The Financial Detective

written report We trust that go with I represents the Smaller Producer of printing motif and society J represents the Worlds Largest Market of Paper. Being the initiations largest paper churchman indicates having a larger inventory, to a greater extent authentic pluss (esp. since it owns timberland and several facilities), and high(prenominal)(prenominal) cost of goods sold than other paper makers. The inventory for companion J (10. 9) is larger than the inventory for companion I (8. 8) the current assets for companion J (32. 6) be higher than that for come with I (27. 2) and the cost of goods sold for Company J (82. 9) is higher than that for Company I (75. ). We also expect that, as the orbs largest paper maker, their products impart move on the marketplaceplace better than a diminisheder maker of paper. Thus, Inventory Turnover should also be higher. Here, Company J (7. 11) has a larger inventory turnover than Company I (6. 75). Receivables turnover, which te lls how many quantify accounts receivables have been collected in a given period, should be higher for the humans largest paper guild than it would be for a gloomy manufacturer of specialty paper. Company Js (11. 64) receivables turnover is higher than that for Company I (8. 68).The facts also state that the worlds largest maker of paper has been symmetrynalizing capacity by closing inefficient mills, implementing cost-containment initiatives, and selling attendant assets. This implies that the go with would have a larger asset turnover ratio than other paper companies. Company J (1. 20) has a larger asset turnover ratio than Company I (. 73). It is probable that since the scummy producer of paper has to the highest degree of its product marketed under branded labels, that it would have a higher shelter of Intangibles, such as trademarks, than the larger caller-out.Here, Company I (14. 6) has an intangible assets nurse that is signifi standtly higher than Company Js ( 1. 9) intangible care for. Based on the above analysis, we believe that Company I is the small producer of printing, writing and technical specialty papers, and that Company J is the worlds largest maker of paper, paperboard, and packaging. RETAIL From the financial ratios and the notes attached, it is appargonnt that Company N is the rapidly growing chain of upscale discount stores while Company M is the firm known for its slump prices, breadth of product and intensity riented strategy. additionS Receivables Company M has pocket-sizeder receivables of 1. 4 compared to confederacy N with 17. 0 and this reason is to the fact that party N offers credit to qualified client as a means of marketing strategy. Inventories Company M has higher inventories of 24. 5 compared to fellowship N with 16. 7 and this reason it attributed to the strategy family M adopts. Company M has a wide breadth of merchandise and volume oriented strategy beat to this high inventories on the equipoise sheet. Intangibles in that respect is a 93. 3% difference compared to connection N with misfortunate intangibles. This reason is due to the operational strategy company M adopts. Company M possesses either or all of these following Good testament, Partnership rights or Patent rights. Analyzing the information provided accurately, one or more of the of the aforementioned rights way out because for company M to sell some products at very low prices, in that respect must be an existing kind of memorandum of accord between the producers and company M. LIABILITIES & EQUITY Deferred Taxes Company M has deferred Taxes of 3. with company N having O. From the information of company M provided, it is possible that the deferred tax is an evidence of swell gains that might have risen from the proceeds of divestments of several non-discount department-store businesses. Debt in up-to-the-minute Liabilities Company M is 75. 4% high than company Ns Debt Current Liabilities. This keister b e as a import of the pack contract entered by company M. Depending on the lease agreement Company M might have an overdue payment for the lease for a period within a year. INCOME STATEMENTDepreciation It is understandable wherefore company N has a high depreciation than company M and this is due to the reason that M is a lease copy wherefore no depreciation is paid for leasing except a rental payment. There is an exception when the lease is a finance lease. Net Income Company N strategies pay off because shareholders of any company want to maximize their investment or returns. Company N is making virtually double of company Ms realise profit, and also considering the fact that company N is making 85% of company M sales. MARKET DATA important Companies in the same(p) industries usually have different betas, one of the reasons this can happen is the kind of financing or debt right ratio. The higher the debt comeliness ratio the higher the beta this shows why company N has a h igher beta compared to company M that has a lower debt equity ratio. Dividend Payout Company M has a higher payout ratio of 31. 12%. occasion why company N might have a low payout ratio can be attributed to investment in future projects with irresponsible NPV due to the rapidly growing chain of upscale discount stores.ASSET MANAGEMENT Receivables Turnover This shows the degree of realization in accounts receivables. Company N has a lower turnover rate, a lower rate implies that receivables are being held longer and the less likely they are to be collected. overly there is an opportunity cost of tying up funds in receivables for a long period of time. Company M is 29 generation higher than company N. From the above analysis, it is obvious that financial ratios of companies in same industries can never be the same but can precisely be similar.The kind of strategy and technology a company adopts tells a lot about differences in financial ratios. COMPUTERS We believe that Company E is the company focused only when on mail-order sales and Company F is the company that sells a highly differentiable line of products. In this persistence one company focuses exclusively on mail-order sales of built-to-order PCs, including desktops, laptops, and note sacred scriptures. Besides the company allows its customers to design, price and purchase through its web site.In contrast the other company has a sell strategy intended to drive employment through its stores. With regards to the SGA expense, as well as depreciation, we can assume that the company resulting with the highest values is of course the one having more stores compared to the one conducting most of its proceedings on an online basis. In this case the high value of 23. 