The Financial Detective 2005
[The Financial Detective 2005
Introduction
Each industry is distinctive. One might be unique in its high fixed assets; other would be differentiated of its increasing intangible assets and many other financial footprints that each industry leaves on its balance sheet. Nonetheless, industries are distinguished furthermore; fingers of one hand are not the same as said. Businesses in the same industry can be characterized differently according to their strategic plan and capital structure. The following case highlighted some characteristics of different industries and different businesses within those industries. From pharmaceuticals to music and books, those differences, supported by numerical financial data, are explained in the following section.
Books & Music
General information provided:
Company 1 1. Selling through a vast retail-store presence 2. Traditional book retailing 3. Online presence and owns publishing imprint
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. Recently became profitable 5. Followed a strategy of acquiring retailed online business recently
Assessing the provided information about the two companies and looking deeply at some of the financial data, it was concluded that company 1 is designated by the letter H and company 2 is designated by the letter G in Exhibit 1 (see appendix 1). Investigating the financial data, it was found that Company 1 (H) had a higher inventories account of 38.6 this supports the fact that it is a traditional book store that needed to keep book inventories at all times to maintain its retail presence. This is further seen in its inventory turnover, is has a lower turnover of 2.42x this reflects the nature of the company which traditional book retailer that experience slow turnover. Moreover, company 1 (H) has an 11.1 in intangible assets, again this
Introduction
Each industry is distinctive. One might be unique in its high fixed assets; other would be differentiated of its increasing intangible assets and many other financial footprints that each industry leaves on its balance sheet. Nonetheless, industries are distinguished furthermore; fingers of one hand are not the same as said. Businesses in the same industry can be characterized differently according to their strategic plan and capital structure. The following case highlighted some characteristics of different industries and different businesses within those industries. From pharmaceuticals to music and books, those differences, supported by numerical financial data, are explained in the following section.
Books & Music
General information provided:
Company 1 1. Selling through a vast retail-store presence 2. Traditional book retailing 3. Online presence and owns publishing imprint
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. Recently became profitable 5. Followed a strategy of acquiring retailed online business recently
Assessing the provided information about the two companies and looking deeply at some of the financial data, it was concluded that company 1 is designated by the letter H and company 2 is designated by the letter G in Exhibit 1 (see appendix 1). Investigating the financial data, it was found that Company 1 (H) had a higher inventories account of 38.6 this supports the fact that it is a traditional book store that needed to keep book inventories at all times to maintain its retail presence. This is further seen in its inventory turnover, is has a lower turnover of 2.42x this reflects the nature of the company which traditional book retailer that experience slow turnover. Moreover, company 1 (H) has an 11.1 in intangible assets, again this