVATIVES WAS IN 2011 WHEN ITACQUIRED THE
TURKISH COMPANY "IMPO". DURING THIS TIME FRANKLIN ENTERED INTO ABRIEF FORWARD CONTRACT FOR THE TURKISH LIRA THAT
RENDERED APRE-TAX INCOMEOF ROUGHLY$600,000 AND AN AFTER-TAX INCOMEOF $500,000..................................................21
OPERATING LEASES ........................................................................................................................................................................22
GOODWILL.....................................................................................................................................................................................23
PENSION PLANS.............................................................................................................................................................................24

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CONCLUSION.................................................................................................................................................................................24
ASSESSING ACCOUNTING FLEXIBILITY ......................................................................................................................................25
GOODWILL.....................................................................................................................................................................................26
CAPITALIZATION OF OPERATING LEASES ..........................................................................................................................................26
RESEARCH AND DEVELOPMENT.......................................................................................................................................................27
PENSION PLANS.............................................................................................................................................................................28
CONCLUSION.................................................................................................................................................................................28
ACTUAL ACCOUNTING DISCLOSURES .......................................................................................................................................28
CUSTOMER RELATIONSHIP ACCOUNTING.........................................................................................................................................29
LEASE ACCOUNTING.......................................................................................................................................................................29
GOODWILL ACCOUNTING...............................................................................................................................................................30
RESEARCH AND DEVELOPMENT ACCOUNTING..................................................................................................................................30
PENSION PLAN ACCOUNTING..........................................................................................................................................................31
CONCLUSION.................................................................................................................................................................................31
QUALITY OF DISCLOSURE ............................................................................................................................................................31
LOW-COST DISTRIBUTION...............................................................................................................................................................32
BUSINESS STRATEGIES AND ECONOMIC CONSEQUENCES ..................................................................................................................32
CURRENT PERFORMANCE................................................................................................................................................................33
SEGMENTS.....................................................................................................................................................................................33
CONCLUSION.................................................................................................................................................................................34
IDENTIFYING POTENTIAL RED FLAGS ........................................................................................................................................34
INCOME/CFO GAP ........................................................................................................................................................................34
CONCLUSION.................................................................................................................................................................................36
UNDOING ACCOUNTING DISTORTIONS ...................................................................................................................................36
GOODWILL.....................................................................................................................................................................................37
FINANCIAL STATEMENTS .............................................................................................................................................................38
BALANCE SHEETS ...........................................................................................................................................................................38
CONCLUSION ..................................................................................................................................................................................44
FINANCIAL ANALYSIS ....................................................................................................................................................................45

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LIQUIDITY AND OPERATING EFFICIENCY RATIOS...............................................................................................................................45
CURRENT RATIO.............................................................................................................................................................................45
QUICK ASSETRATIO .......................................................................................................................................................................47
INVENTORY TURNOVER...................................................................................................................................................................48
DAYS SUPPLY INVENTORY...............................................................................................................................................................49
ACCOUNTS RECEIVABLE TURNOVER ................................................................................................................................................50
DAYS SALES OUTSTANDING ............................................................................................................................................................51
CASH TO CASH CYCLE .....................................................................................................................................................................52
WORKING CAPITAL TURNOVER.......................................................................................................................................................53
CONCLUSION.................................................................................................................................................................................55
PROFITABILITY RATIOS.................................................................................................................................................................55
SALES GROWTH PERCENTAGE ........................................................................................................................................................56
GROSS PROFIT MARGIN ................................................................................................................................................................57
OPERATING PROFITMARGIN.........................................................................................................................................................58
NETPROFIT MARGIN.....................................................................................................................................................................59
ASSET TURNOVER..........................................................................................................................................................................60
RETURN ON ASSETS .......................................................................................................................................................................61
RETURN ON EQUITY.......................................................................................................................................................................62
CONCLUSION.................................................................................................................................................................................63
CAPITAL STRUCTURE RATIOS......................................................................................................................................................64
DEBT TO EQUITY............................................................................................................................................................................64
TIMES INTEREST EARNED ...............................................................................................................................................................65
DEBT SERVICE MARGIN .................................................................................................................................................................66
ALTMAN’S ZSCORE.......................................................................................................................................................................67
INTERNAL GROWTH RATE..............................................................................................................................................................69
SUSTAINABLE GROWTH RATE ........................................................................................................................................................70
CONCLUSION.................................................................................................................................................................................71

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Company Overview
To begin our valuation of Franklin-Electric, we will break down the company’s
structure and examine its operations. Then we will use a representative sample of
Franklin’s closest competitors to perform an industry analysis with Porter’s Five Forces
Model. Afterwards, we will determine how well Franklin aligns its own strategies with
the industry’s key success strategies.
Franklin-Electric chiefly manufactures and installs fluid pumps and the necessary
components therein. The company was founded in 1944 as a domestic producer, but
now has operating facilities in Brazil, Mexico, China, Europe, South Africa, and Turkey
(FELE 10-K). Currently, the company competes in the Industrial Electrical Equipment
industry with both a “Water Systems Segment” and a “Fueling Systems Segment”.
Water Systems Segment
Franklin has 25 of its 30 manufacturing and distribution facilities dedicated to the
Water Systems Segment (WSS), which represents the majority of the company’s
operations (FELE 10-K 2014). The WSS generated 79.4% of Franklin’s revenue in 2014,
down from 80.2% in 2013 (Bloomberg).
Bloomberg
The WSS produces the submersible motors, drives, controls, pumps, and
monitoring components necessary for complete water movement systems. These
systems are customizable, and can be tailored for different processes, including but not
limited to: agricultural irrigation, greywater (wastewater) removal, and residential water
wells.

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Bloomberg
Fuel Systems Segment
Franklin Electric’s Fueling Systems Segment (FSS) produces fuel pumping
systems, fuel containment systems, and the supplementary monitoring and controlling
systems (FELE 10-K). Franklin creates and manufactures pumps, pipes, sumps, fittings,
vapor recovery components, electronic controls, monitoring devices and related parts
and equipment for submersible fueling systems (FELE 10-K). Franklin provides these
pumps for use primarily in gas stations.
In 2014, revenue attributable to the FSS was $214 million, up from $141 million
in 2010 (Bloomberg). We consider this to be significant because the FSS is growing
faster than the WSS.
Industry Overview
We have identified Pentair PLC, Xylem Inc., and IDEX Corp. as Franklin Electric’s
closest competitors based on market capitalization and revenues by segment and
geographic location. We will use these four firms as a representation of the Industrial
Electrical Equipment industry for the purposes of this analysis. The table below shows
the similarity of our industry sample based on 2014 data.
Bloomberg

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Porters Five Forces Model
We decided to use the Porter’s Five Forces Model as a tool to examine the
profitability level a firm could expect within the industry. This model evaluates the five
most common forces shaping a business environment. Further, this analysis will allow
us to determine the most effective corporate strategies for success by giving a layout of
the areas with the highest potential profitability.
The first step in the Five Forces Model is to evaluate the levels of competition in
each of the five parent forces that make up the model. The five forces are: the rivalry
among existing firms, the threat of new entrants to the industry, the power that
suppliers hold over the firms, the power that customers hold over the firms, and the
threat of customers substituting one firm’s product for another’s. The chart below
shows the intensity of competition of each of the five forces.
Rivalry Among Existing Firms
Of the five forces in the model, we believe that rivalry between the established
firms is the most influential. This is because the degree of rivalry dictates how a
company will act in order to gain customers. If this force is high or high-mixed, firms
will operate as price-takers; if this force is is low or low-mixed, firms will operate as
price-setters.
When a firm is a price-taker it must operate at the mercy of traditional supply

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and demand, and must fight with its peers to win customers by offering the lowest
price. Price takers can succeed by undertaking any processes that result in tight cost
control.
Firms who are price-setters focus on product differentiation. Since the unique
goods set them apart from their peers, they are able to charge a premium to the
customer without much risk of a loss in sales.
For us to determine the degree of rivalry between existing firms, there are
several sub-forces that need to be examined first. These sub-forces are: the industry
growth rate, the industry concentration, the fixed-to-variable cost ratios, the exit
barriers, and the switching costs.
Industry Growth Rates
The degree of rivalry in an industry is affected by the recent growth rates of the
whole industry. Strong growth lessens competition, and slow growth increases it.
If the industry is experiencing a period of slow economic growth, firms must
compete for market share by using their key success strategies aggressively. This
heightened competition is because during economic downturns, revenues become
harder to generate with normal strategies. Alternatively, in periods of strong growth
companies can lessen the aggression of their strategies and focus on expansion. Since
industry sales are up, there is less stress placed on the firms to earn market share.
We have chosen sales volume as the metric we will compare to evaluate how the
industry is growing. We believe revenue is appropriate because it shows us the
historical progress of firm top-line activity. The table below shows the sales growth for
our industry sampling from 2009-2014.
Wharton Wrds

