Introduction

I will be working with the dataset below containing 2000 rows and 8 columns:

Title: The Forbes 2000 Ranking of the World’s Biggest Companies (Year 2004).
Source: http://vincentarelbundock.github.io/Rdatasets/datasets.html

in order to investigate the following questions:

What are the top companies ranked by sales, profits, assets and market capitalization respectively?
- Which continents do they operate in?
What are the top profit-making sectors across continents?
- Is there any consistency across continents?
Is there a relationship between companies’ profits and assets?
- Between profits and market capitalization?
How are profits distributed across sectors?
How are sectors distributed in the Forbes ranking for this year?

Note: all the data is expressed in billions of dollars.

Displayed below are the top 10 companies as ranked by Forbes.

Head of Dataset
rank	name	country	category	sales	profits	assets	marketvalue
1	Citigroup	United States	Banking	94.71	17.85	1264.03	255.30
2	General Electric	United States	Conglomerates	134.19	15.59	626.93	328.54
3	American Intl Group	United States	Insurance	76.66	6.46	647.66	194.87
4	ExxonMobil	United States	Oil & gas operations	222.88	20.96	166.99	277.02
5	BP	United Kingdom	Oil & gas operations	232.57	10.27	177.57	173.54
6	Bank of America	United States	Banking	49.01	10.81	736.45	117.55
7	HSBC Group	United Kingdom	Banking	44.33	6.66	757.60	177.96
8	Toyota Motor	Japan	Consumer durables	135.82	7.99	171.71	115.40
9	Fannie Mae	United States	Diversified financials	53.13	6.48	1019.17	76.84
10	Wal-Mart Stores	United States	Retailing	256.33	9.05	104.91	243.74

Summary Statistics of Meaningful Data

From the summary below, we learn that the majority of the companies in the Forbes ranking are from the United States and that Banking is the most represented category.

##            country                      category        sales        
##  United States :751   Banking               : 313   Min.   :  0.010  
##  Japan         :316   Diversified financials: 158   1st Qu.:  2.018  
##  United Kingdom:137   Insurance             : 112   Median :  4.365  
##  Germany       : 65   Utilities             : 110   Mean   :  9.697  
##  France        : 63   Materials             :  97   3rd Qu.:  9.547  
##  Canada        : 56   Oil & gas operations  :  90   Max.   :256.330  
##  (Other)       :612   (Other)               :1120                    
##     profits             assets          marketvalue    
##  Min.   :-25.8300   Min.   :   0.270   Min.   :  0.02  
##  1st Qu.:  0.0800   1st Qu.:   4.025   1st Qu.:  2.72  
##  Median :  0.2000   Median :   9.345   Median :  5.15  
##  Mean   :  0.3811   Mean   :  34.042   Mean   : 11.88  
##  3rd Qu.:  0.4400   3rd Qu.:  22.793   3rd Qu.: 10.60  
##  Max.   : 20.9600   Max.   :1264.030   Max.   :328.54  
##  NA's   :5

Cleaning up and Augmenting Data

Columns were renamed and a continent column was added use to as a filter to answer the research questions listed earlier.

Head of Cleaned up and Augmented Dataset
rank	company	continent	country	sector	sales	profits	assets	marketcap
1	Citigroup	Americas	United States	Banking	94.71	17.85	1264.03	255.30
2	General Electric	Americas	United States	Conglomerates	134.19	15.59	626.93	328.54
3	American Intl Group	Americas	United States	Insurance	76.66	6.46	647.66	194.87
4	ExxonMobil	Americas	United States	Oil & gas operations	222.88	20.96	166.99	277.02
5	BP	Europe	United Kingdom	Oil & gas operations	232.57	10.27	177.57	173.54
6	Bank of America	Americas	United States	Banking	49.01	10.81	736.45	117.55
7	HSBC Group	Europe	United Kingdom	Banking	44.33	6.66	757.60	177.96
8	Toyota Motor	Asia	Japan	Consumer durables	135.82	7.99	171.71	115.40
9	Fannie Mae	Americas	United States	Diversified financials	53.13	6.48	1019.17	76.84
10	Wal-Mart Stores	Americas	United States	Retailing	256.33	9.05	104.91	243.74

Top 10s

Here we take a look at the top 10 companies ranked by sales, profits, assets, and market capitalization.

