Nhóm 4:

Trương Mỹ Huyền K174040449

Vũ Hoàng Phúc K174040462
Đinh Thị Mai Phương K174040463
Nguyễn Ngọc Sương K174040466
CASE STUDY: THE FINANCIAL DETECTIVE
I. IDENTIFYING FINANCIAL CHARACTERISTICS
• Industry economics and firm strategy drive variance between financial characteristics of
companies
• Firm strategies are diverse among industries
• Identify similarities & differences
• Match financial data with company descriptions
II. PAIRS OF PARTICIPANTS IN DIFFERENT INDUSTRIES 1) AIRLINES
Brief information
One company is a major airline with both domestic and international flights. They also offer other
services such as travel packages and airplane repair. They own a refinery to supply their own jet fuel.
In '08 the company merged with one of the largest airline carriers in the US.
The other company operates primarily in the US and is the leading low-cost carrier here. The company
only carries three different aircraft in their fleet, making maintenance simpler than larger legacy
airlines. The company grows by purchasing new aircraft and the rights to fly into new airports.
Significant figures
Company A Company B Explanation
The ratio of goodwill Higher Lower Company A has 28 times higher than
and intangibles in asset company B (supporting merging of company
A)
COGS Higher Lower COGS of A is 70% and B is 60%
Inventory turnover Lower Higher Inventory turnover of A is 37 and B is 85.4

Net property, plant & Lower Higher B owns more equipment and property. A is
equipment 42% and B is 75%
Return on equity Higher Lower ROE of A is 46% and B is 23,6%. ROE for A
is nearly double B.

Dividend payout ratio Higher Lower Dividend payout ratio of A is 7,9% and B is
0%
Net income Equal Equal A and B has the same net income (11%)
Deferred tax Lower Higher A's deferred tax rate is 0 while B is 14
Conclusion
A is the major international and domestic airline. They charge higher prices leading to a higher
profit margin.
B is the leading low-cost airline in the US flying primarily in the US and some Caribbean and
Latin America destinations. They are a low-cost leader, sacrificing profit, but save when it comes to
their maintenance costs.
2) BEER
Brief information
One company is a national brewer of mass-market consumer beers sold under a variety of brand names.
They operate an extensive network of breweries and distribution systems. They also own a number of
beer-related businesses and several major theme parks. Over the past 12 years, they have acquired
several large brewers from around the globe.
The other company is the largest craft brewer in the US. They produce higher-quality beers but
production is lower-volume and the beers have premium prices. They are financially conservative.
Significant figures
Company C Company D Explanation
The ratio of goodwill and Higher Lower Company C has 70 times higher than
intangibles in asset company D

Long term debt Higher Lower Long term debt of C is 32% and D is 0%.
C is liable for more long-term debt
COGS Lower Higher COGS of C is 39% and D is 48%
Minority int. in earnings Higher Lower C has a value for Minority int. in earnings
(4%)
Dividend payout ratio Higher Lower Dividend payout ratio of C is 88,2% and
D is 0%
Debt/assets ratio Higher Lower Debt/assets ratio of C is 66% and D is
28,5%
Debt/equity ratio Higher Lower Debt/equity ratio of C is 95,1% and D is
0,1%
Conclusion
C is the national brewer of mass-market consumer beers sold under a variety of brand names. They
have more goodwill from merging companies with their brand.
D is the largest craft brewery in the US. Their data shows they have a conservative approach.
3) COMPUTERS
Brief information
One company sells high-performance computing systems to gov. agencies, universities, and
commercial businesses. They are financially conservative.
The other company sells personal computers and handheld devices and software. They use their own
operating system for their computers and create new and innovative designs for their products. Their
prices carry premium price tags. The company follows a vertical integration strategy starting with
owning chip manufacturers and ending with owning its own retail stores. Significant figures
Company E Company F Explanation
R&D cost Lower Higher Cash of E is 3% and F is 13%
Dividend payout ratio Higher Lower Dividend payout ratio of E is 21,8%
Quick ratio Lower Higher Quick ratio of E is 0,9% and F is 2,45%
Long term marketable Higher Lower Long term marketable securities of E is 56%
securities