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The sales in all the companies are growing steadily, and the industry as a whole
has experienced over a 50% increase in sales in 6 years. This strong level of growth
means that for now, companies have the opportunity to focus on expansion rather than
competing with their peers to generate a positive income during hard economic
conditions.
Concentration
We found that the companies are producing similar equipment, which is causing
them to fight over the same customers. Customers include oil companies, well
producers, and water distributors demand a lower price. This increases the
competitiveness of the industry, and pushes the companies to strive for the lowest
price. The table and chart below show the market share, based on revenue, of the firms
in our industry sample.
Wharton Wrds
Wharton Wrds

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Xylem(XYL) and Pentair, PLC(PNR) have significantly greater market shares than
their competitors. This is because they have a larger market cap than Franklin Electric
(FELE) and IDEX (IEX), and because they offer a greater variety of products. Pentair is
absorbing Xylem’s market share by expanding the variety of products in its Process and
Flow technologies at a higher rate than Xylem. We believe that this is significant
because it shows that the firms are effectively competing against one another to retain
their market share.
Fixed and Variable Costs
The organizational structure of this industry involves high fixed costs (FELE, IEX,
PNR, XYL 10-Ks). This is due to resource intensive production that requires expensive
machinery.
In production there is high demand for raw materials like steel and aluminum.
Fluctuations in the price of these commodities impact the variable costs, and the
resulting earnings.
We believe a negative situation for this industry would be when demand is low
and commodity prices are high. Yet, this industry is showing a pattern of steady growth
in recent years and the demand is not likely to fall soon (FELE, IEX, PNR, XYL 10-Ks). It
is important for the long-term profitability of the industry to maintain this growth,
because stagnant growth may lead to high excess capacity. If the growth slows down
the companies could be unable to cover their high fixed costs.
Exit Barriers
Exit barriers can play a large role in the decision-making process of firms looking
to shift focus or sell out of the industry completely. There could be liquidity risk from
specialized equipment, which can be difficult to sell, or legal contracts, such as leases,
with stipulations that need to be met.
Since firms in the industry invest heavily in fixed assets, we looked at the
absolute and relative value of property, plant, and equipment (PP&E), as shown in the
table below.

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Wharton Wrds
With many specialized assets, the company has poor liquidity of PP&E.
Ultimately, this could either lead to the firm sustaining heavy losses in order to exit the
industry, or the firm being forced to remain a failing business. As a result, they compete
aggressively for their market share. These exit barriers fuel the rivalry between
participating firms.
Switching Costs
Switching costs restrict a firm’s horizontal mobility across an industry or a sector.
The higher the switching costs, the less likely a company will react to new business
opportunities. This benefits existing firms in profitable industries, while negatively
impacting others; therefore, switching costs are both a barrier to entry and an exit
barrier. These switching costs stem from the fixed costs and the variable costs of the
new business opportunity.
The industrial electrical equipment industry has low variable costs since most raw
materials are commodities, which have highly competitive prices (10-Ks). However,
some key suppliers are one of few providers (10-Ks). This protects firms in our sample,
since a new firm could be delayed in establishing contracts for the necessary supplies.
Fixed costs stem from the operation of specialized property, plant, and
equipment assets. In a hypothetical situation where a firm switched operations, the
expense of retooling the equipment makes the investment too significant, even if the
firm planned to use the same plant. This high upfront investment results in high
switching costs for firms considering entering or leaving the industry.

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Therefore, due to the high fixed costs and length of time it takes to switch
operations, we find that it makes entering or exiting the industry impractical.
Threat of New Entrants
We believe that there is a low threat of new entrants, which is beneficial to firms
already competing in the industry. We have identified the low threat because firms
depend on economies of scale and there are high barriers to entry.
Economies of Scale
Since firms in the industry compete on price, we believe it is important for firms
to leverage their fixed costs across many products to increase the gross margin, which
is economies of scale. The two main factors that must be achieved to benefit from
economies of scale are: increasing supply without increasing fixed assets (or at a lower
rate) and having sufficient demand for the higher supply.
We believe this is important for preventing new entrants, since it will require new
competitors to produce large volumes of goods, have comparable sales, and minimize
fixed assets.
Barriers to Entry
Within the industry, the average firm has $1.67 billion in long-term assets
(Bloomberg). The size of assets make it difficult for firms to enter or to leave the
market since it requires significant capital investments. Furthermore, the average plant
can take months or years to construct, which further increases the initial investment
(FELE, IEX, PNR, XYL 10-Ks).
Firms looking to enter the market must also overcome protections on intellectual
property, which include patents and trademarks. Although not as restricting as the
initial capital investment, we believe it is significant, since intangibles less goodwill
account for over 5% of assets across the sampling (FELE, IEX, PNR, XYL 10-Ks). Also,
R&D expenses account for nearly half of net income, which means that firms are
actively investing in maintaining their intellectual property advantage (FELE, IEX, PNR,
XYL 10-Ks).

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Threat of Substitutes
We believe that the threat of substitutes is low. Within the industry, firms
compete to supply industrial pumps for water and fuel. However, once installed,
customers tend not to switch the pump (FELE, IEX, PNR, XYL 10-Ks).
Switching Costs
We identified the primary factor that determines a customer’s willingness to
substitute is the switching costs. In addition to the direct monetary expense, there are
indirect costs of: time (lost revenue), labor, and training (if it operates differently).
Although the direct costs of switching products are low, the indirect costs can be
very high, especially in the fuel segment (Bloomberg). Since the indirect costs are high,
we believe that customers will not switch unless they believe they will incur significantly
lower operating expenses or higher productivity.
Customers Willingness to Switch
The other factor we found that determines the threat of substitutes in the
industry are the customer’s loyalty. Although there is a certain level of brand loyalty
within the industry, the primary drivers of product selection are costs and productivity
(FELE, IEX, PNR, XYL 10-Ks). The reason costs and productivity outweigh loyalty is
because firms in the industry primarily sell to corporations, which causes their
customers to focus on profit maximization (FELE, IEX, PNR, XYL 10-Ks).
Therefore, we believe that a firm will readily switch between products if the
benefits outweigh the costs. Although there are exceptions, such as a strategic
partnership, these are less common than a supplier-customer relationship.
Bargaining Power of Suppliers
Our sample firms have high bargaining power over their suppliers. Since firms in
the industry primarily use commodities as inputs, the materials trade at the market rate
(FELE, IEX, PNR, XYL 10-Ks).

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Suppliers’ Details
Since the factors of production for our sample firms primarily consists of: steel,
copper, aluminum, electric motors, capacitors, forgings, bearings, and iron castings,
they are able to purchase the materials from many suppliers without switching costs
(FELE, IEX, PNR, XYL 10-Ks). The suppliers of these materials have low differentiation,
which further reduces their bargaining power (Bloomberg). This allows firms in the
industry to choose from any supplier without a loss of quality.
However, a few suppliers produce specialized products, which have few
substitutes (FELE, IEX, PNR, XYL 10-Ks). These “key” suppliers have a high bargaining
power since there is low competition for these products.
Thus, we believe that suppliers to firms in the industrial electric equipment
industry have low-mixed bargaining power.
Bargaining power of customers
Customers hold some degree of what is called bargaining power over every firm
they do business with. A high degree of bargaining power means that the customer can
influence the price and products of the industry, and can easily switch from one firm’s
product to another’s.
The typical customers in this industry span fire and rescue organizations, original
equipment manufacturers, exploration and production companies, crop/livestock farms,
schools, hospitals, hotels, restaurants, and households (FELE, IEX, XYL, PNR, 2014 10-
Ks). Business is often conducted through lengthy contracts which lock customers in to
business dealings for varying durations of time. This means that switching costs occur
for the customers in breaking the contract and searching for new suppliers.
Differentiation
The products in this market are very similar in functionality, and a customer can
switch relatively easily from one product to another. The only hindrance is due to the
contract based relationships mentioned earlier.

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Factors the companies of the industrial electrical equipment industry consider
important for customers are quality and price (Bloomberg). Buyers pressure the firms in
the industry to keep improving these. If one firm had a product line with superior price
and quality, the customer base would begin purchasing from that supplier. This means
that the customers’ preferences increase the competitiveness of the industry, and drives
the companies to compete on a high level. Although some minor differences occur, the
products in this category are not very differentiated.
Porter’s Five Forces Conclusion
Because the rivalry among existing firms is high, firms must use price-taking
techniques to edge out their competitors when vying for customers. There is a low
threat of new entrants which means that the firms in the industry only have to focus on
competing with each other. The threat of substitute is low, which lowers the
differentiation between products in the industry and forces firms to use price-taking
strategies. The last two forces are the bargaining powers of suppliers and buyers, and
because they are low-mixed the firms competing have freedom to operate on their own
terms without much worry of suppliers or buyers influencing prices.
With this information we determine that profitability of this industry is low-mixed,
and that firms need to rely on price-setting techniques to garner sales and turn a profit.
Key Success Factors
Now that our industry analysis is complete, we can use the information regarding
the levels of competition in the forces to decide what we feel are the best strategies for
companies to undertake when competing in this industry.
Based on our analysis of the profitability of the industry, we have decided that
the two factors that determine success for a firm competing in the industry are the size