The tables below reveal that companies in the Americas dominate the top 10 in terms of profits and market capitalization with eight companies in each category followed by Europe with two companies. When it comes to sales and assets, Europe and Asia play a bigger role. Africa and Oceania do not make the top 10 in any category.

Top 10 Ranked by Sales
	company	continent	sector	sales
10	Wal-Mart Stores	Americas	Retailing	256.33
5	BP	Europe	Oil & gas operations	232.57
4	ExxonMobil	Americas	Oil & gas operations	222.88
29	General Motors	Americas	Consumer durables	185.52
75	Ford Motor	Americas	Consumer durables	164.20
21	DaimlerChrysler	Europe	Consumer durables	157.13
8	Toyota Motor	Asia	Consumer durables	135.82
2	General Electric	Americas	Conglomerates	134.19
13	Royal Dutch/Shell Group	Europe	Oil & gas operations	133.50
17	Total	Europe	Oil & gas operations	131.64

Top 10 Ranked by Profits
	company	continent	sector	profits
4	ExxonMobil	Americas	Oil & gas operations	20.96
1	Citigroup	Americas	Banking	17.85
2	General Electric	Americas	Conglomerates	15.59
6	Bank of America	Americas	Banking	10.81
5	BP	Europe	Oil & gas operations	10.27
20	Freddie Mac	Americas	Diversified financials	10.09
22	Altria Group	Americas	Food drink & tobacco	9.20
10	Wal-Mart Stores	Americas	Retailing	9.05
31	Microsoft	Americas	Software & services	8.88
17	Total	Europe	Oil & gas operations	8.84

Top 10 Ranked by Assets
	company	continent	sector	assets
1	Citigroup	Americas	Banking	1264.03
403	Mizuho Financial	Asia	Banking	1115.90
9	Fannie Mae	Americas	Diversified financials	1019.17
396	Sumitomo Mitsui Financial	Asia	Banking	868.42
11	UBS	Europe	Diversified financials	853.23
350	Allianz Worldwide	Europe	Insurance	851.24
398	Mitsubishi Tokyo Finl	Asia	Banking	827.48
15	JP Morgan Chase	Americas	Banking	792.70
34	Deutsche Bank Group	Europe	Diversified financials	792.49
27	Barclays	Europe	Banking	791.54

Top 10 Ranked by Market Cap
	company	continent	sector	marketcap
2	General Electric	Americas	Conglomerates	328.54
31	Microsoft	Americas	Software & services	287.02
24	Pfizer	Americas	Drugs & biotechnology	285.27
4	ExxonMobil	Americas	Oil & gas operations	277.02
1	Citigroup	Americas	Banking	255.30
10	Wal-Mart Stores	Americas	Retailing	243.74
58	Intel	Americas	Semiconductors	196.87
3	American Intl Group	Americas	Insurance	194.87
7	HSBC Group	Europe	Banking	177.96
354	Vodafone	Europe	Telecommunications services	174.61

Profits by Sectors and by Continents

We now narrow our focus on profits by geographic classification.

The tables below reveals interesting information:

Banking leads the ranking in the Americas, Europe and Oceania and is a top sector in 4 continents
Oil & Gas is also a top sector in 4 continents
The Materials sector is the second largest in Africa and Oceania

Top 5 Sectors in Africa Ranked by Profit
	sector	profits
2	Conglomerates	1.45
8	Materials	1.38
1	Banking	1.19
9	Oil & gas operations	1.05
10	Telecommunications services	0.45

Top 5 Sectors in the Americas Ranked by Profit
	sector	profits
2	Banking	95.90
9	Diversified financials	53.51
19	Oil & gas operations	50.24
16	Insurance	42.38
10	Drugs & biotechnology	36.21

