Summary of Case 7: The Financial Detective
For the Health Products industry, there were several data figures that really stood out when Companies A and B were compared. It is shown why Company B is the “world’s largest prescription pharmaceutical company” and why Company A is not. The figures used to support this claim are: Intangibles, Cost of Goods Sold, Inventories, and Inventory Turnover.
The first company mentioned that they are, “supported by a robust research and development budget,” so one could conclude that its intangibles would be higher than the other company. When looking at the figure, Company B has double the amount of Intangibles that Company A has. Another key ...view middle of the document...
” Given the financial data of the two companies I’ve found that Company C is the company mentioned first in the paragraph. The figures used to support this claim are: Net Fixed Assets, Fixed Asset Turnover, and Cash and Short Term Investments.
The first company mentioned has, “an extensive network of breweries” and “owns a number of beer related businesses, such as snack and aluminum container manufacturing, and several major theme parks.” With this information, it can be concluded that to operate such a diverse business Company C would also require more buildings, equipment, and other necessary assets. When looking at Net Fixed Assets it shows to be more than three times as much as the second company mentioned. Since there is a greater amount of NFA in the first company, it can be assumed the Fixed Assets Turnover will be much lower than the second company. Company D holds most of their assets in Cash and Short Term Investments, which is indicated by the second company who described themselves as “financially conservative.” Companies who are financially conservative tend to take less risk and would probably be more prone to keeping its investments in cash and short-term investments. Company C if the mass-market brewer and Company D is the smaller “financially conservative” brewer.
While comparing the two computer companies I noticed key differences in the data. One company is focused “exclusively on mail-order sales of built-to-order PCs, including desktops, laptops, notebooks, servers, workstations, printers, and handheld devices.” The other company sells many different product lines of computers, consumer electronic devices, etc. Company E represents the customizable PCs and Company F represents the retail firm. The figures used to support this claim are: Accounts Payable, Accounts Receivable, Current Liabilities, Current Ratio, SG&A Expenses.
I found several differences when comparing data for book and music retailers companies G and H. The first company is described as focusing on selling mainly to retail stores and is the leader in traditional book retailing, while the other company “sells books, music, and videos solely through its internet website,” as well as electronics and general merchandise. Company H has three times more the net fixed assets than Company G which means Company H had to invest quite a bit more to remain the traditional book sales leader. Company H has such a wide retail-store presence, that their inventory is more than double than that of Company G. The inventory turnover ratio for Company H is a low 2.42 which means they sell and restock their inventory 2.42 each year compared this to Company G’s much higher inventory turnover of 13.56. I’ve concluded that Company H is the traditional leader in retail bookstores and Company G is the online focused firm.
The first paper products company is a vertically integrated company that owns timberland and numerous lumber, paper,...