Case Analysis of Unidentified Industries2006 Essay Example

Case Analysis of Unidentified Industries2006 Essay Example Case Analysis of Unidentified Industries2006 Essay Case Analysis of Unidentified Industries2006 Essay `Case analysis of Unidentified Industries2006 Although different industries have their own characteristic, we can see some common features in certain industries. Thus we divide them into 4 kinds: Service, retail trade, manufacturer and online seller. List as below: Classification of Different Industries and their features 1. Service (Table 1) Advertising agency (AG) Commercial bank Health maintenance organization (HMO) >Their services are based on human resources. They do not need a lot of PPE or inventories and lots of money (like long-term debt). Since they provide their service first and the customers always pay at the end of the service, their account should be high. So now we want to find an industry that is zero inventories, low PPE, high accounts receivable and low long-term debt. See the table 1, we find E, G and N each has a very high accounts receivable, low inventories and PPE. It shows that they are all service industries. Now we have to look deeply to find the difference among these three industries. First, N has an extremely high accounts receivable (90%) and the longest receivables collection period (4,071 days). And their biggest part of liabilities is notes payable. It really meets the features of Commercial bank. So N is Commercial bank. What the different between E and G? We find that their percentages of balance sheets are almost the same. So we have to find some clues from selected financial data. It shows that their Receivables collection period and Revenue/total assets are pretty difference. With common sense, we know that HMO will have a longer Receivables collection period (They provide the service first and wait for the insurance company to pay for their service fee) and lower Revenue/total assets (Since AG is a pretty low cost industries, all we need is idea and time) when compares with AG. So G is AG and E is HMO. Result: Advertising agency (AG) >G Commercial bank> N Health maintenance organization (HMO) > E Airline > Both of them need certain PPE and their accounts receivable will not so high, which is not the same as the other three. Since air planes are very expensive, so the Airline Company maybe has a very high PPE, and certain long-term debt (to buy the airplanes). What is more, they do not have inventories, which is totally different from Family restaurant chain. So we look at the table and try to find a company that has high PPE, zero inventories, middle or high long-term debt. Only M meets the requirement. So M is Airline. Airline > M 2. Retail trade (Table 2) Bookstore Chain Retail drug chain Retail grocery chain Department store chain Features: Certain PPE, high inventories, high inventory turnover. >B, I, J, K It is hard to tell the different among them. In common sense, Retail drug chain always has a high Common stock. And Department store chain may have a high PPE. Department has a long Receivables collection period(Because they use their â€Å"own brand† charge card). So we can guess that Bookstore Chain> B Retail drug chain> K Retail grocery chain> I Department store chain> J 3. Manufacturer (Table 3) Pharmaceutical manufacturer(PM) Electric and gas utility(EG) Features: High PPE, Low inventories>D and L PM have a longer Receivables collection period (because they will not receive the money until their drugs can be sold by the drug retailer). , high level of receivable collection, and high price(drugs are always expensive) EG may have a higher PPE (since most of their products are relying on the PPE), and their receivables collection period should be around 31 days (just like the electric bills), so 40 days just meet it. So L should be EG. We can guess H is Electric and gas utility and L is Pharmaceutical manufacturer. Result: Pharmaceutical manufacturer(PM)>D Electric and gas utility(EG)>L 4. Online seller (Table 4) Online bookseller Online direct factory to customer personal computer vendor Features: Low PPE, low inventories, high cash > C and A For Online bookseller, they do not need long-term debt. For Online direct factory to customer personal computer vendor, since they sell most of their products to business ways and they do not produce things actually, so their inventory turnover should be very high, like C (79. ). So we can easily distinguish it