Inventory level Lower Higher Inventory of E is 1% and F is 16%

Net income Higher Lower Net income of E is 23% and F is 4%
COGS Lower Higher COGS of E is 60% and F is 69%
Conclusion
E is the innovative designed and premium priced handheld and personal computer company.
Their innovation and differentiation has allowed them to charge premium prices on their products,
which has allowed a larger profit margin
F is the financially conservative high-performance "supercomputers" company. Their highly
complex products require more R&D and fewer customers (no consumer- mainly business and
government), leading to a lower profit margin
4) HOSPITALITY
Brife information
Company one operates hotels and residential buildings but does not own the hotels. Revenue comes
from contracts with the hotel owners who pay a percentage of hotel revenues. The company's growth
is organic as it buys mainly rights. They pursue a strategy of repurchasing a significant percent of
shares of its own stock.
The second company operates up-scale hotels and resorts. Their strategy is to maintain market presence
by owning all of their property which contributes to the high recognition of its brand. Significant
figures
Company G Company H Explanation
Receivables Lower Higher Receivables of G is 4% and H is 18%
Property Higher Lower Property of G is 4% and H is 18%
Long term debt Lower Higher Long term debt of G is 14% and H is 63%
Liabilities Lower Higher Liabilities of G is 47% and H is 159%
Profit Lower Higher Profit of G is 5% and H is 30%
Quick ratio Higher Lower Quick ratio of G is 0,72% and H is 0,37%
Debt to asset ratio Lower Higher The debt to asset ratio for G is 47.4% whereas
H is 159%
Net profit margin Lower Higher Net profit margin for G is 4.9% whileas H is
30.1%
Conclusion
G is the second company. They own most of their assets and have more overall liabilities. This
leads to the belief this is the up-scale company.
H is the first company. It does not have a large amount of property but is more liquid than company
G. They have less long term debt and more stockholder's equity. There is not enough significant data
about inventory turnover.
5) NEWSPAPERS
Brife information
The first company owns and operates two newspapers. This company has began offering marketing
and digital-advertising options to customers and acquiring firms in profitable industries. This company
has introduced cost controls to address cost-structure issues such as personnel expenses. Founded in
1851, the second company is renowned for its highly circulated newspaper offered both in print and
online. This paper is sold domestically as well as around the world. Because the company is focused
largely on one product, it has strong central controls that have allowed it to remain profitable despite
fierce competition.
Significant figures
Company I Company J Explanation
Long term debt Higher None Company J has no long term debt, Company I
is 10

Long term marketable Higher None Company J has no long term marketable
securities securities, Company I is 13

SG&A expense Higher None Company I has a higher SG&A expense

Inventory turnover None Higher Company I has next to no inventory turnover

Net income Higher Lower Company J has a negative net income

Profit margin Higher Lower Company J has a negative profit margin
Short term expenses Lower Higher Company I has less short term expenses
Cash Lower Higher Company I has less cash
Debt in current Higher None Company I has more debt in current liabilities
liabilities

Gross profit Higher Lower Gross profit for company I is 61 while J is -1

 Dividend payout Higher Lower Dividend payout for company I is 41.8 while
J is -39.4 (still pay dividend even with a loss)
Conclusion
I is the second company. Its large amount of long-term securities supports that it is a business
that has been around for a long amount of time. This company is maintaining profit through its strong
central controls.
J is the first company. It is not making a profit and has a negative dividend payout. The cost
structure issues are apparent. There is no SG&A expense.
6) PHARMACEUTICALS
Brife information
Company one is a diversified company that sells both human pharmaceuticals as well as animal health
products. This company's strategy is to stay ahead of the competition by investing in the discovery and
development of new drugs.
Company two focuses on generic pharmaceuticals as well as medical devices. Most of this company's
growth has been inorganic. The growth strategy has been to participate in highly leveraged acquisitions
and has participated in more than 100 in the past 8 years. The goal of acquiring new business is to
enhance the value of the proven drugs in the company's portfolio rather than gamble on new drugs.
Significant figures
Company K Company L Explanation
The ratio of goodwill Higher Lower Company K's assets come almost
and intangibles in entirely from goodwill and intangibles
asset