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of the customer base and tight cost control.
Because these firms are price-takers, tight cost control is the traditional method
that companies need to rely on. Having lower prices gives the firm the most opportunity
to increase its customer base (WSJ). There are multiple ways to achieve tighter cost
control. Lowering distribution costs by investing in efficient distribution centers will
cause fixed costs per unit to decrease (Bloomberg). Firms can also vertically integrate,
to ensure that input costs are lowered throughout the supply chain (Bloomberg). We
believe this is important because lowering the cost of sales allows firms to lower the
selling price, while maintaining their margins, which will attract more customers.
Having a large customer base means that a firm has a large market to generate
sales. A firm can increase the amount of customers it has in multiple ways, but the
typical methods are difficult because of the restrictions price-takers experience.
Therefore, the easiest way for firms to accomplish this is simply to buy a smaller firm
and acquire its existing customers (FELE, IEX, PNR, XYL 10-Ks). This helps negate the
necessity of having the lowest prices, because buyouts are easier to complete when
compared to traditional cost-cutting methods (WSJ). This trend is prevalent since every
company in our sample has at least one strategic acquisition per year. Also, each firm
has a significant portion of its intangible assets in an account called “Customer
Relations,” which is only created when a buyout occurs and goodwill is gained. (FELE,
IEX, PNR, XYL 10-K’s)
Franklin’s Strategies for Competitive Advantage
In the final part of our industry analysis we will discuss how well Franklin-Electric
is aligning itself with the above success factors.
Franklin has performed 6 acquisitions in the past five years, and has created a
large resulting customer relations account ultimately responsible for 84% of 2013 total
intangibles excluding goodwill. (FELE 10-K) These buyouts have increased the number
of contracts that Franklin has in the field, and gives the company a large cushion of
customers to rely on for revenue generation. Compared to the industry sampling,
Franklin is behind in the dollar value of its contracts, but has a strong track record of

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buyouts, and has caused the account to experience steady growth since 2010 (FELE 10-
K). Because of this trend we feel that Franklin will continue to make increases to its
customer base, and will exploit this success factor to generate profitability in the future.
Franklin has been focusing on lowering its cost of goods sold by establishing an
efficient supply chain. The firm is focusing on lowering distribution costs by closing
distribution centers in strategic locations. This will reduce its fixed costs because it has
less property taxes, insurance expense, and utility bills. Franklin could also be pursuing
vertical integration through acquisitions and strategic partnerships. However, the
company does not disclose its vertical integration efforts, so we are unable to determine
this.

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Accounting Analysis
The second step in the business valuation process is a formal accounting
analysis. Through identifying where there is accounting flexibility, and evaluating FELEs
accounting policies and disclosure, we will be able to get a view on whether the
financials provide appropriate information. further, by assessing the degree of
distortion, we will have a basis for undoing any inappropriate estimates. A good quality
accounting analysis is essential for the reliability of the financial analysis.
Type 1 Accounting Disclosures
We define Type 1 Accounting Disclosures as any accounts that arise from the
relationship between a business’s activities and the key success factors that we
determined for the industry.
We have found that the number and style of strategic acquisitions a company
has made determines to an extent how well that company competes in this industry.
Also, to compete on price, low-cost distribution tends to give companies an edge.
Customer Relationships
One of the key success factors that we determined for this industry is the
necessity of increasing customer base. One important way these firms perform this act
is through buyouts.
All of the firms in our industry sampling have made significant increases to
company size through acquisitions within recent years. The table below shows the
merger and acquisition activities for the last five years of the industry sampling.
Source: XYL, IEX, PNR, FELE, 2009-2014 10k’s
*Pentair, Inc. in 2012 underwent a reverse merger with Flow Control

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When one of these companies makes an acquisition, they gain significant
intangible assets aside from their new goodwill. What they do then is partition out these
amortized intangible assets and report them separately. These can be brand names,
patents, trademarks, etc. (FELE, IEX, PNR, XYL 10-k’s)
One of the intangibles that companies take out of the goodwill is an account
called Customer Relationships This industry involves a lot of contract work, so many of
the firms within have extensive contracts executed with their clientele. A firm that is
bought out will transfer the contracts it has established with its customers over to its
new parent firm. ‘Customer Relationships’ represents the legal rights the parent firm
has to the acquired firm’s customers’ business. This is a valuable asset because rather
than having to offer lower prices to win over new customers, a firm can just buy other
firms existing customers.
This table shows our industry sampling with firms’ Customer Relations accounts
as percentages of their respective Total Finite Intangibles. Aside from goodwill,
Customer Relationship is the largest intangible asset these companies possess.
Source: XYL, FELE, IEX, PNR, 2010-2013 10-K’s

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This Type 1 Disclosure is prevalent throughout the industry, has ample
disclosure, and is directly linked to the industry key success factor of using acquisitions
to increase the customer base.
Low Distribution Costs
One of the key success factors we found in the industrial electrical equipment
industry is minimizing distribution costs. These costs are derived from: fuel costs,
shipping rates, freight costs, and other costs associated with a company’s supply chain.
The cost of shipping can vary between the products being shipped and the shipping
destination.
Since firms operate internationally, we believe it is necessary that they maintain
efficient supply chain practices. Firms can do this through strategic acquisitions and
vertical integration (bcf.usc.edu).
We discovered that industrial electrical equipment firms are accounting for the
variances in shipping expenses across the globe by acquiring competitors (FELE, PNR,
IEX, XYL 10-Ks). By acquiring another company’s facilities, including its distribution
centers, a firm can maintain more stable shipping expenses. These expenses once
normalized will give the company greater potential to increase operating
income. A typical acquisition creates multiple advantages, including the use of the
acquired companies pre-existing supply chain, which can include: distribution centers,
shipping contracts, and geographic proximity to the customer and supplier.
We have identified several industrial electrical equipment firms working toward
achieving a form of vertical integration. Pentair has recently bought Flow Control giving
them a true vertical integration, and Xylem has undergone a process of virtual vertical
integration with TORO Distribution. Franklin-Electric however, either does not pursue
vertical integration or they do not disclose the related acquisition or partnership.
Vertical integration allows one company to control multiple stages of production
through ownership or “extended enterprises”. An extended enterprise is a cooperative
form of business, where the supplier is seen as an extended enterprise, which behaves
internal to the company (Institute for Supply Management). Through the use of vertical

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integration, transportation costs of raw materials can be reduced from the supplier’s
warehouse to the manufacturer’s facility. This cost reduction often results in firms
increasing their operating income through a reduction in COGS.
Conclusion
In conclusion, we have determined the Type 1 Accounting Disclosures to
effectively translate the benefits companies gain from performing their key success
factors into material gains that are represented in the financials.
Disclosure levels are adequate across the board. Reports for intangibles are
separated thoroughly and the footnotes below each table in the 10-K’s offer context for
acquisitions.
Furthermore, the firms in our sampling that we know perform vertical
integrations provide adequate disclosure for us to gather the information needed to
draw conclusions between integrating vertically and lowering distribution costs.
Type 2 Accounting Disclosures
We define Type 2 Accounting Disclosures as accounts whose measurement and
reporting policies are at the discretion of the management. GAAPoffers general
methods for handling these items, but because of politics and red tape they offer a
large degree of flexibility in their reporting ‘rules’.
The way these items are reported can potentially distort investors’ perceptions about
the value and performance of a company. These items include operating leases,
goodwill, research & development, and the occasional defined benefit pension plan. In
this piece of the report we will evaluate the Type 2’s, and if we determine significant
distortion of the company’s financial health, we will restate financial statements. Our
plan is to impair, amortize, or capitalize these items in order to show an alternative
value of the business.
Research and Development
Within the industry, research and development activities are vaguely detailed.
According to GAAP standards, research and development must be stated as an expense

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as these costs are incurred. Although recorded as an expense, research and
development is geared towards bringing in future revenues from generating new or
improved products. In many cases, research and development is required in order for a
company to become an industry leader. In the pump industry, research and
development does not provide a substantial role in the companies due to their
successful and original designs.
Source: Fidelity Investments Income Statements
Hedging and Forex Risk
Franklin Electric is a multinational corporation that has significant exposure to
changes in currency relative to the dollar. It has major operations in United States,
Europe, South Africa, Brazil, Mexico, Turkey and China. In foreign countries Franklin
Electric purchases materials and completes sales in foreign currencies. Franklin Electric
lost $1.7 million in 2012 to currency exchange risk and $3.3 million in 2013 to currency
exchange, and in 2011 Franklin Electric lost $1.4 million due to the Turkish Lira. These
losses occurred mainly because the value of five different currencies depreciated
relative to the U.S. dollar.
Derivatives are a common practice that international companies use to hedge
their foreign currency risk. Franklin Electric does not use derivatives to hedge the
currency risk its operations are exposed to. They also do not hedge in raw material
commodities or energy. The only time the company bought derivatives was in 2011

