Financial Detectives

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UVA-F-1486

The Financial Detective, 2005

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THE FINANCIAL DETECTIVE, 2005

Financial characteristics of companies vary for many reasons. The two most prominent

drivers are industry economics and firm strategy.

Each industry has a financial norm around which companies within the industry tend to

operate. An airline, for example, would naturally be expected to have a high proportion of fixed

assets (airplanes), while a consulting firm would not. A steel manufacturer would be expected to

have a lower gross margin than a pharmaceutical manufacturer because commodities such as steel

are subject to strong price...