The Financial Detective, 2005

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timer Asked: Mar 23rd, 2017
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Question Description

The case is in attachment which is CASE 7: The Financial Detective, 2005

In the Case Report, you must relate the description to the company (A,B,C,etc.) and list and discuss the ratios that justify your choice. You will need more than one ratio to support your choice. The chosen ratio must be relevant to the industry.

Conditions; the case report I recommend you use the following general format.

1.Introduction: (a) to the case (b) the problem or situation (c) the people involved (when applicable). This should be a few paragraphs (as needed).

2.Analysis: Most cases will require both quantitative and qualitative analysis. You must show step by step, all formulas used, and all calculations performed. If you like, some of the details can be moved to the appendix. Spreadsheets should be uploaded as separate documents. It is not enough just to do the number crunching. You must explain and interpret all your analysis.

3.Conclusions: Some cases require you to make recommendations. You will have to justify them with the appropriate arguments and calculations. You can also write here any additional things you recommend the company should do or look at.

The work must be your original work and must be 6 complete pages without any references

more information

Comparisons among industries

This case is primarily about the effects of managerial strategy on financial ratios, but it also affords several insights about the effect of industry differences on financial ratios. For instance, differences in asset intensity can produce dramatically different asset structures (for example, compare the percentages of inventory and net property, plant, and equipment [PP&E] for paper products with computers). The rate of technological change can manifest itself in several ways including the reinvestment rate required to stay competitive (for example, compare dividend-payout ratios for newspapers, and books and music). Industry structure is believed to affect the profitability through the pricing power of the firm. The newspaper industry can be characterized as locally oligopolistic (in some areas, however, monopolistic); the discount retail industry is much more competitive in structure. The gross profit margins of the two industries differ substantially. The general insight is that, in conducting the financial analysis of a firm, one must understand the nature of the industry.

Some observations about the art of ratio analysis:

Ratio analysis is only as good as the financial statements that underlie it. In particular, one needs to understand the accounting policies that generated the statements. The various treatments of goodwill, lease obligations, and equity interests in subsidiaries appear in the discussions. In addition, the absence of data can frustrate ratio analysis.

Frameworks such as the DuPont system of ratios and categories of ratios (activity, profitability, liquidity, and leverage) are useful organizing schemes for an analysis.

Naïve ratio analysis can absorb considerable time, as one seeks to find a pattern (any pattern) in the blizzard of numbers. Effort is economized by thinking first about the underlying business that generated the ratios.

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20170323195310finance_paper by Dari Donner FILE 20170323195310FINANCE_PAPER.DOC (93.5K) T IME SUBMIT T ED 23-MAR-2017 02:55PM WORD COUNT 1187 SUBMISSION ID 742498695 CHARACT ER COUNT 6952 20170323195310finance_paper ORIGINALITY REPORT 99 7 0 99 % % % % SIMILARIT Y INDEX INT ERNET SOURCES PUBLICAT IONS ST UDENT PAPERS PRIMARY SOURCES 1 99 Submitted to St. Xavier University % St udent Paper EXCLUDE QUOT ES OFF EXCLUDE BIBLIOGRAPHY ON EXCLUDE MAT CHES OFF ...
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Tutor Answer

professor22
School: Purdue University

Attached.

Running head: FINANCIAL ANALYSIS

Title:
Course:
Course code:
Student’s name:
Instructor’s name:
Date:

FINANCIAL ANALYSIS 2

Introduction
Different companies have different financial characteristics because of numerous reasons. There
are however two key agents which include: the economics of an industry and strategy used by a
firm. All companies within a particular industry operate within a particular financial standard.
For instance, it is probable that a steel firm will have a lower gross margin than a pharmaceutical
firm reason being, steel products tend to be liable to high price competition whereas
differentiated pharmaceutical drugs are not restricted by price. Average financial statements will
differ from one industry to another due to the distinctive features of every industry.
Also, the different financial characteristics within industries can be attributed to the various
strategies that are used by different industries. Managers select strategies that will enable their
companies to gain competitive advantage by gaining a favorable market position within the
specified industry. Strategies normally involve making of crucial decisions on how a product is
manufactured, marketed and lastly on how the firm will be funded. Companies within the same
industry apply totally different strategies which tend to generate conspicuous variations in their
financial outcomes.
The key aim of this project is to make comparisons among industries based on the results that
managerial strategies has on financial ratios. It will also include a number of approaches
concerning the effect of industry disparities on financial ratios.
People involved
Case 7 presents to students pair of contributors in various industries. Both the strategies they
apply and market position they occupy gives a hint to their projected financial situation and
performance. The student is given the task of corresponding the financial information provided

FINANCIAL ANALYSIS 3

with the firm being described and furthermore expound on the variations in the industries’
financial results.
Analysis
Financial information is crucial when it comes to making important decisions in any firm or
industry based on financial situation and performance. The financial data provided was analyzed
by comparing different financial ratios from the data of different industries against each other.
The ratios that were used in conduc...

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Anonymous
Excellent job

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