Top 5 Sectors in Asia Ranked by Profit
	sector	profits
8	Consumer durables	22.32
24	Telecommunications services	15.00
19	Oil & gas operations	13.73
27	Utilities	12.34
9	Diversified financials	9.96

Top 5 Sectors in Europe Ranked by Profit
	sector	profits
2	Banking	56.25
19	Oil & gas operations	52.35
10	Drugs & biotechnology	24.00
11	Food drink & tobacco	17.79
9	Diversified financials	13.63

Top 5 Sectors in Oceania Ranked by Profit
	sector	profits
1	Banking	7.59
10	Materials	2.99
13	Telecommunications services	2.73
4	Construction	1.75
11	Media	1.48

Investigating Profit Relationships

Here we look at the relationships between profits and assets as well as profits and market capitalization and we can make the following observations:

There is a positive trend in both profit and marketcap variables in relation to profits as indicated by the regression line
The relationship is stronger between profits and aseets than it is betwen profits and marketcap as indicated by the steeper slope.
The outliers companies are mostly from Europe

Distributions by Sector

To see how profits are distributed across sectors, we use the box plot below and make the following observations:

The sectors with the highest profits worlwide were Oil & Gas, Banking and Conglomerates
- These few observations deviate greatly from the sector mean
The sector operating with the greatest losses was the telecom industry
Banking has the greatest profit-loss range
The Drugs & Biotechnology sector had the largest interquantile range suggesting the most consistent profits in a single sector

To visualize how the sectors are distributed in terms of frequency in this ranking year we use a bar plot as seen below. The top 5 sectors are Banking, Diversified Financials, Insurance, Utilities & Materials as was summarized earlier in this report.

A Closer Look at Banking, The Top Sector

Let’s take a more focused look at the most represented sector, Banking. We can make the following observations:

The few companies making the largest profits are in the Americas
Asia has the greatest number of companies making betwen 2 billions dollars or less
- There are no companies in the banking sector making more than 2 billions dollars
The only continents with companies making loses in this sector as Europe and Asia
- Asia has the greatest numbers of companies making large losses
Africa and Oceania have the fewest number of companies operating in this sector

Conclusion

To conlude, we restate the research questions and answer them explicity based on our findings:

What are the top companies ranked by sales, profits, assets and market capitalization respectively? Which continents do they operate in?
- Listing only the top 3 for brevity:
- Sales: Wal-Mart Stores (Americas), BP (Europe), ExxonMobil (Americas)
- Profits: ExxonMobil (Americas), Citigroup (Americas), General Electric (Americas)
- Assets: Citigroup (Americas), Mizuho Financial (Asia), Fannie Mae (Americas)
- Market Capitalization: General Electric (Americas), Microsoft (Americas), Pfizer (Americas)
What are the top profit-making sectors across continents? Is there any consistency across continents?
- Africa: Conglomerates, Materials, Banking
- Americas: Banking, Diversified Financials, Oil & Gas
- Asia: Consumer Durables, Telecommunications Services, Oil & Gas
- Europe: Banking, Oil & Gas, Drugs & Biotechnology
- Oceania: Banking, Materials, Telecommunications Services
- Banking and Oil & Gas Operations are consistently in the top 5 sectors
Is there a relationship between companies’ profits and assets? Between profits and market capitalization?
- Yes, there is a positive relationship between profits and assets, and between profits and market capitalization although the latter is not as strong.
How are profits distributed across sectors?
- The sectors with the highest profits worlwide were Oil & Gas, Banking and Conglomerates
- The sector operating with the greatest losses was the telecom industry
- Banking has the greatest profit-loss range
- Drugs & Biotechnology had the largest interquantile range
How are sectors distributed in the Forbes ranking for this year?
- The most represented sectors were Banking, Diversified Financials, Insurance, Utilities & Materials

Final Project - Analysis of The Forbes 2000 Ranking of the World’s Biggest Companies (Year 2004)

Mael Illien

7/30/2019