The Financial Detective

PAPER We gestate that c on the squ atomic mo 18er I represents the littler Producer of printing papers and social club J represents the Worlds Largest Market of Paper. Being the publics largest paper maker indicates having a bigger inventory, more(prenominal)(prenominal) true assets (esp. since it owns timberland and several facilities), and gameer speak to of goods sold than other paper makers. The inventory for community J (10. 9) is large than the inventory for confederacy I (8. 8) the current assets for party J (32. 6) ar broad(prenominal)er than that for attach to I (27. 2) and the cost of goods sold for play along J (82. 9) is richly than that for companionship I (75. ). We to a fault expect that, as the worlds largest paper maker, their products leave alone move on the marketplace advance than a meeker producer of paper. Thus, Inventory Turnover should also be extravagantlyer. Here, beau monde J (7. 11) has a larger inventory turnover than Company I (6. 75). Receivables turnover, which tells how many times accounts receivables beat been collected in a given period, should be higher(prenominal) for the worlds largest paper federation than it would be for a sm tout ensemble producer of distinguishing characteristic paper. Company Js (11. 64) receivables turnover is higher than that for Company I (8. 68).The facts also utter that the worlds largest maker of paper has been rationalizing capacity by gag law inefficient mills, implementing cost-containment initiatives, and selling nonessential assets. This implies that the fel uttership would squander 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 small producer of paper has approximately of its product marketed down the stairs branded labels, that it would have a higher rate of Intangibles, such as trademarks, than the larger caller-out.Here, Company I (1 4. 6) has an intangibles value that is significantly higher than Company Js (1. 9) intangible value. 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 fiscal ratios and the notes attached, it is apparent that Company N is the rapidly growing arrange of upmarket discount stores while Company M is the firm known for its measly prices, breadth of merchandise and volume riented dodge. assetS Receivables Company M has abase receivables of 1. 4 compared to political party N with 17. 0 and this reason is to the fact that order N offers credit to qualified customer as a actor of merchandising dodging. Inventories Company M has higher inventories of 24. 5 compared to confederacy N with 16. 7 and this reason it attributed to the strategy companionship M adopts. Company M has a wide breadth of merchandise and volume oriented strategy metre to this high inventories on the balance sheet. Intangibles There is a 93. 3% contrast compared to company N with low intangibles. This reason is receivable to the operational strategy company M adopts. Company M possesses either or all of these following Goodwill, Partnership rights or Patent rights. Analyzing the information provided accurately, one or more of the of the aforementioned rights exit because for company M to sell around products at very low prices, there must be an exist kind of memorandum of understanding between the producers and company M. LIABILITIES &038 EQUITY Deferred Taxes Company M has deferred Taxes of 3. with company N having O. From the information of company M provided, it is manageable that the deferred tax is an evidence of capital gains that top executive have risen from the issue of divestments of several non-discount department-store argumentes. Debt in Current Liabilities Company M is 75. 4% high than comp any Ns Debt Current Liabilities. This can be as a effect of the lease contract entered by company M. Depending on the lease agreement Company M might have an delinquent payment for the lease for a period within a year. INCOME controversyDepreciation It is understandable wherefore company N has a high depreciation than company M and this is out-of-pocket to the reason that M is a lease copy therefore no depreciation is salaried for leasing take away a rental payment. There is an exception when the lease is a pay lease. Net Income Company N strategies pay off because shareholders of any company want to maximize their enthronization or returns. Company N is qualification almost double of company Ms bread profit, and also considering the fact that company N is making 85% of company M gross revenue. commercialise DATABeta Companies in the analogous industries usually have different betas, one of the reasons this can happen is the kind of financing or debt equity ratio. The h igher the debt equity ratio the higher the beta this shows why company N has a higher beta compared to company M that has a lower debt equity ratio. Dividend Payout Company M has a higher payout ratio of 31. 12%. Reason why company N might have a low payout ratio can be attributed to investment in future projects with positive NPV due to the rapidly growing chain of upscale discount stores.ASSET worry Receivables Turnover This shows the degree of actualisation in accounts receivables. Company N has a lower turnover rate, a lower rate implies that receivables are being held longer and the less promising they are to be collected. Also there is an opportunity cost of binder up funds in receivables for a long period of time. Company M is 29 times higher than company N. From the above analysis, it is patent that financial ratios of companies in same industries can never be the same but can only be similar.The kind of strategy and engineering science a company adopts tells a lot a bout differences in financial ratios. COMPUTERS We believe that Company E is the company focused exclusively on mail-order sales and Company F is the company that sells a highly differentiable line of products. In this industry one company focuses exclusively on mail-order sales of built-to-order PCs, including desktops, laptops, and note disks. Besides the company allows its customers to design, price and purchase through its weave site.In contrast the other company has a sell strategy intended to drive calling 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 transactions 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 description of the company with more retail stores.Another all important(p) financial data confirming this finding is the intangible data. From the Exhibit 1, the company E has a value of 0 in intangibles which is not impress due to its business orientation. Company E is an assembler of PC components construct 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 bundle 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 believe that company P is the diversified media company that generates most of its revenues through newspapers sold around the kingdom 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. We believe this because Company P has a larger amount of current assets (other and supply) and net fixed assets than CompanyO. Company P operates in not just the United States but it also operates in countries all around the world, which it heart and soul 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 world(prenominal) presence. This will result to a huge customer base 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 h ave a lot of customers and there can be delays 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 two companies are at par have the same ratios. This essence that there is an equal amount of goods and services available in the production line 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, increased 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 i s financed by debt. INCOME/EXPENSES NETINCOME Company O is almost likely to succeed more than company P in its operations because of its modify decision making and administration. feel closely at the net income figure of both companies, company O net income is higher than company P net income.EBIT AND NET do good 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 amend in this aspect because of the adopted business of decentralized decision making and administration, which led 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 are. The reason for this could be that company P may be trying to invest in a project that is preventing it from paying shareholders competent dividends BETA Company P has a higher value which means a higher expected 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 years smaller firms have performed better in terms of returns. Shareholders of company O are willing to pay more for the shares today in anticipation 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. LIQUIDITY electric current RATIO 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 liabilitie 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