Case 6 - The Financial Detective Essay
From the case study of The Financial Detective, 2005 the objective is to place the correct company to match the given financial data and ratios. I will analyze and compare the financial ratios of the companies in each industry and interpret them to identify the correct company.
Company A is Johnson and Johnson (J&J) as it is evident based on its financials. The cost of goods sold is twice as higher as Company B because J&J has a very broad range of products that would require many different resources and suppliers. J&J has a high inventory and receivables turnover mainly because it is reflecting its mass-marketing strategy. Also because J&J mass markets its broad line of …show more content…
Company I is International Paper and has higher intangibles due to owning numerous packing-product facilities. Depreciation went up as they experienced a net loss because of the closing of inefficient mills.
Company J is Wausau Paper and has higher inventories because it is such a smaller firm that it must carry sufficient inventory to meet customer demand. They also have lower fixed assets because they purchase the wood fiber used in its products on the open market
Hardware and Tools:
Company K is Snap-On as it is a global manufacturer and marketer of tools and has a lower percentage of receivables because it sells its products primarily to retailers, wholesalers and distributors which may have faster and regular payment terms. The company also has a higher net profit margin due to not incurring as much costs associated with maintaining a sales force.
Company L is Black and Decker as it obviously has higher SG&A expenses as they market their products via its own technical representatives and mobile franchise dealers. Their receivables are also higher which can be attributed to the financing it provides to its customers.
Company M is Wal-Mart as evidenced by their known low prices and high volume-oriented strategy. They have high net fixed assets with Company N close behind because they are continuing to expand their network of distribution centers. Their inventory turnover ratio is high as