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when it acquired the Turkish company "Impo". During this time Franklin entered into a
brief forward contract for the Turkish Lira that rendered a pre-tax income of roughly
$600,000 and an after-tax income of $500,000.
In 2012, Xylem began periodically entering into forwards contracts to hedge its
currency risk (Xylem 10-K), Pentair occasionally enters into foreign currency contracts
to minimize fluctuations (Pentair 10-K), and Idex Corp also uses forwards contracts to
hedge foreign currency exposure (Idex 10-K). Franklin Electric trails the industry in
managing their foreign exchange risk.
Franklin Electric moderates its foreign currency exchange rate risk through
several different natural ways. For one, the company operates and maintains local
production facilities in the markets it operates in. Also, Franklin sells product in the
same currency that it is produced in. Finally, the company limits its foreign currency
denominated debt. We have found that relative to hedging, these policies are minimal
and do a poor job of lessening the impact of currency fluctuations. We can conclude
that they are in fact exposed to currency risk, and though not as effective as hedging,
there are means of mitigation in place.
Operating Leases
Operating leases are off-balance sheet items that, when left as reported, will
understate liabilities and assets. We will evaluate the remainder of the operating leases
and amortize them accordingly. If non-current liabilities are increased by more than
20% after capitalization, we will restate the financials. This will result in creation of the
asset Capitalized Operating Lease Rights, and Capitalized Operating Lease Liability
accounts. Once this is done, we will have a more faithful representation of the
company’s assets and liabilities.
Companies have strong incentives for utilizing operating leases instead of capital
leases. Operating leases are not capitalized, as they are considered rental expenses and
are shown on the income statement. This give companies an opportunity to understate
liabilities on the balance sheet and decrease the debt-to-equity ratio. If operating leases
are significant in comparison to the non-current liabilities, analysts should restate this

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post in the balance sheets to provide a more realistic view of future payment
obligations.
All of the companies within the industry sampling, Franklin included, use
operating leases. The following table shows the future operating lease obligations for
these firms. As we will show later in the evaluation, none of the companies’ operating
leases, if capitalized, are significant enough to fundamentally alter our view of future
payment obligations.
Source: IEX, PNR, XYL, FELE 10-K’s
Goodwill
Goodwill is an asset account created from the purchase of an existing firm.
Essentially, it is the difference in dollars between the market and book values of an
acquired firm. Companies consider goodwill an asset because they believe they have
gained a competitive advantage along with the tangible assets of the purchased firm.
Competitive advantages are important in this industry and firms are always
looking to increase their own through acquisitions and the like. That being said,
competitive advantages usually will not hold value indefinitely as they will quickly be
nullified by the rapid progression of the competitors within the industry.
Firms in this industry rely heavily on strategic acquisitions to stay competitive,
and most of the firms have a large portion of their assets listed as goodwill.
The following table is an industry sampling of goodwill totals as compared to
Property, Plant and Equipment. As the totals of goodwill is higher than investments in
production capacity, we consider amortization of goodwill to be necessary for our
further valuation.

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Source: Yahoo! Finance
Pension Plans
Though Franklin-Electric has historically followed the industry in the use of
defined benefit pension plans, recently the company has elected to change direction. In
2012, Franklin-Electric restructured its basic pension plan as a defined contribution
retirement plan offering. In the defined benefit plans of Pentair, Xylem, and Idex, the
retirement payments are guaranteed to employees, and based on factors such as years
of service and participants’ salaries. This strategy can be dangerous to a company’s
liabilities because the strung-out payments to retired employees translate into long-
term obligations and expenses. Franklin’s redesignation of the retirement plan was
intended to reduce the expected cash funding volatility of the pre-existing retirement
plans, while keeping its plans appealing enough to attract and retain talented
employees.
Conclusion
After identification of the Type 2 Accounting Disclosures, we have discerned that
goodwill is the only one with enough weight to be considered potentially distortive.
If operating leases were capitalized, not enough change would occur in the non-
current liabilities to warrant a restatement of the financials; research and development

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is too small a portion of operating expenses to change anything if restatements were
made; the company’s defined benefit plans were turned into defined contribution plans
in 2012; and Franklin has its own strategy in place to mitigate forex risks.
Assessing Accounting Flexibility
Because companies can exploit the flaws inherent in the GAAP procedures for the
Type 2 Accounting Disclosures, problems with distortion can occur. We have
determined that because degrees of flexibility vary from one type to the next, we will
need to analyze the flexibility of the individual items.
Customer Relationships’ is an inflexible intangible asset representing the
contracts a firm establishes with its customers. This account is transferred between
firms through acquisitions, but is separated out of goodwill. According to U.S. GAAP,
intangible assets that meet the contractual-legal criterion cannot be revalued, but are
carried over at the historical cost minus any amortization and impairment. Furthermore,
unlike goodwill these assets must be amortized. The only degree of flexibility allowed in
the reporting of these assets is the company’s ability to decide on the useful life. To
estimate the fair values of the contractual customer relationships asset, assumptions
such as future contract renewals and other benefits are used.
Because of this, companies differ on the useful lives of these assets.
Furthermore, the life spans tend to vary within the company from purchase to
purchase. Franklin-Electric has used life spans of 13, 17, 19, and 20 years for the
marginal increases of the account depending on the acquisition (FELE 2014 10k), Idex
determines that the useful life of its ‘Customer Relationships’ will be anywhere from 10-
20 years (IEX 2015 10k), Xylem states that the amortization for finite intangibles takes
place over 5-20 years (XYL 2015 10k), Pentair did not disclose the range of useful life
spans it applies to its finite intangibles (PNR 2015 10k).
Franklin Electric has gained substantial customer base increases through these
purchased contracts and the value attributed to the Customer Relationships account is

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in accordance with GAAP policies. Because the amounts are amortized reasonably and
are fully disclosed in the SEC filings, we have determined the degree of accounting
flexibility regarding the reporting of ‘Customer Relationships’ fairly low.
Goodwill
Goodwill in itself is a flexibly-reported account because firms are only required to
impair it if a triggering event causes the reporting unit’s fair value to drop below its
carrying value. (www.fasb.org topic 350). This impairment would signify deterioration
of the competitive advantages that goodwill represents.
The companies in our industry sampling are impairing goodwill inconsistently. In
the past six years, Pentair impaired goodwill only in 2014 and 2011; Idex impaired it in
2012 and 2008; Xylem impaired goodwill in 2013 and 2012; and Franklin Electric has
not impaired goodwill from 2009 from 2014. (FELE, IEX, PNR, XYL 2009-2014 10-K’s).
Goodwill is translated into an asset because firms consider it a valued
competitive advantage such as increased market share, increased capacity, and less
competition (if a competitor is bought). Though goodwill is not consistently impaired
throughout the industry, for our purposes we will impair it over a course of five years
from the date it was acquired. If after impairment, the company has lost 30% or more
of their net fixed assets, we will restate the financials. This will result in lower assets
and a more accurate view of the company’s worth.
Capitalization of Operating Leases
A company’s management can have a lot of influence on the way leases are
recorded in the books. If a company can utilize off-balance sheet operating leases
instead of capital leases or debt, they can obtain significant benefits. For instance, if an
item can be placed on the income statement rather than on the balance sheet, that
item can be closed at year’s end and will not affect the ratios used to value the
company. As an example, a company can do a sale and leaseback of an asset. If the
lease can be considered an operating lease, the management can hide contractual
obligations from the balance sheet. If the operating leases are significant, this

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maneuver could make a company look financially more healthy, thus favorably
distorting the view of the company.
For a lease to be considered an operating lease, it cannot meet any of the
following criteria (US GAAP):
1. The lease transfers ownership of the property to the lessee by the end of the lease
term.
2. The lease contains an option to purchase the leased property at a bargain price.
3. The lease term is equal to or greater than 75% of the estimated economic life of the
leased property.
4. The present value of the minimum lease payment equals or exceeds 90% of the fair
value of the leased property less any investment tax credit retained by the lessor.
Franklin Electric and the industry use operating leases at an insignificant level.
Therefore, it is unnecessary to capitalize because it will have an immaterial impact on
our view of the company.
Research and Development
Research and development must be recognized as an expense on the company
books, yet it provides an upper hand in providing quality and improvements to the
company’s product line. The firms within the industry do not specify many details on
what these research and development expenses are being used for, however, the firms
all disclose that this funding is spent towards developing existing products for better
use. Although only a small percent of capital is dedicated to research and development,
it is concluded that the firms in the pump industry companies make changes to their
products in accordance with advancing technologies for competitive advantage.
With such small percentages of the overall operating expenses being allocated to
research and development, the firms have a lower amount of allocated expense than a
firm with high amounts of capital dedicated towards research and development, as we

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see in many other industries. Research and development in the pump industry is not as
important to being competitive as existing products have little need to be changed.
Pension Plans
Although pension plans do not play a significant role in the pumping industry,
they have flexibility in the sense that a company can choose which type of retirement
plan it wants to use. Within the industry, either defined benefits or defined contribution
is adopted. Pensions are recorded as a liability on the balance sheet, as well as an
expense on the income statement, meaning the statements can be manipulated
depending on which form is used. Franklin, uses a defined contribution retirement plan,
which is more beneficial to a company’s books due to lower long-term obligations. On
the other hand, Pentair, Xylem, and Idex, use a defined benefits retirement plan, which
requires the companies to incur long-term expenses paid out to retired employees over
the rest of their life spans. This can be harmful to a company due to an ever-increasing
liabilities account.
Conclusion
We find that Franklin and its industry contain significant accounting flexibility potential
for goodwill because significant acquisitions occur with regularity. Furthermore,
customer relationships and pension plans are accounts that can be used to overvalue
the company due to the size of the accounts. We find research and development and
operating lease capitalization to have a much less profound effect on the financials of
companies in the industry.
Actual Accounting Disclosures
Franklin Electric shows a very high level of disclosure in its SEC filings. 10-K’s are
thorough and clear, segmented well, and easily understandable. Dis-aggregation is
prevalent especially in the intangible assets sections, with finite and indefinite
intangibles reported separately from themselves, and separate from goodwill. Footnotes
appear readily throughout the statements explaining various transactions and
impairments, and giving context to the intangible accounts listed. Operating leases are

