Essay, Research Paper: Financial Detective

1. Identification of the company being described
Company A: Manufacturer of toiletries, non-prescription drugs, and consumer and baby care products.
Analysis:
· Compared with Co. B, Co. A has a higher gross margin equivalent to 63.1 percent.
Company B: Manufacturer of pharmaceuticals and low-margin hospital supplies.
Analysis:
· Goodwill can be seen on the other assets portion of the balance sheet. Co. B has a significant amount of other assets (40.6 %).
· Compared to Co. A, gross profit is 36.0 percent.
Company C: Marketer of high quality washers, dryers, dishwashers and refrigerators in its own name.
Analysis:
· High quality can be associated with high sales price of goods. Co. C has a higher Sales / Assets ratio equal to 223.0 percent.
· Cost of good sold is lower (72.8%) as against (79.8%) which may explain that manufacturing and selling under one brand name has a lower manufacturing cost.
Company D: Marketer of the same products under 3 different brand names.
Analysis:
· The company has a higher cost of goods sold (79.8 %) which may explain that manufacturing and selling one product under 3 brand names would require higher cost of goods sold.
Company E: Manufacturer of large mainframe computers.
Analysis:
· This company offers financial services aside from the manufacture of mainframe computers. Receivables comprise 18.7 percent of total assets which is significant in financing type of business.
· Financial services reflect other income for the company in the form of interest income which is 2.7 percent of total revenues generated.
Company F: Manufacturer of supercomputer systems for scientific applications.
Analysis:
· Output of the units were relatively small but the price is highest in the industry. Cost of goods sold is only 35.7 percent gross margin is 64.3%.
· Because the supercomputers were used for research, R&D expense of Co. F is 15.8 % of sales.
Company G: Discount store - wholesaler
Analysis:
· Inventory is large – 51.7 percent which is typical of wholesaler of goods.
· Receivable is only 1.9%.
· Days’ Receivables is only 2.
Company H: Credit-based department store.
Analysis:
· Receivables is 34.7 %
· SG&A is 97.1% (all of it operating expenses) may explain the nature that it leases it properties being used.
· Days’ Receivables is 196.
Company I: Semiconductor company with the defense industry as its main client.
Analysis:
· Compared with Co. J, total current assets is only 50.9% as against 60.2% which represents that it is less financially conservative.
Company J: Semiconductor manufacturer with radios and television equipment as
its primary product specialization.
Analysis:
· Compared with Co. I, total current assets is 60.2%, 15.6 % of which is on cash & equivalents. This means that the company is financially conservative.
· Aside from semiconductor manufacturing, it is also involved in manufacturing of television and radio equipment. Which will explain the other income of 3.9%.
Company K: Operator of high quality hotels and motels.
Analysis:
· Long-term debt is considerably lower (21.6%) than Co. L (46.5%).
Company L: Largest food contractor in the country. Its financing is through off-balance sheet limited partnerships.
Analysis:
· Long-term debt is 46.5% which justifies that much of its hotel operations are financed by other parties on long-term basis.
· Long-term debt/equity is 308%.
Company M: Newspaper company that owns a number of small newspapers throughout the Midwest.
Analysis:
· Broadcasting is a secondary line of business that accounts for the other income percentage of 11.8 percent.
· Has significant amount of goodwill stemming from acquisitions. Other assets – 61.7%.
Company N: Large flagship newspaper that sells all over the country and the around the world.
Analysis:
· Other assets is lower – 25.2%.
· Because it is a big newspaper company that sells its product around the country and the world, its net properties, plant and equipment is significantly higher at 56.2%.
Company O: Trucking and freight-forwarding company
Analysis:
· The SG&A is high at 86.1% and is composed of purely operating expenses, which is typical for a freight forwarding company.
Company P: Railroad company.
Analysis:
· 20% of revenues was said to be derived from real estate business which will reflect on the company’s receivables – 18.7%
· Sales assets = 191% which reflects that it has diverse and high selling products like real estate.


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