The Financial Detective 2005 Essay

949 Words Dec 25th, 2011 4 Pages
[The Financial Detective 2005
Introduction
Each industry is distinctive. One might be unique in its high fixed assets; other would be differentiated of its increasing intangible assets and many other financial footprints that each industry leaves on its balance sheet. Nonetheless, industries are distinguished furthermore; fingers of one hand are not the same as said. Businesses in the same industry can be characterized differently according to their strategic plan and capital structure. The following case highlighted some characteristics of different industries and different businesses within those industries. From pharmaceuticals to music and books, those differences, supported by numerical financial data, are explained in the
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For company 2 (G), inventory account is much lower than company one (14.8) this reflects the fact that company 2 is online based business that sells mostly digital products such as media along with few other general electronics and merchandise. Thus, its inventory turnover is much higher (13.56x) correspondent to the nature of most of the sold product (digital media) that are highly demanded and easily accessible. Regarding its fixed assets account, company 2 (b) has lower fixed assets of 7.6 this mainly reflects the activities related to electronics and other merchandise that probably requires some fixed assets, but for its E-commerce, it needs minimal- none fixed assets. Considering the type of this business (online based) it was noticed that its receivables account is very minimal compared to company 1. This is probably due to the fact that online products are delivered upon payment, thus it is rare to purchase music on credit. Assessing some of the income statements components, depreciation is recognized to be low (1.1) this is highly related to its low fixed assets. Last but not least, SG& A expenses of 16.9 is lower than company 1 , this is logical because company 1 depends on a network of retailers that impose higher general and administrative expenses while company 2 depends solely on its o0nline channel. Finally, net profit of 8.5 (which is higher than company 1) indicates the mentioned recent

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