Long-term debt Higher Lower Company K has 3X the long term debt
Deferred taxes Higher None Company K has 12 deferred taxes while
L has 0
R&D expense Lower Higher Company L has a higher research &
development expense

Net income Lower Higher Company L has a higher net income,

K's is negative
 Dividend payout None Higher Company K has 0% dividend payout, L
is 88.7
LT debt/shareholders Higher Lower LT debt/shareholders equity for
equity company K is 501.9% vs company L's
54.6 %
Interest coverage ratio Lower Higher Company K has an interest coverage
ratio of 1.7 showing K does not have
good financial health

Conclusion
L is the first company. Their high research & discovery expense supports their strategy of investing in
the discovery of new drugs.
K is the second company. Their high goodwill and intangible asset fund supports that their main source
of profit is from mergers. They are just under profitable.
7) POWER
Brife information
The first company focuses on solar power. This includes the manufacturing and selling of power
systems as well as maintenance services for those systems.
The other company owns large, mostly coal-powered electric-power-generation plants in countries
around the world. Most of its revenues result from power-purchase agreements with a country’s
government that buy the power generated. Some of its U.S. assets include regulated public utilities.
Significant figures
Company M Company N Explanation
Cash Lower Higher Cash of M is 5 and N is 25
Liabilities Higher Lower Liabilities of M is 83 and N is 24
Stockholders equity Lower Higher Stockholders equity of M is 17 and N is 76
Net profit Lower Higher Net profit of M is 2 and N is 15
Net PPE Lower Higher Net PPE of M is 62 and N is 19
Inventory turnover Higher Lower Inventory turnover of M is 17.6 and N is 4.6
Debt ratio Higher Lower Debt ratio of M is 83% and N is 24.2%
LT debt/shareholders Lower Higher LT debt/shareholders equity of M is 292.5%
equity and N is 5.2%

Dividend payout Higher None N has no dividend payout, M is 91.5

Beta Lower Higher Beta of M is 1.15 and N is 1.5
Conclusion
M is the first company which focuses on solar power. This includes the manufacturing and selling
of power systems as well as maintenance services for those systems.
N is the second company owning large, mostly coal-powered electric-power-generation plants in
countries around the world. Most of its revenues result from power-purchase agreements with a
country’s government that buy the power generated. Some of its U.S. assets include regulated public
utilities.
8) RETAIL
Brife information
One company is a leading e-commerce company that sells a broad range of products, including media
(books, music, and videos) and electronics, which together account for 92% of revenues. Onethird of
revenues are international and 20% of sales come from third-party sellers (i.e., sellers who transact
through the company’s website to sell their own products rather than those owned by the company).
A growing portion of operating profit comes from the company’s cloud- computing business. With its
desire to focus on customer satisfaction, this company has invested considerably in improving its
online technologies.
The other company is a leading retailer in apparel and fashion accessories for men, women, and
children. The company sells mostly through its upscale brick-and-mortar department stores.
Significant figures
Company O Company P Explanation
Current liabilities Higher Lower Current liabilities of O is 52 and P is 38
Net profit Lower Higher Net profit of O is 1 and P is 4
Net PPE Lower Higher Net PPE of O is 33 and P is 49
Inventory turnover Higher Lower Inventory turnover of O is 7.7 and P is 4.9
LT debt/shareholders Lower Higher LT debt/shareholders equity of O is 61.5%
equity and P is 320.9%
Dividend payout None Higher O has no dividend payout, P is 197.5
Conclusion
P is the second company as a leading retailer in luxury apparel and fashion accessories for men, women,
and children.
O is the first company as a leading e-commerce company that sells a broad range of products, including
media (books, music, and videos) and electronics.
SUMMARY
As proven in the case, no two companies financial statements are exactly alike. The financial
statements of companies in a particular industry, however, have many similarities and follow certain
financial norms unique to that industry. Our analysis focused on identifying these similarities and
differences within the data to come to our educated conclusions.