1 in selling, general and administrative expense and the high value of 1. 8 in depreciation belonging to company F fit the verbal description of the company with more retail stores.Another important financial data verificatory this finding is the intangible data. From the Exhibit 1, the company E has a value of 0 in intangibles which is not surprising due to its business orientation. Company E is an assembler of PC components manufactured by its suppliers, therefore not having any claim of ownership of intangibles. On the other hand, the intangible value of 1. 2 of company F is due to the fact that company F has a variety of proprietary software products. In addition, the price to book ratio is lower for Company F (5. 3) than for Company E (17. 46). This is in line with our analysis because the facts state that the retail store has a declining market share, so the lower price to book ration would match the description for a company with a lower market share. Based on our analysis above, we believe that company E is the company focusing exclusively on mail-order sales of built-to-order PCs, and company F is the company having an aggressive retail strategy intended to drive traffic through its stores. NEWSPAPERSWe beli eve that company P is the modify media company that generates most of its revenues through newspapers sold roughly the country and around the world and that Company O is the firm that owns a subprogram of newspapers in relatively small communities throughout the Midwest and southwest. We believe this because Company P has a larger amount of current assets (other and total) and authorize fixed assets than CompanyO. Company P operates in not just the linked States but it also operates in countries all around the world, which it means it will have a lot of assets than Company O.FINANCIAL STATEMENT analysis ASSETS RECEIVABLESCompany P is higher than Company O and this can be attributed to the fact that company P has an international social movement. This will result to a huge customer immoral compared to Company O. higher customer base would yield more credit sales. result to its revenues all over the world in the sense that it will have a lot of customers and there can be delay s in monetary transactions. Since its business has international presence it can adopt a business strategy of offering a high volume of credit sales to customers.INVENTORIES The cardinal companies are at par have the same ratios. This means that there is an equal amount of goods and services available in the stock of both companies. INTANGIBLES Company O has a higher intangibles value than company P because although company O is a smaller company it has acquired a Customer good will, employee morale, increase bureaucracy, and aesthetic appeal than company P which is a more diversified media company. DEBT MANAGEMENT TOTAL DEBT/TOTAL ASSETCompany P has a higher ratio compared to O.Most of companys total debt are short term financed and this is to say that in the next period, the company can have a lower total debt to total asset ratio compared to company O. Based on this current standing it shows that 26. 81% of companys P asset is financed by debt. INCOME/EXPENSES NETINCOME Company O is almost likely to succeed more than company P in its operations because of its decentralized decision making and administration. Looking closely at the net income figure of both companies, company O net income is higher than company P net income.EBIT AND NET PROFIT MARGIN Company O has a higher EBIT because the company is more profitable than company P. Company P has a lower net profit margin value than company O which indicates a low margin of safety, higher risk, and that a decline in sales will erase profits and result in a net loss. Company O is better in this aspect because of the adopted business of decentralized decision making and administration, which light-emitting diode to better success in its operations. MARKET DATADIVIDEND PAYOUT Company O has a higher ratio than company P which means it has a higher percentage of earnings paid to its shareholders in dividends. The shareholders of company O are benefiting better from the company than the shareholders of company P a re. The reason for this could be that company P may be trying to invest in a project that is preventing it from paying shareholders adequate dividends BETA Company P has a higher value which means a higher expect return of a stock or portfolio which is correlated to the return of the financial market as a whole than company O.PRICE/EARNING ratio Company O has a higher ratio than P. Over the days smaller firms have performed better in terms of returns. Shareholders of company O are willing to pay more for the shares today in outlook of great prospects of returns in the future. ASSET MANAGEMENT RECEIVABLES TURNOVER Company O has a higher turnover value because it has a higher number of number of times that account receivables are collected during in a period than company P. LIQUIDITYCURRENT dimension AND QUICK RATIO Company O has a better and higher value of the two ratios than company P so it means that company O has more current assets and cash equivalents to cover its liabiliti e when due than company P. Based on our analysis above, we believe that company P is the diversified media company that generates most of its revenues through newspapers sold around the country and around the world and that Company O is the firm that owns a number of newspapers in relatively small communities throughout the Midwest and Southwest