Case 6: the Financial Detective
Financial data is the most crucial information in describing any sort of business, but this information is also useful in differentiating between different types of businesses. In any specific industry, many key players are present, yet their strategies and implementations of business vary greatly. Two firms may achieve the same earned profit, yet go about securing this profit in radically different ways .A close analysis of financial data for each business can be used to understand and explain these different strategies employed by a given company and how that strategy affects the financial performance of each company. This case calls for the examination of two different companies within the same …show more content…
Company I is the larger firm while company J is the smaller firm. The first clue to this conclusion is the amount of long-term debt company I is carrying (41.3) compared to company J (18.3). As we know that the larger firm has spent the last few years reorganizing and attempting to cut costs, it would make sense that these initiatives were taken because of high company debt. Along this line, I’s total debt/total assets is much higher (42.78), which would also help to explain the cost-containment initiatives needed. Also, I’s cost of goods sold (75.3) is lower than J’s (82.9), most likely due to their ownership of supply companies and J’s decision to buy theor wood fiber on the open market.
Hardware and Tools These two companies manufacture and sell hardware and tools. The first company is a global