The Financial Detective, 1996
INTRODUCTION
The Financial Detective, 1996 is a case study that tests one's financial analytical ability. Given the company's description of its strategic and operating profile in a particular industry, the analysts should examine and match a particular set of common size financial data and ratios to a company's description.
In short, the financial practitioner must exercise due care in examining the details and fine prints of the company's strategic and operating description, employing the lesson learned of the fundamental theory of finance of a company. In particular, a good grasp of the application of various financial ratios would help in the analysis and in matching of the strategic and operating description against the common size financial data and ratios.
PROBLEM STATEMENT
For each of the 8 industries, two companies, with dissimilar operation and strategy, are described. Included in the given are the common-size financial data and ratios of two companies for each industry. A particular company will be matched or identified based on the given description of its operation and strategy vis-à-vis the given set of common size financial data and ratios, or vice-versa.
Explain the differences in financial results across industries.
FRAMEWORK OF ANALYSIS
The analysis takes the following process:
1. Analysis of the common-size financial data that showed significant differences between companies for each of the 8 industries, as shown in Annex A.
2. Identify from the operating and strategic description of the company such characteristics and features that markedly distinguished one from the other, as shown in Annex B.
3. Perform cross-referencing and analysis between the identified financial data that showed significant differences between companies against the differences in the operation and strategic description.
ANALYSIS
Health Products
In terms of percentage of total current assets to total assets, Company A (44.4%) is higher than Company B (28.7%).
The Financial Detective, 1996 is a case study that tests one's financial analytical ability. Given the company's description of its strategic and operating profile in a particular industry, the analysts should examine and match a particular set of common size financial data and ratios to a company's description.
In short, the financial practitioner must exercise due care in examining the details and fine prints of the company's strategic and operating description, employing the lesson learned of the fundamental theory of finance of a company. In particular, a good grasp of the application of various financial ratios would help in the analysis and in matching of the strategic and operating description against the common size financial data and ratios.
PROBLEM STATEMENT
For each of the 8 industries, two companies, with dissimilar operation and strategy, are described. Included in the given are the common-size financial data and ratios of two companies for each industry. A particular company will be matched or identified based on the given description of its operation and strategy vis-à-vis the given set of common size financial data and ratios, or vice-versa.
Explain the differences in financial results across industries.
FRAMEWORK OF ANALYSIS
The analysis takes the following process:
1. Analysis of the common-size financial data that showed significant differences between companies for each of the 8 industries, as shown in Annex A.
2. Identify from the operating and strategic description of the company such characteristics and features that markedly distinguished one from the other, as shown in Annex B.
3. Perform cross-referencing and analysis between the identified financial data that showed significant differences between companies against the differences in the operation and strategic description.
ANALYSIS
Health Products
In terms of percentage of total current assets to total assets, Company A (44.4%) is higher than Company B (28.7%).