Three unlabelled companies: X has an 85% gross margin and spends 20% of revenue on research; Y has a 22% gross margin and 90 days of inventory; Z has a 55% EBITDA margin, depreciation at 20% of revenue and heavy interest. Which industries are they in?

X reads as software, Y as a consumer durables maker, and Z as an infrastructure owner such as a telecom tower company. X's product costs almost nothing to deliver and its spending goes on research. Y makes or buys physical goods on thin margins and carries a season of stock. Z earns a high margin from a large, debt-funded asset base that depreciates slowly, which is how towers, toll roads and power lines look.

Read each statement for its unusual line, the one that would look odd in most businesses. A doctor does the same with blood tests: most numbers are normal, and one out-of-range reading narrows the diagnosis. Gross margin tells you what the product costs to make, and the biggest line below it tells you where the business spends to stay alive: research, stock or fixed assets.

Both fit an 85% gross margin with heavy research. The tie-breaker is selling and administration at 40% of revenue: software companies spend more on selling than on research, while drug companies spend more on research and hold inventory. You would confirm with the balance sheet: deferred revenue from customers paying upfront points to software, while stock of finished drugs and research partly capitalised points to pharmaceuticals. Commit to software, and name the test.

A 22% gross margin means Y adds little to what it buys, so it makes or assembles physical goods. Ninety days of stock is three months of cost of sales, about 19 rupees for every 100 of annual revenue sitting in warehouses. That fits a consumer durables maker building stock ahead of a season, such as air conditioners before summer. A grocer turns stock in weeks; a jeweller holds it for many months and would show far more than 90 days. The next line to ask for is receivable days: long credit to dealers confirms durables.

Depreciation of 20 on 100 of revenue implies a big asset base. If the assets last about 20 years, depreciation of 20 means roughly 400 of fixed assets per 100 of revenue, an asset turnover of only 0.25, and interest of 22 says most of it was borrowed. The 55% EBITDA margin is what lets the business carry that debt. Telecom towers, toll roads and power transmission all look like this. The runner-up is a hotel owner, but hotels rarely reach a 55% margin; a contract term or a tenancy ratio, if the interviewer has one, would settle it.