Financial Detective

Financial Detective: Comparing Companies Based on Relative Financial Data

Health Products:

Company A is the manufacturer of a broad line of name-brand toiletries and nonprescription drugs. This company produces a wide variety of different products and therefore needs more equipment to keep up with production. On the balance sheet, Company A has 19.6% net fixed assets which is more than Company B by 4.7%, proving that Company A must be using more equipment for production.

This means that Company B must be the producer of pharmaceuticals and hospital supplies. Additional evidence of this is that Company B records 46.1% intangibles, which would explain the significant research and development budget.

Beer:

Company C is a national brewer of mass-market consumer beers. Net fixed assets for C is significantly higher than D, which can be attributed to the several breweries, distribution centers, and manufacturing companies that Company C owns. Intangibles are also higher for C than D, which is indicative of the many trademarks and copyrights under which the company sells its beer.

Company D is the producer of seasonal and year-round beers at smaller volumes. This company is described to have recently undergone a major cost-savings initiative, so they should have more cash and short-term investment. Company D has recorded more cash and short-term investments than Company C by 54.2% (C recorded 1.4% and D recorded 55.6%). Furthermore, Company D records zero long-term debt, which can be a sign of the firm being financially conservative.

Computers:

Company E is a mail-order computer company focused on built-to-order PCs. Since this company assembles PC components manufactured by different suppliers, it is likely that the firm owes money to these suppliers and consequently has a higher accounts payable. On the balance sheet, Company E records a 38.3% accounts payable versus only 18% for Company F. Additionally, Company E has a significantly higher amount under...