The Financial Detective 2005

The m 1tary Detective 2005 Introduction Each patience is distinctive. One might be peculiar in its mellow placed assets opposite would be differentiated of its increasing intangible asset assets and many former(a) financial footprints that every(prenominal)(prenominal) industry leaves on its balance sheet. Nonetheless, industries ar distinguished yet to a greater extent than(prenominal) fingers of one heap are not the same as said. Businesses in the same industry crapper be characterized differently according to their strategic plan and capital structure. The avocation scale highlighted some characteristics of different industries and different craftes deep down those industries.From pharmaceuticals to music and maintains, those differences, supported by numerical financial data, are explained in the come uping section. Books & Music General information provided social club 1 1. Selling through with(predicate) a vast retail-store presence 2. Traditional book re tailing 3. Online presence and owns publishing stamp Company 2 1. Sells books, music, videos solely through the internet website 2. Three quarters of the sales are media 3. Sells electronics and other merchandise 4. latterly became moolahable 5.Followed a strategy of acquiring retailed online business lately Assessing the provided information round the two companies and look deeply at some of the financial data, it was reason out that alliance 1 is designated by the earn H and keep attach to 2 is designated by the earn G in Exhibit 1 (see appendix 1). Investigating the financial data, it was appoint that Company 1 (H) had a higher(prenominal) inventories visor of 38. 6 this supports the feature that it is a conventional book store that requisite to keep book inventories at all times to maintain its retail presence. This is further seen in its inventory turnover, is has a glare turnover of 2. 2x this reflects the nature of the connection which traditional book r etailer that experience muffled turnover. Moreover, high society 1 (H) has an 11. 1 in intangible assets, again this reflects the companies intangible assets such as publishing imprints. Also, companionship 1 (H) owns about 24. 4 in fixed assets as a results of its vast retail network. For caller 2 (G), inventory banknote is practically light than company one (14. 8) this reflects the concomitant that company 2 is online found business that sells virtuallyly digital intersection points such as media along with few other public electronics and merchandise.Thus, its inventory turnover is much higher (13. 56x) correspondent to the nature of most of the sold product (digital media) that are exceedingly demanded and easily accessible. Regarding its fixed assets account, company 2 (b) has lower fixed assets of 7. 6 this chiefly reflects the activities related to electronics and other merchandise that in all probability requires some fixed assets, but for its E-commerce, i t take minimum- none fixed assets. Considering the type of this business (online based) it was spy that its receivables account is very minimal compared to company 1.This is probably due to the fact that online products are delivered upon payment, thus it is rare to purchase music on credit. Assessing some of the income statements components, derogation is recognized to be low (1. 1) this is exceedingly related to its low fixed assets. eventually but not least, SG& A expenses of 16. 9 is lower than company 1 , this is transparent because company 1 depends on a network of retailers that impose higher general and administrative expenses while company 2 depends solely on its o0nline channel. Finally, net profit of 8. 5 (which is higher than company 1) indicates the mentioned recent profitability.Newspapers Information provided Company 1 1. have-to doe with largely on one product 2. Fierce competition 3. Recently reinforced a large office construct for its headquarters. 4. int ernational Company 2 1. Owns a second of topical anaesthetic newspapers 2. Has a earthshaking amount of goodwill 3. Recent acquisitions 4. decentralize decision making and administ ration winning a closer look to the provided data, it was concluded that company 1 is designated by letter P and company 2 is designated by letter O (see Exhibit 1) this extract was based on a number of factors company 1 (P) have more receivables ( 9. ) than company 2 O, this is due to the fact that company 1 (P) operates on a large, international scale than company 2, this larger customer base requires better and more receivable terms. Whereas company 2 , which operates on a smaller local take has lower receivables of 4. 6. Company 1 (P) has near the double in fixed assets account t in company 2 (o) (34. 6, 14. 1) explaining the new purchase of the headquarter building by company (p). Assessing the intangibles account of both companies, it was noticed that company 2 (O) enjoys a high level of go odwill (76. ) while company 1 (P) has far less intangibles of 37. 1. Evaluating companys 1 (p) focused and centralized strategy of producing and distributing one newspaper internationally, it was state that this focus led to a rock-bottom cost of goods sold (cost/ unit is inexpensive) this is attest in the lower COGS of 40. 5 compared to 49. 7 in company 2 (o). moreover, companys 1 (P) Debt/ asset ratio is higher than company 2 (O) ( 26. 81 compared to 15. 2) this indicated that it is more cost efficient for company 1 that operates internationally to finance its strategy implementation by using more debt than equity. This boosted the ROE of company 1 to founder 20. 89 relative to a lower ROE of company 2 (9. 86) which follow a more conservative finance mix. As a final point, looking at the SG&A expenses, it was observed that company 1 (P) has higher admin expenses due to its strategy of operating internationally while company 2 enjoyed less Admin expenses due to its local strat egy ( 39. 7 compared to 23 ).