Summary of Case 7: the Financial Detective

Summary of Case 7: The Financial Detective

For the Health Products industry, there were several data figures that really stood out when Companies A and B were compared. It is shown why Company B is the “world’s largest prescription pharmaceutical company” and why Company A is not. The figures used to support this claim are: Intangibles, Cost of Goods Sold, Inventories, and Inventory Turnover.

The first company mentioned that they are, “supported by a robust research and development budget,” so one could conclude that its intangibles would be higher than the other company. When looking at the figure, Company B has double the amount of Intangibles that Company A has. Another key difference is in Cost of Goods Sold (COGS). The second company mentioned that it, “manufactures and mass markets a broad line of pharmaceutical products,” so it can be concluded that their COGS might be higher than that of a company that does more licensing of products. When looking at the figure, Company A more than doubles Company B in the COGS category. When comparing the Inventory Turnover, Company B’s is three times less than that of Company A because Company B has significantly more inventories and product lines. The items that Company B markets are more likely to be items for everyday use available to mass markets over the counter whereas Company A is marketing towards an individual consumer when developing and distributing their pharmaceuticals. With the financial data and ratios provided, it can be concluded that Company B is the company mentioned in the first paragraph. This is confirmed by the high amount of Intangibles, low COGs, and low Inventory Turnover.

The companies mentioned in the Beer industry have a huge variance between one another. One company is a large manufacturer with investments in other types of businesses and strategies, while the other “produces seasonal and year round beers with smaller production volume and higher prices.” Given...