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listed, and pension plans are presented and explained. Because of these traits, we have
determined that Franklin Electric is a high-disclosure company.
Customer Relationship Accounting
Franklin-Electric shows responsibility in the actual disclosures of its gains in
customer contracts through acquisitions. The disaggregation of the goodwill account is
consistent on a yearly basis and the Customer Relationship account is derived the same
way every time. Compared to the industry, Franklin reports the handling of the assets
prior to acquisition in more detail. The industry standard is to elect not to disclose the
individual life spans assigned to the incremental increases of finite intangibles. Franklin
is the only one to estimate the lifespan of the newly-acquired relationships and disclose
the number of years directly pertaining to the amount.
Overall, the consistency and high disclosure levels Franklin demonstrates when
dealing with its ‘customer relationships’ has led us to determine that the company’s
actual accounting disclosures for this area are diligent.
Lease Accounting
A company’s management decides to what extent capitalized operating leases are used.
As discussed in previous sections, operating leases provide a more flexible standpoint
than capital leases in distorting the view of the company’s financial ratios.
Franklin Electrics capital leases are insignificant in comparison to their operating
leases. In that regard they are not very conservative, as capital leases would reflect a
more fair value on their contractual obligations. However, the operating leases are not
significant enough to impact the interest coverage or the debt-to-assets ratio in a
meaningful way.
The table above shows the total operating lease percentage to the non-current
liabilities of Franklin Electric. These percentages are too low to justify a restatement of

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the operating leases, as a restatement would not significantly change our view of
Franklin Electric’s value.
Goodwill Accounting
Franklin Electric shows goodwill as approximately 20% of total assets, and is
larger on a year-to-year basis than property, plant, and equipment. These goodwill
totals come from the acquisitions and mergers Franklin undertakes. Furthermore these
totals are not amortized, causing them to be inflated to more than what they are worth.
Goodwill is flexibly reported, and Franklin has adopted an aggressive strategy
when dealing with it. Asset totals are much higher on the financials because of the
existence of goodwill and the neglect in its amortization.
This table represents the correct totals of goodwill after the amortization of the
marginal yearly increases of the account. The company is gaining new goodwill much
faster than it is amortized away, and the impairment charges will not reduce the
operating income levels by 30% or more. Even so, goodwill is still larger than 30% of
net fixed assets so we amortized it and will have to restate the financials.
Research and Development Accounting
Compared to the competitors in the industry, Franklin Electric shows the highest
level of disclosure when reporting research and development activities. Although
Franklin Electric discloses certain activities related to the water systems and fueling
systems segments, it only dedicates 2.1 percent of overall operating expenses towards
research and development. This assumes that Franklin Electric does not have a primary
interest in the development of new products. Instead, they dedicate small amounts of
capital towards developing existing products in order to keep a competitive advantage
within the industry.

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Pension Plan Accounting
In 2012, Franklin Electric redesigned its retirement plan offering from a basic
pension plan to a defined contribution pension plan offering. The purpose of this
change was to standardize and reduce the expected cash volatility of the pre-existing
plan while keeping a competitive retirement plan offering that would appeal to and
retain employees. On December 31, 2011, Franklin froze benefits under both the basic
pension plan and the cash balance plan. Although these plans were discontinued, some
participants of the basic pension plan would still accrue benefits over a sunset period of
five years. The post-retirement plan liabilities are determined by a discount rate
calculated by a yield-curve approach and a weighted average. In 2014, Franklin had
post-retirement benefit and pension payment obligations of $13.7 million. The change
of retirement plans resulted in a reduction of total long-term liabilities and expenses
which will benefit Franklin-Electric in the years to come.
Conclusion
We find that in general Franklin’s reporting is thorough. We were able to discern
areas that require adjustment and areas that are fine as is. This would have been
difficult (or impossible) had Franklin combined lines that were optional; however, in
reporting to a greater level of detail we are able to form a more accurate analysis of
Franklin’s accounting statements (shown in undoing accounting distortions).
Quality of Disclosure
The levels of disclosure of the key accounting policies are what influence
outsiders’ understandings and assessments of the company. An understanding of the
quality of these disclosures will help an external analyst determine whether or not the
company has remained diligent in the reporting of its financial statements.

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The firms in the industry make increases to their market shares through strategic
acquisitions of other companies. The acquisitions are increasing the customer base and
expanding the boundaries surrounding how the company operates. The companies in
our industry provide a high quality of disclosure on the acquisitions of other companies,
and more specifically, the customer relationships that follow.
The tables discussed in the Customer Relationships section provide useful
information on the companies acquired. The value of the companies is decomposed in a
meaningful way, and Customer Relationships are fully disaggregated from goodwill and
discussed at length in the footnotes.
Overall, Franklin’s quality of disclosure on their Customer Relationships is on par
with the industry norm of providing detailed acquisition information.
Low-cost Distribution
We found that either Franklin does not take actions to achieve vertical
integration, or it does not disclose information relating to the activity. This is subpar for
the industry since Pentair and Xylem reported their efforts to increase vertical
integration (directly or indirectly). However, Idex didn’t report anything relating to
vertical integration. Therefore, we find Franklin’s disclosure to be below the industry
average quality of disclosure levels of vertical integration.
Business Strategies and Economic Consequences
Business activities within Franklin’s 8 and 10-k’s contain a good level of
disclosure. Items are disaggregated where necessary, risks are clearly identified and
explained, and the consequences of the company’s decisions are displayed. As external
analysts of Franklin Electric, we have been able to draw significant conclusions about
the company’s practices through the material provided us in the SEC filings. Because of
the, we have determined that the company has little to hide from potential investors.
On the whole, Franklin’s SEC filings contain higher quality disclosures than the
competing firms in our sampling giving us good reason to believe the company is acting
responsibly in it’s reporting.

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Current performance
One of the most important purposes of balance sheets, income statements and
cash flows is to represent a company’s current performance. It is, however important to
supplement these numbers with more in-depth information in the Notes and MD&A
sections of the 10-Ks. Linking financial performance to the operating conditions give
outsiders a more meaningful understanding of the performance of the company.
In their 10-K, Franklin Electric is providing comprehensive detail about their
performance. Net sales increased about 8 percent from $891.3 million in 2012 to
$965.5 million in 2013. SG&A expenses increased with $15.5 million from 2012-2013
where an increase of about $9 million was attributable to acquisitions. Operating
income increased with 8.72% the same year, however, there was items impacting this
that was considered “non-operational in nature” referred to as non-GAAP adjustments.
According to FELE, this information is provided in the 10-K to give investors a better
understanding of underlying trends.
Franklin also gives clarification for changes in cost of sales, which dropped 50
basis points from 2012 to 2013, with a corresponding increase in the gross profit
margin. This was explained with fixed costs being leveraged on higher sales.
Segments
If a firm operates in more than one segment, the financial information can be
hard to interpret if the performance of the different segments is not disclosed in full
detail.
Franklin Electric operates in two segments; Water Systems and Fueling Systems.
The performance of the respective segments are discussed in detail, as well as
described through specified financial information. This financial information includes
operating income and margins as well as acquisition related items. The Water Systems
is significantly larger than the Fueling Systems, as Fueling only represented 20 percent
of consolidated sales. However, the Fueling Systems has been increasing at a higher
rate than Water Systems over the last years, which is described in detail in the FELE 10-
Ks.

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In the Notes, they supply some additional information on the geography of the
different segments that Franklin operates in. The locations only separate between the
United States and “Foreign”. As net sales are larger outside than inside of the U.S., this
information could have been given in more detail. Especially since market growth
potential, specifically for Water Systems, is assumed to create a higher demand outside
of the United States.
Conclusion
We consider the quality of disclosure to be high for the industry. Companies
provide detailed disclosure about their business strategies, accounting policies, current
performance and segments. Franklin provides a disclosure of even greater quality than
industry norms. They are forthcoming about anomalies in the numbers, and provide
investors with what seems to be quality, non-biased information.
Identifying Potential Red Flags
In addition to identifying and evaluating accounting disclosure, as a part of the
accounting quality analysis, analysts should look for “red flags” that could point out
questionable accounting. When the analyst identifies potential red flags, the related
items should be examined more closely. This is to provide the analyst with an
understanding on whether the information is distorted, or if it affects how the
performance of the company can be interpreted.
After investigating FELE’s financials, we identified one potential red flag. Over the
last 10 years, there are significant variations in the relationship between Net Income
and cash flow from operating activities (CFO). In the following section, we will analyze
this gap and discuss whether it affects how we will value the company.
Income/CFO Gap
There are legitimate reasons for why accrual accounting numbers can differ from
a company’s cash flows. This is one of the reasons for why cash flow statements add
critical information to the income statement and balance sheet when valuing Franklin
Electric.

