The Financial Detective

5 Pages Posted: 21 Oct 2008

See all articles by Robert F. Bruner

Robert F. Bruner

University of Virginia - Darden School of Business

Casey Opitz

University of Virginia - Darden School of Business

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Abstract

This case presents common-sized financials for two companies, each of which is in a number of industries. The companies have different market niches, and students are asked to identify the companies from details provided. The case also allows for financial comparisons among industries.

Excerpt

UVA-F-0805

THE FINANCIAL DETECTIVE

The financial statements of no two companies are alike. Industries differ, and each has a financial norm around which companies within the industry operate. An airline, for example, would naturally be expected to have high fixed assets (airplanes), while a consulting firm would not. A paper company would be expected to have a lower gross margin than an automobile manufacturer, because its product is more like a commodity.

Similarly, companies within industries have different financial characteristics, in part, because of varied strategies. The following paragraphs describe two participants in each of a number of different industries. Their strategies and market niches provide clues to the financial condition and performance one would expect of them. The companies' common‑sized financial statements and operating data, which have been put in a standardized format, are provided in Exhibit 1. It is up to you to match the financial data with the company descriptions.

Health Products

Of companies A and B, one manufactured pharmaceuticals and a variety of low‑margin hospital supplies, and both product lines were marketed primarily through direct sales to doctors and hospitals. The firm had recently acquired a large hospital supply company and therefore had significant goodwill on its books. The other firm manufactured and nationally mass‑marketed a broad line of name‑brand toiletries, nonprescription drugs, and consumer and baby‑care products, through 165 decentralized subsidiaries.

. . .

Keywords: data analysis, financial ratios, industry analysis

Suggested Citation

Bruner, Robert F. and Opitz, Casey, The Financial Detective. Darden Case No. UVA-F-0805, Available at SSRN: https://ssrn.com/abstract=1278839

Robert F. Bruner (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-3823 (Phone)
434-924-0714 (Fax)

HOME PAGE: http://faculty.darden.edu/brunerb/

Casey Opitz

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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