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Course Guide: Transfer Pricing: Industry & Financial Ratios

Instructor: Dr. Bob Rogers
Guest Speaker: Joshua Been
Semester: Spring 2014

Industry Resources & Financial Ratios

Welcome to the Industry and Financial Ratios page.  This part of the guide provides:

  • Basic explanation of SIC and NAICS
  • Databases permitting  NAICS or SIC searching
  • Locate a NAICS industry code
  • Use NAICS code to locate company & industry information.
    • Mergent Online -- Company & Financial ratios report
    • IBISWorld -- Industry

The Standard Industrical Classification (SIC) and the North American Industry Classification System (NAICS) codes are used to identify the type of business in which a company is engaged. Many companies have more than one industry code. A variety of agencies and business sources use these codes to gather statatics and group like companies.


North American Industry Classification System (NAICS)

NAICS was first released in 1997, the system uses 6 digits.  This allows for a more detailed classification system.  NAICS is releasing updates to the classification system during 2012.  Some codes will be consolidated while others will be moved to another code.

 Coffee Shop with limited service - Example722515

         1st – 2 digits represent industry sector - - 72=Accommodation and Food Services

         3rd digit represents a sub sector of the industry - - 722=Food Services and Drinking Places

         4th digit identifies the industry group - - 7225=Restaurants and Other Eating Places

         5th digit identifies the NAICS industry  - - 72251=Restaurancts and Other Eating Places

         6th digit recognizes the national industry (US) - - 722515=Snacks & Nonalcoholic Beverage Bars


Why is it useful to know these codes? 
      Many resources permit either NAICS or SIC or searching:  Mergent Online, IBISWorld, ReferenceUSA and a number
      of other databases.


Standard Industrial Classification (SIC)

SIC is a 4 digit system used to define & classify businesses by their type of activity.  SIC was replaced in 1997 by North American Industry Classification System (NAICS).  Some business and resources still use SIC information.

1st   2 digits indicate the general industry group 

              58  (Eating & Drinking Places)

              59   (Miscellaneous Retail)

2nd  2 digits specify a more focused industry segment  12 or 63

              5812 – Coffee Shops

              5963 – Coffee Cart-Food Service – Retail

NAICS -- Locating a industry code using NAICS

1.   Use the NAICS search form located on the website.

2.   Enter a keyword in the search box.  (I want to know the NAICS industry code for “gears”.)

3.   Search Results – Review the results and decide which NAICS code comes closest to your keyword.  - In this example, I’m looking for “power transmission suppliers -- Click the 423849 for a definition about the NAICS code.

4.   423840 Industrial Supplies Merchant Wholesalers --  Gears Merchant Wholesalers


5.   Next, write down the NAICS code for later use.
6.  The NAICS code can be used in the Mergent Online and IBISWorld databases to locate gasket wholesale companies and industry information.

Mergent Online (



IBISWorld  (

1. In the Search Box, located in the center of the page, type in the NAICS code -- 423840

2.  Search Results are sorted by Country and Report Type. 

3.  Select the Report that is relevant.

4.  42384 Industry Report - Industrial Supplies Wholesaling in the US -- (iExpert Report)

  • Sections include: Industry Outlook, Products & Market, Major Companies, and Operating Conditions
  • Report can be downloaded in a number of formats.

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