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We have found changes in the gap between Net Income and Cash Flow from
Operations to be occurring from changes in the company’s accounting policies; more
specifically the accrual estimates. The graph and corresponding table on the next page
show the difference between Cash Flow from Operations and Net Income of FELE from
2004-2013. There are big changes both on the up and the down side, and this indicates
that Franklin has made changes in the accounting policies for accrual estimates.
Source: FELE 10-Ks
The biggest change in the difference between Net Income and CFO can be
spotted in the chart in the intersection between Net Income and CFO in FY 2008. The
next year the gap increases significantly. This is due to a decrease in Net Income, but
more importantly, a significant leap in CFFO.
Further investigation shows that the biggest driver behind this increase is a
positive trend-shift in the Changes in Non-Cash Capital item in the Cash Flow statement

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(FELE, 10-K, 2010). Changes in Non-Cash Capital corresponded to $60.9 million in
2009, as oppose to -$35.2 in 2008, and a 10-year average of -$4.95 million (FELE 10-Ks
2005-2013). When this number is dissected, it shows that the change in Non-Cash
Capital is mostly due to three factors: a decrease in Receivables of $18.7 million; a
decrease in Inventories of $59.5 million; and a decrease in Income taxes of $18.4
million.
Franklin provides some disclosure on the big increase in the gap between Net
Income and CFO. They state that the increase in CFO primarily is a result of lower
accounts receivable, reduced inventories, and tax payments- instead of expenses- from
the government. The decrease in accounts receivable is due to lower sales, as well as
the timing of customer payments. Reduction in Inventories is explained by the
management’s focus on reducing inventory levels as a result of “economic and business
conditions”. These conditions include reduced sales and timing of tax payments. The
change in Income tax is explained by a decrease in payment requirements in 2009, as
well as an overpayment of taxes in 2008 (FELE 10-K, 2010).
The income statement indicates some degree of financial stress in the fiscal year
of 2009, probably from holding back during the crisis of 2008. This supports Franklin’s
claims on the reasoning behind these numbers.
Conclusion
In identifying potential red flags, we went through the income statements,
balance sheets and cash flows of FELE to find anomalies. We found that the gap
between Net Income and Cash Flow from Operations is questionable. However, the
company provides explanations for these anomalies in a way that seems justifiable.
Over all, franklins accounting seems to provide a valid picture of the situation and
performance of the organization.
Undoing Accounting Distortions
Although the original figures reported are approved by GAAP a company can
value a company more accurately through reevaluation. The undoing of accounting

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distortions takes values that a company has originally reported and restates them in a
method that is more helpful when evaluating a company. For Franklin Electric, the
account that needed to be restated was Goodwill. The standard for reevaluating
Franklin’s accounting policy was met when the amount of Goodwill reported on their
balance sheet was worth over 20% of their Net Fixed Assets. Restating the accounting
values over 6 years gives the investor a more accurate value of the company.
Goodwill
Goodwill is an intangible asset that is associated with the price paid above the
book value. Companies will pay above market value to obtain a competitive advantage
or reputation that comes with the acquisition of the company. The accounting policies
designed by GAAP that involve goodwill have flexible standards. Testing for impairment
to goodwill can be done annually or more frequently depending upon the decisions of
the specific firm. Because there are no set guidelines companies may have
discrepancies in this area.
For this analysis a five year impairment schedule has been set for goodwill.
Goodwill impairment was set to begin in 2009 and the additional amount added to the
balance was found for each additional year. The goodwill attributed to that year was
then divided out equally to the following years that the company would receive the
value. Totals of all portions were found and restated for the new impairment of Franklin
Electric’s goodwill. The additional impairment increases the company’s expenses which
decreases net income and retained earnings. These findings directly affect the financial
statements that will follow.

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Financial Statements
Financial Statements are used by a company to report business activities. They
are also used to compare the performance of the company in respect to both other
companies and to itself from year to year. Businesses commonly adhere to GAAP when
reporting their financial statements but there are specific areas where information can
be misstated. For Franklin, the values of Goodwill needed to be restated on the Balance
Sheet and Income Statement to better reflect accurate information to the potential
investor. For the years 2010-2013 the goodwill Balance Sheets and Income Statements
have been restated to better reflect the information. 2009 was not restated because no
adjustment for impairment was needed. Other possible restatement issues include
research and development along with operating leases. However, because Franklin did
not break the threshold for possible misrepresentation on these accounts no
restatement was necessary.
Balance Sheets
The balance sheet reflects a company’s permanent accounts to the investor. The
company is divided up into assets, liabilities, and stockholder’s equity. Investors use
these charts to learn more about the company’s accounts, how they finance their debt,
and how they pay off the debt they have financed. Because goodwill is allowed to be
stated in different ways through GAAP the balance sheet should be restated to give a
more accurate representation of the company’s financials.
For the years 2009-2013, the values on the balance sheets were restated in
order better display the impairment of goodwill. A five year period was chosen as the
normal life of new goodwill. The first year balance sheet was not restated because no
impairment was distributed to 2009. The distributions for these years can be found in
the chart above on page 22.

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Income Statements
The income statement shows which type of activities generate the revenues and
expenses of the firm. The income statement is broken up into operating, investing and
financing activities. For the company Franklin, the operating section of the income
statement was adjusted to reflect the restatement of goodwill. Because goodwill is
allowed to be stated in different ways through GAAP, the income statement should be
restated to give a more accurate representation of the company’s financials.
For the years 2009-2013, the income statements were restated to better reflect
Franklin’s operating and net income. Goodwill was not impaired as an expense which
caused operating and net income to be overstated. By restating these years, the
investor gains a more fair perspective on Franklin Electric’s income.

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Conclusion
The difference between the original statements and the restated financials shows
the differences in accounting policies that Franklin uses. Restating the goodwill over a
five year period gives the investors’ better insight to the value of the company. Franklin
did not choose to impair their goodwill because they continued to acquire new
companies which are a source of goodwill. Without the impairment of goodwill, Franklin
has higher net income which increases retained earnings and owners’ equity. By
restating both the balance sheets and the income statements for the years 2009-2013,
the investor gains a more accurate perspective on Franklin Electric’s income.

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FINANCIAL ANALYSIS
The next step in the valuation process is to perform ratio analysis as a trend
analysis for the firm as well as compare the ratios to the company’s peers. After the
ratio analysis is complete, the next step is to produce forecasts of the financial
statements, including forecasts of the restated income statements and balance
sheets. The ratios are good indicators in assessing how financially successful the
companies are. They are split into the different categories of liquidity and operating
efficiency ratios, profitability ratios, and capital structure ratios. The forecasted
financial statements, as well as the estimated cost of capital will provide a basis for
the different valuation models that will be used in the prospective analysis.
Liquidity and Operating Efficiency Ratios
Liquidity ratios measure a company’s ability to deal with its short-term debt
obligations. They are indicators of financial health. Usually, higher values of the
ratios mean stronger liquidity. Operating efficiency ratios assesses the cycle of the
flow of cash in and out of the company.
When comparing FELE to its peers, these ratios are important. They tell us
something about the financial standing of the companies and how effectively they
operate. This information will later be useful in the financial forecasting and
estimation of the cost of capital.
Current Ratio
The current ratio is an indicator of the degree to which a company is able to
pay its short-term debt obligations. Here, the current ratio is a company’s current
assets divided by the current liabilities. A higher ratio normally means better liquidity
in the company. If the current ratio is below 1, the current liabilities are greater than
the current assets. This is usually a negative signal, as it means the company’s
short-term assets are insufficient to cover its short-term liabilities.

Data from 4/1/2015
46 | P a g e
The table and graph that above shows the current ratios five years back for
Franklin Electric and the companies we selected to represent the industrial electrical
equipment industry(PNR, IEX, and XYL). The data is compiled from the companies’
10-Ks with calendar year end date for their fiscal years. The graph shows us that
Franklin Electric’s current ratio is in good standing in comparison to it’s competitors,
although there is a fairly strong decline over the last twelve months, which almost
makes it touch the industry average. The balance sheet suggest that this is due to a
decline in current assets, but more importantly a strong incline in short-term
liabilities. The latter has increased due to increases in accounts payable by 23%,
increases in current maturities of long-term debt and short-term borrowings by
122%, and increases in accrued expenses and other current liabilities by 53%.
2010 2011 2012 2013 2014 Average
XYL 2.06 2.02 2.4 2.36 2.31 2.23
PNR 1.96 1.93 1.95 2.01 1.77 1.92
IEX 1.96 3.06 3.03 3.25 2.61 2.78
FELE 3.47 3.23 2.95 3.41 2.33 3.08
INDUSTRY 2.36 2.56 2.58 2.76 2.26 2.5
CURRENT RATIO
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2010 2011 2012 2013 2014
CURRENTRATIO
XYL
PNR
IEX
FELE
INDUSTRY

