Submitted by: Submitted by scuhans
Views: 892
Words: 576
Pages: 3
Category: Business and Industry
Date Submitted: 11/30/2011 10:44 PM
Background information:
The objective of this case is to analyze the common-sized financial data and ratios of 8 pairs of companies in different industries. By analyzing numbers in financial statements, we hope to have better image about their industry economics and firm strategies.
Analysis:
Health products
1. Company A has higher receivables and higher inventories, so it might not distribute its products through a direct sales force, instead it might sell its products to retailers and distributors.
2. Company B has minority interests items in its income statement, so it may owns shares in joint ventures.
As a result, Company A manufactures nonprescription drugs sold to retailer, while Company B distributes prescription drugs to doctors and hospitals.
Household Appliances
1. Company D has higher receivables and lower receivable turnover, that means it might sell its products through a retailers rather than sell under its brand name.
Therefore, Company D is the one has private-label appliances on contract with retailer and Company C's strategy is to be the quality leader and charges higher price.
Computers
1. Company F has lower gross profit, because it keeps costs low and charges low prices.
2. Company F has lower inventories and higher receivable turnover, because it's a mail-order seller, thus normally it gets paid quickly (or immediately) then customize the orders.
Hence, Company F is the mail-order seller and Company E sells through dealers targeting on business market.
Retailing
1. Company G has high receivables which is more than 60% of total assets, so it might sells largely on credit.
2. Company H has lower gross profit and high asset turnover, which is 2.3 times of Company G's asset turnover, we might indicate that the strategy of Company H is to sell underpriced to enhance market share and sales volume.
Thus, Company G is the large, national chain of department stores, and Company H is the home-improvement store chain....