Case 7 The Financial Detective 2005
The Financial Detective 2005
Beer
Beer Company 1 is a “national brewer of mass-market consumer beers sold under a variety of brand names” (pg. 120). As one might expect, this national company has “an extensive network of breweries and distribution systems and owns some beer-related businesses” (pg. 120). It also owns several major theme parks.
Beer Company 2 is a brewer of “seasonal and year-round beers with smaller production volume and higher prices” that “outsources most of its brewing activity” (pg. 120). It is financially conservative, and has undergone a “major cost-savings initiative to counterbalance the recent surge in packaging and freight costs” (pg. 120).
Beer Company C has net fixed assets of 54.7% of total assets while Beer Company D’s net fixed assets were 16.0% of total assets, which leads me to believe Beer Company C is the national company because it owns a network of breweries and distribution centers, as well as beer-related businesses – while Beer Company D doesn’t own distribution centers, beer-related businesses or a number of breweries (they outsource most of their brewing).
Beer Company C’s long-term debt is 51.2% of its total liabilities, while Beer Company D’s long-term debt represents only 0.00% of its total liabilities. Carrying this much long-term debt also leads me to believe Beer Company C is the national company because it is this long-term debt that is paying for the net fixed assets.
The total debt to total asset ratio for Beer Company C is 51.19 while the ratio for Beer Company D is 0.00. The smaller debt to asset ratio means that Beer Company D carries less debt, or is more conservative, than Beer Company C. Beer Company D’s description was one of being financially conservative; therefore, it stands to reason that Beer Company D is the smaller brewer.
Inventory turnover for Beer Company C is 12.6 times, while Beer Company D’s inventory turnover rate is 7.44 times. The higher turnover rate tells me that Beer
Beer
Beer Company 1 is a “national brewer of mass-market consumer beers sold under a variety of brand names” (pg. 120). As one might expect, this national company has “an extensive network of breweries and distribution systems and owns some beer-related businesses” (pg. 120). It also owns several major theme parks.
Beer Company 2 is a brewer of “seasonal and year-round beers with smaller production volume and higher prices” that “outsources most of its brewing activity” (pg. 120). It is financially conservative, and has undergone a “major cost-savings initiative to counterbalance the recent surge in packaging and freight costs” (pg. 120).
Beer Company C has net fixed assets of 54.7% of total assets while Beer Company D’s net fixed assets were 16.0% of total assets, which leads me to believe Beer Company C is the national company because it owns a network of breweries and distribution centers, as well as beer-related businesses – while Beer Company D doesn’t own distribution centers, beer-related businesses or a number of breweries (they outsource most of their brewing).
Beer Company C’s long-term debt is 51.2% of its total liabilities, while Beer Company D’s long-term debt represents only 0.00% of its total liabilities. Carrying this much long-term debt also leads me to believe Beer Company C is the national company because it is this long-term debt that is paying for the net fixed assets.
The total debt to total asset ratio for Beer Company C is 51.19 while the ratio for Beer Company D is 0.00. The smaller debt to asset ratio means that Beer Company D carries less debt, or is more conservative, than Beer Company C. Beer Company D’s description was one of being financially conservative; therefore, it stands to reason that Beer Company D is the smaller brewer.
Inventory turnover for Beer Company C is 12.6 times, while Beer Company D’s inventory turnover rate is 7.44 times. The higher turnover rate tells me that Beer