United States: financial insight

With its GDP of over 21 trillion U.S. dollars in 2019, the economy of the United States is of crucial importance for the world economy – even though the United States has been hit hard by the coronavirus and GDP is predicted to decrease by 7.3 – 8.5 percent in 2020. Such a decrease is also visible in the number of full-time employees: In June 2019, about 130 million people were employed full-time in the United States, this number decreased to 119 million in June 2020, which corresponds to a decrease of 8.5 percent.

This report helps understand which sectors are most vulnerable to a crisis, such as the corona pandemic, and shows which companies are most likely to survive a financially challenging period, by analyzing annual reports from 2019 and quarterly reports from 2020.

First, the general state of the economy of the United States before the pandemic is presented, followed by the current forecasts. Afterwards, based on the annual reports and recently published numbers of roughly 1,800 NYSE- and NASDAQ-listed companies, a representative analysis of both the service and the manufacturing sectors has been conducted, using the internationally accepted operating KPIs, as well as solvency and activity ratios. Many of these, such as the value of cash reserves or liquidity ratios, are especially useful to evaluate the risks sectors might face in 2020. Companies in the retail trade sector, for example, have a median of 128 million cash reserves, but the median of their debt is around ten times higher. In connection with COVID-19-related shop closures, these companies are particularly at risk.

In the fourth chapter, profitability and company valuation are analyzed, such as profit margin. This shows that manufacturing sectors with high five-year average profit margins, such as consumer non-durables, have a larger buffer in case revenue drops. Finally, each sector is analyzed individually, and the most important financial indicators are presented as an overview.

With these and other similar analyses, not only does this report give an overview of the economy in the United States in 2019 in general, but it also shows the main characteristics of the different service and manufacturing industries with their implications for future business opportunities and challenges.

Operating KPIs

• Revenue
• Expenses
• Number of employees
• Revenue per employee

• Assets and liabilities
• Long-term debt-to-equity
• Long-term debt-to-total capital
• Quick rato
• Current ratio
• Revenue to assets

• Five-year annual revenue growth rate
• Five-year average net profit margin
• EBIT
• EBITDA
• Return on assets
• Price-to-earnings ratio