Standard Industrial Classification
A standard 4-digit code used by the US government to identify the industries according to their functions or products is Standard Industrial Classification (SIC). These codes were later replaced in 1997 with 6-digit codes mostly. However the Securities and Exchange Commission still uses the SIC codes.
These codes now known as the North American Standard Industrial Classification System are used to identify the category a particular industry belongs to. For instance a company having a code 3721 SIC belongs to the aircraft industry. Similarly the SIC code 3211 represent flat glass industry and so on. A complete list is available on the internet to look for the category an industry belongs to making it easy for the business class to communicate effectively.
These codes are used to improve the communication process between sections of business and countries. These codes represent the industry group, major group and the division an industry belongs to. The first three digits in the SIC codes represents the industry group and the first two digits represents the major group. The division can be understood with the example that all the SIC codes that belong to the manufacturing ranges from 20-39.
For example the code 2024 represents that the industry group (dairy products), 20 as the majors which belongs to manufacturing division. The main idea behind these codes is to create a list that distinguishes between the industries so that they can be identified if someone is looking to do business with them. It has lessened the need to go through all the industries profile in order to determine what it makes and how good it is at it. Due to increase in the business categories and methods this step by the US government was appreciated all over the globe because of the advantages it brought to business community.
The code only fails in the sense, that it does not tell the user that the industry belongs only to the specified category or, it is just a part of the industry’s business. These codes can be used as a marketing strategy to promote one industry and is coming in handy in today’s business world.
- Debt ratios
- Liquidity ratios
- Profitability ratios
- Asset management ratios
- Cash Flow Indicator Ratios
- Market value ratios
- Financial analysis
- Business Terms
- Financial education
- International Financial Reporting Standards (EU)
- IFRS Interpretations (EU)
- Financial software
Most WantedFinancial Terms
- Most Important Financial Ratios
- Debt-to-Equity Ratio
- Financial Leverage
- Current Ratio
- Interest Coverage Ratio (ICR)
- Solvency Ratio
- Break-even Point
- Debt Service Coverage Ratio
- Receivable Turnover Ratio
- Return On Capital Employed (ROCE)
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