Case 6: the Financial Detective

The Financial Detective, 2005 |

|

|

Health Products:

This situation deals exclusively with companies that sell health products. Each organization has different bases of business strategies as well as sells different types of products. The first organization is the world’s largest prescription-pharmaceutical company that is supported by robust research and development budget. In the recent years, this company has divested several of its non-pharmaceutical business and come to be seen as the partner of choice for licensing deals with other pharmaceutical and biotechnology firms. I think this company, in detail, is company B according to the financial statements given within the case. The first difference that helps support this theory is that Company B has greater investments and advances, which is supported by the “robust research and development budget”, 3.1 vs. 0.1. Additionally, considering they deal exclusively with pharmaceutical medication, the costs of producing small pills will cost less than say medical supplies or machinery for patients, 11.1 vs. 23.9. The second company that was described is a diversified health=products company that manufactures and mass markets a broad line of prescription pharmaceuticals. For obvious reasons, the second described company would be Company A. Some supportive evidence is that Company A has higher inventories which entails that they sell a wide variety of items, rather than just pharmaceutical pills. Some of those items include, prescription pharmaceuticals, over-the-counter remedies, consumer health and beauty products, and medical diagnostics and devices. These products in turn will have a higher inventory amount in comparison to Company B. Lastly, the second described company is said to be “diversified”, which will help with the assumption of higher cash and short term investments, since they sell more than one type of products.

Beer:

The second example deals with two different beer...