Data from 4/1/2015
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Quick Asset Ratio
Assessment of the quick ratio has the same purpose as the current ratio, but
instead of including all the current assets, the quick ratio only includes the assets
that are considered the most liquid. This excludes assets like inventory and other
short-term assets that are hard to convert into cash on a short notice. Generally, if a
company has a quick ratio of one or above, they should be in good financial
standing to pay off any short-term debt obligations. We calculate the quick ratio by
dividing the cash and accounts receivable by the current liabilities.
Franklin’s quick ratio has a good average over the last five years. How ever,
the increase in short-term liabilities discussed earlier has had a negative impact also
for the quick ratio. FELE’s quick ratio has fallen significantly over the last 12 months.
They have fallen below the industry norm, and are now barely able to cover their
short-term debt obligations with their most liquid assets.
2010 2011 2012 2013 2014 Average
XYL 1.27 1.93 1.87 1.42 1.8 1.66
PNR 1.03 0.96 0.93 0.96 0.8 0.94
IEX 1.27 1.87 1.97 2.27 1.86 1.85
FELE 1.93 1.87 1.42 1.8 1.01 1.61
INDUSTRY 1.37 1.66 1.55 1.61 1.37 1.51
QUICK ASSET RATIO
0.00
0.50
1.00
1.50
2.00
2.50
2010 2011 2012 2013 2014
QUICK ASSET RATIO
XYL
PNR
IEX
FELE
INDUSTRY

Data from 4/1/2015
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Inventory Turnover
The inventory turnover ratio provides information on how effectively the
company is producing and selling products. To give meaningful insight, this
information must be seen in comparison to the company’s competitors as inventory
turnover can vary a lot between different industries.
The inventory turnover ratio was calculated using cost of revenue divided by
inventory. A low turnover can indicate that a company is selling less than what was
expected when filling up the inventory. A high turnover can be a result of high sales
or a small inventory, sometimes due to low expectations.
Some of FELE’s competitors(PNR and IEX) are operating in different segments
outside of the industrial electrical equipment industry. This will impact the inventory
turnover ratio in a way that makes it less suitable for comparison. Issues like this
need to be kept in mind in the comparative analysis.
Franklin Electric’s inventory turnover ratio has been at a small but steady gap
2010 2011 2012 2013 2014 Average
XYL 5.11 5.41 5.17 4.92 4.94 5.11
PNR 5.18 5.27 2.22 3.87 4.05 4.12
IEX 4.55 4.33 4.9 4.98 5.04 4.76
FELE 3.45 3.87 3.07 3.31 3.19 3.38
INDUSTRY 4.57 4.72 3.84 4.27 4.31 4.34
INVENTORY TURNOVER
0.00
1.00
2.00
3.00
4.00
5.00
6.00
2010 2011 2012 2013 2014
INVENTORY TURNOVER
XYL
PNR
IEX
FELE
INDUSTRY

Data from 4/1/2015
49 | P a g e
below the industry norm over the last five years. This can be an indicator that the
inventory is managed more poorly than what is normal for the industry. This
observation can, however, be affected by the different segmentations mentioned in
the previous paragraph.
The inventory turnover has been relatively stable for all the companies over the
last five years. The exception is Pentair, which had a significant decrease in 2012
due to a high increase in inventory that did not turn into increased sales until the
year after.
Days Supply Inventory
Days supply of inventory is measuring how many days it takes a company to
sell its inventory (including raw materials and work in progress). Viewed over a year,
the number shows how many days’ worth of sales the inventory holds on average. A
shorter period indicates less money tied up in inventory, while a longer period
indicates more money tied up in inventory. A shorter period is considered better
than a longer period, as the company has less exposure to inventory depreciation
and less money tied up in working capital. The days supply of inventory is the
number of days in the year divided by inventory turnover.
2010 2011 2012 2013 2014 Average
XYL 71.42 67.48 70.64 74.16 73.82 71.5
PNR 70.45 69.3 164.1 94.22 90.17 97.65
IEX 80.19 84.38 74.53 73.26 72.37 76.95
FELE 105.84 94.24 118.75 110.29 114.44 108.71
INDUSTRY 81.98 78.85 107.01 87.98 87.7 88.7
DAYS SUPPLY INVENTORY

Data from 4/1/2015
50 | P a g e
As the days supply of inventory are calculated from the inventory turnover, the
comparative standings are the same for all the companies. Franklin Electric has more
days worth of sales tied up in inventory than its competitors, and thus a somewhat
poorer inventory management.
Accounts Receivable Turnover
Accounts receivable turnover is a measure used to assess how effectively a
company is collecting its extending credit and debts. The ratio is calculated by
dividing revenue by accounts receivable. A high ratio is therefore good, as it means
either high sales or low accounts receivable, which indicates effective credit policies
through collecting of short-term debts and extending credit.
0.00
20.00
40.00
60.00
80.00
100.00
120.00
140.00
160.00
180.00
2010 2011 2012 2013 2014
DAYS SUPPLY INVENTORY
XYL
PNR
IEX
FELE
INDUSTRY
2010 2011 2012 2013 2014 Average
XYL 4.64 5.03 4.89 4.7 5.08 4.87
PNR 5.86 6.07 3.46 5.45 5.84 5.34
IEX 7.09 7.27 7.63 7.99 8.39 7.67
FELE 10.08 10.47 8.66 8.39 7.29 8.98
INDUSTRY 6.92 7.21 6.16 6.63 6.65 6.71
ACCOUNTS RECEIVABLE TURNOVER

Data from 4/1/2015
51 | P a g e
Four years ago, Franklin Electrics accounts receivable turnover ratio was
superior to its peers. Although still in good standing, FELE has had a decline over the
last four years, as oppose to a stable development with the other companies. The
chart for sales growth in the industry in the industry analysis section shows that
Franklin Electrics sales growth is almost at par with the industry. Accounts
receivable, on the other hand has increased significantly, which causes the decline
on the chart.
Days Sales Outstanding
In comparison to the days supply of inventory, the days sales outstanding is
the number of days in a year divided by the accounts receivable turnover ratio. Days
sales outstanding is measuring how many days it takes to receive a payment after a
sale is made. Over a year, it is the average number of days it takes to collect
receivables. Companies want to receive payment after a sale as soon as possible for
a multitude of reasons (including liquidity, opportunity cost etc.). Therefore, a lower
ratio is normally considered better than a higher ratio.
0.00
2.00
4.00
6.00
8.00
10.00
12.00
2010 2011 2012 2013 2014
ACCOUNTS RECEIVABLE
XYL
PNR
IEX
FELE
INDUSTRY

Data from 4/1/2015
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As with the accounts receivable turnover ratio, Franklin Electric has been doing
better than the industry norm, although the days sales outstanding has increased
over the last four years. Here too, the graph for Pentair diverging from the other
companies. In line with the increase in inventory discussed earlier, the accounts
receivable increased a lot in 2012. This did not turn into sales until a year later,
which explains the sudden surge in days sales outstanding in 2012.
Cash to Cash Cycle
The cash to cash cycle, or the cash conversion cycle is a measure that shows
how long it takes a company to sell off its inventory and collect on the accounts
receivable. It expresses the number of days it takes from a dollar is put into
production until cash is generated through sales. A lower ratio is a good indicator, as
each dollar put into production converts into cash faster. The ratio is the sum of
days supply of inventory and days sales outstanding.
2010 2011 2012 2013 2014 Average
XYL 78.65 72.56 74.71 77.72 71.86 75.1
PNR 62.25 60.1 105.35 67.01 62.53 71.45
IEX 51.52 50.2 47.83 45.66 43.51 47.74
FELE 36.22 34.87 42.14 43.52 50.09 41.37
INDUSTRY 57.16 54.43 67.51 58.48 57 58.92
DAYS SALES OUTSTANDING
0.00
20.00
40.00
60.00
80.00
100.00
120.00
2010 2011 2012 2013 2014
DAYS SALES OUTSTANDING
XYL
PNR
IEX
FELE
INDUSTRY

Data from 4/1/2015
53 | P a g e
Franklin Electric is following the industry norm relatively closely. The tight
collection of the lines in the graph may how ever be misleading, as Pentair strongly
diverges in 2012, rendering a bigger scope on the y-axis. Franklin Electric has a
slight increase in the cash to cash cycle over the last five years compared to the
industry average, which means a slower recovery now than five years ago.
Working Capital Turnover
Working capital is a measure of a company’s financial strength. The working
capital turnover is comparing the working capital to sales over a given period. This
can tell us something about how effectively the company has used its working
capital to generate sales. The working capital turnover is sales divided by working
capital, which are current assets minus current liabilities. A high ratio is a good
thing, as the company utilizes the working capital effectively to generate sales.
2010 2011 2012 2013 2014 Average
XYL 150.07 140.04 145.35 151.87 145.68 146.61
PNR 132.7 129.4 269.45 161.23 152.7 169.1
IEX 131.71 134.58 122.37 118.92 115.89 124.69
FELE 142.06 129.11 160.89 153.82 164.53 150.08
INDUSTRY 139.14 133.28 174.52 146.46 144.7 147.62
CASH TO CASH CYCLE
0.00
50.00
100.00
150.00
200.00
250.00
300.00
2010 2011 2012 2013 2014
CASH TO CASH CYCLE
XYL
PNR
IEX
FELE
INDUSTRY

Data from 4/1/2015
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Through the last five years, the working capital turnover of Franklin Electric has
been below the industry average. The working capital turnover of FELE has, how
ever, increased over the last five years, while the industry average has decreased.
This is a good indicator for Franklin Electric, and the graph are approaching an
intersection with the industry average.
Pentair had a strongly declining working capital turnover in 2012. The tendency
in the other ratios is propagating through a “delayed” increase in sales, where the
working capital increased in 2012, and sales did not increase accordingly until 2013.
The ratio goes back up in 2013 and 2014, and this irregularity should not carry any
weight in assessing Franklin Electric.
2010 2011 2012 2013 2014 Average
XYL 4.66 4.57 3.47 3.32 3.28 3.86
PNR 5.8 5.8 2.83 4.32 5.61 4.87
IEX 4.46 3.46 3.31 2.95 3.24 3.48
FELE 2.65 2.97 3.15 2.89 3.9 3.11
INDUSTRY 4.39 4.2 3.19 3.37 4.01 3.83
WORKING CAPITAL TURNOVER
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2010 2011 2012 2013 2014
WORKING CAPITAL TURNOVER
XYL
PNR
IEX
FELE
INDUSTRY

Data from 4/1/2015
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Conclusion
Over the last five years, Franklin Electric’s liquidity has been strong enough to
cover its short-term liabilities. The margin has, however, been declining. The higher
than average current ratio also explains part of the lower than average, but inclining
working capital turnover. Further, when it comes to operating efficiency ratios,
Franklin has shown weaker inventory management than its peers, but a more
effective management of accounts receivable. FELEs cash cycle has been following
the industry norm tightly over the last five years. Going forward, Franklin Electric
should work on reversing the negative trend in the liquidity ratios, as well as
improving the management of inventory.
Profitability Ratios
We used profitability ratios to determine Franklin’s ability to generate earnings
less expenses. The profitability ratios we analyzed indicate the company is doing well
when they are higher than its competitors, or if the ratios are growing from prior
periods. The ratios included in our analysis are: sales growth percentage, gross profit
margin, operating profit margin, net profit margin, asset turnover, return on assets, and
return on equity.
Companies’ 10-Ks
0
1
2
3
4
5
Sales Growth
Percentage
Gross Profit Margin
Operating Profit
Margin
Net Profit MarginAsset Turnover
Return on Assets
Return on Equity
FELE Profitability Ratios vs Industry

Data from 4/1/2015
56 | P a g e
Based on our analysis of Franklin compared to its competitors: IEX, PNR, and
XYL, we have determined that Franklin is competitive in most categories. Franklin only
has a significant advantage in asset turnover, meaning it is using its assets more
efficiently. Franklin is underperforming its competitors on operating margin and net
profit margin. Franklin is in-line with the industry in the other categories.
Sales Growth Percentage
Sales growth is the increase (or decrease) in a company’s sales from the
previous period to the current one. Sales growth percentage can be calculated with:
(Current Period Revenue - Previous Period Revenue) / Prior Period Revenue x
100. Generally, a higher sales growth percentage is considered a positive signal since it
indicates that the company is generating higher revenues than the previous period.
Companies’ 10-Ks
2010 2011 2012 2013 2014 Average
XYL 12.39% 18.77% -0.32% 1.21% 2.06% 6.82%
PNR 12.56% 14.05% 27.76% 58.50% 0.56% 22.69%
IEX 13.79% 21.50% 6.30% 3.58% 6.11% 10.26%
FELE 14.03% 15.03% 8.56% 8.32% 8.53% 10.89%
INDUSTRY 13.19% 17.34% 10.57% 17.90% 4.31% 12.66%
SALES GROWTH PERCENTAGE
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2010 2011 2012 2013 2014
Sales Growth Percentage
Industry
FELE
IEX
PNR
XYL

Data from 4/1/2015
57 | P a g e
We found that Franklin tends to slightly underperform the industry average.
Although Franklin’s sales growth is 1.8% less than the average of 12.7%, it has
outperformed the industry in 2010 and 2014. After accounting for the outlier by Pentair
in 2013, Franklin is on par with the industry. Thus, Franklin is growing its revenue at a
similar rate to its competitors.
Gross Profit Margin
The gross profit margin is the difference between a company’s revenues and the
cost of sales. Therefore, gross margin is the amount of profit generated by each dollar
of sales. The gross margin can be calculated by: gross profit / sales. The higher the
gross margin, the greater the premium a company charges for its goods and services.
Companies’ 10-Ks
We found that Franklin underperforms the industry by 3.4% and their gross
profit margin is fairly stable. Therefore, we can conclude that Franklin has yet to benefit
2010 2011 2012 2013 2014 Average
XYL 37.91% 38.42% 39.62% 39.07% 38.64% 38.73%
PNR 30.71% 31.45% 32.82% 33.86% 34.99% 32.77%
IEX 40.88% 40.18% 41.13% 43.15% 44.20% 41.91%
FELE 32.25% 33.16% 33.84% 34.34% 32.87% 33.29%
INDUSTRY 35.44% 35.80% 36.85% 37.60% 37.67% 36.67%
GROSS PROFIT MARGIN
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
2010 2011 2012 2013 2014
Gross Profit Margin
Industry
FELE
IEX
PNR
XYL

Data from 4/1/2015
58 | P a g e
from its lean manufacturing (cost reduction) initiative or it cannot sell its product at a
higher price point effectively.
Operating Profit Margin
The operating profit margin shows how much a company makes or loses (before
interest and taxes) from its operating activities. Operating margin is a more complete
indicator of a company’s performance than gross margin since it includes more than the
cost of sales, such as marketing expense and other variable costs. Operating margin
can be calculated by taking the operating income / sales. Thus, a higher operating
margin is desirable since it will result in a company having a greater income from each
dollar of sales after variable costs. This will allow a company to more easily pay its fixed
costs and still have retained earnings.
Companies’ 10-Ks
2010 2011 2012 2013 2014 Average
XYL 12.59% 12.73% 12.71% 11.08% 12.92% 12.40%
PNR 11.03% 9.70% 7.85% 12.55% 13.80% 10.99%
IEX 17.33% 17.40% 18.52% 19.61% 20.71% 18.72%
FELE 10.03% 11.24% 11.08% 11.95% 12.20% 11.30%
INDUSTRY 12.74% 12.77% 12.54% 13.80% 14.91% 13.35%
OPERATING PROFIT MARGIN
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2010 2011 2012 2013 2014
Operating Profit Margin
Industry
FELE
IEX
PNR
XYL

Data from 4/1/2015
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We found that Franklin’s had an 11.3% five year operating margin, 2.1% lower
than the industry average. Franklin never outperformed the industry, and it was the
lowest in three of the five years. This is consistent with what we’d expect given
Franklin’s below average gross margin. Given this, we conclude that it is essential for
Franklin to outsell its competitors to generate a similar profit. However, we believe this
is a neutral signal because Franklin’s operating margin has increased slightly every year.
This is most likely because Franklin’s lean manufacturing strategy is yielding positive
results.
Net Profit Margin
Net profit margin is a company’s net income / sales. Net margin shows how
much of its sales a company will keep less all expenses. This is a great measure of a
company’s profit margins since it includes most revenues and expenses. The primary
weakness of the net margin is that is captures a lot of “noise,” or information not
relevant to a company’s core business.
2010 2011 2012 2013 2014 Average
XYL 10.58% 8.86% 8.70% 7.62% 9.24% 9.00%
PNR 6.55% 5.53% 4.42% 8.35% 9.80% 6.93%
IEX 10.95% 11.09% 11.56% 12.65% 13.46% 11.94%
FELE 6.00% 7.45% 8.00% 7.56% 8.04% 7.41%
INDUSTRY 8.52% 8.23% 8.17% 9.04% 10.14% 8.82%
NET PROFIT MARGIN

Data from 4/1/2015
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Companies’ 10-Ks
Franklin suffers from a slightly below average net profit margin, 7.4% versus the
industry’s 8.8% five year average. In addition to underperforming the market, Franklin’s
net margin declined in 2013, and has yet to recover to 2012 levels. Also, Franklin has
had the weakest net margin three of the five years, and the second weakest the others.
Thus, we believe that Franklin’s net margin is bearish, given its inferior results
compared to its competitors.
Asset Turnover
The asset turnover provides us with the amount of sales generated from each
dollar of assets. This provides a measure of efficiency since we can see how effectively
each company is using its assets. Asset turnover can be calculated by sales / total
assets. A higher asset turnover means that a firm is able to sell more goods and
services from its investment in assets.
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
2010 2011 2012 2013 2014
Net Profit Margin
Industry
FELE
IEX
PNR
XYL
2010 2011 2012 2013 2014 Average
XYL 101.82% 86.16% 82.00% 79.98% 87.49%
PNR 86.99% 96.29% 58.91% 59.94% 75.53%
IEX 77.19% 68.91% 72.67% 74.38% 73.29%
FELE 99.37% 107.90% 99.30% 100.76% 101.83%
INDUSTRY 91.34% 89.81% 78.22% 78.77% 84.54%
ASSET TURNOVER

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