from online bookseller. Thus Online bookseller>A Online direct factory to customer personal computer vendor>C 5. Others (Table 5) Restaurant chain Computer software developer There are only two industries left: H and F F has a higher Common stock, since computer software developer company like Apple, they has really high common stock, so we can guess that F is Computer software developer, while H should be restaurant chain. Restaurant chain > H Computer software developer > F . Final results: A>Online bookseller B>Bookstore Chain C>Online direct factory to customer personal computer vendor D>Pharmaceutical manufacturer E>Health maintenance organization F>Computer software developer G>Advertising agency H>restaurant chain I>Retail grocery chain J>Department store chain K>Retail drug chain L>Electric and gas utility M>Airline N>Commercial bank Table 1 |Balance Sheet Percentages |E |G |M |N | |1. Cash and marketable securities |8 |11 |18 |2 | |2. Accounts receivable |37 |51 |2 |90 | |3. Inventories |0 |0 |0 |0 | |4. Other current assets |5 |0 |6 |0 | |5. Plantequipment(net) |4 |7 |66 |0 | |6. Other assets |46 |32 |8 |9 | |7. Total assets |100 |100 |100 |100 | | | | | | | |8. Notes payable |6 |8 |4 |73 | |9. Accounts payable |39 |46 |4 |5 | |10. Accrued items |1 |2 |0 |0 | |11. Other current liabilities |9 |0 |19 |0 | |12. Long-term debt |15 |7 |10 |15 | |13. Other liabilities |6 |0 |15 |0 | | | | | | | |14. Preferred stock |0 |0 |0 |0 | |15. Common stock |25 |37 |48 |7 | |16. Total liabilities and net worth |100 |100 |100 |100 | |Selected Financial Data | | | | | |17. Current assets/current liabilities |0. 92 |1. 1 |0. 94 |1. 17 | |18. Cash, MS, and Ars/current liabilities |0. 082 |1. 1 |0. 72 |1. 17 | |19. Inventory turnover(X) |NA |NA |NA |NA | |20. Receivables collection period(days) |201 |89 |12 |4071 | |21. Total debt/total assets |0. 21 |0. 16 |0. 14 |0. 88 | |22. Long-term debt/capitalization |0. 33 |0. 14 |0. 16 |0. 15 | |23. Revenue/total assets |0. 675 |2. 079 |0. 542 |0. 081 | |24. Net profit/revenue |0. 074 |0. 022 |0. 072 |0. 204 | |25. Net profit/total assets |0. 05 |0. 045 |0. 039 |0. 016 | |26. Total assets/net worth |4. 03 |2. 74 |2. 1 |13. 28 | |27. Net profit/net worth |0. 2 |0. 123 |0. 082 |0. 218 | Table 2 |Balance Sheet Percentages |B |I |J |K | |1. Cash and marketable securities |12 |3 |1 |8 | |2. Accounts receivable |3 |3 |8 |12 | |3. Inventories |42 |22 |17 |35 | |4. Other current assets |2 |3 |5 |2 | |5. Plantequipment(net) |25 |55 |36 |41 | |6. Other assets |16 |13 |33 |3 | |7. Total assets |100 |100 |100 |100 | | | | | | | |8. Notes payable |0 |3 |4 |0 | |9. Accounts payable |26 |17 |16 |24 | |10. Accrued items |22 |4 |0 |5 | |11. Other current liabilities |0 |9 |3 |5 | |12. Long-term debt |0 |33 |27 |0 | |13. Other liabilities |17 |13 |10 |7 | | | | | | | |14. Preferred stock |0 |0 |0 |0 | |15. Common stock |35 |21 |41 |59 | |16. Total liabilities and net worth |100 |100 |100 |100 | |Selected Financial Data | | | | | |17. Current assets/current liabilities |1. 23 |0. 96 |1. 34 |1. 69 | |18. Cash, MS, and Ars/current liabilities |0. 31 |0. 21 |0. 36 |0. 59 | |19. Inventory turnover(X) |2. 7 |10. 2 |2. 3 |5. 7 | |20. Receivables collection period(days) |7 |4 |41 |16 | |21. Total debt/total assets |0 |0. 35 |0. 31 |0 | |22. Long-term debt/capitalization |0 |0. 57 |0. 37 |0 | |23. Revenue/total assets |1. 613 |2. 956 |0. 675 |2. 767 | |24. Net profit/revenue |0. 029 |0. 016 |0. 063 |0. 037 | |25. Net profit/total assets |0. 046 |0. 047 |0. 042 |0. 102 | |26. Total assets/net worth |2. 84 |4. 67 |2. 35 |1. 69 | |27. Net profit/net worth |0. 131 |0. 218 |0. 104 |0. 173 | Table 3 |Balance Sheet Percentages |D |L | |1. Cash and marketable securities |19 |0 | |2. Accounts receivable |8 |5 | |3. Inventories |5 |2 | |4. Other current assets |8 |6 | |5. Plantequipment(net) |14 |69 | |6. Other assets |46 |18 | |7. Total assets |100 |100 | | | | | |8. Notes payable |10 |3 | |9. Accounts payable |2 |5 | |10. Accrued items |1 |0 | |11. Other current liabilities |11 |5 | |12. Long-term debt |5 |30 | |13. Other liabilities |14 |26 | | | | | |14. Preferred stock |0 |1 | |15. Common stock |56 |29 | |16. Total liabilities and net worth |100 |100 | |Selected Financial Data | | |17. Current assets/current liabilities |1. 65 |0. 95 | |18. Cash, MS, and Ars/current liabilities |1. 12 |0. 37 | |19. Inventory turnover(X) |1. 6 |19. 8 | |20. Receivables collection period(days) |68 |40 | |21. Total debt/total assets |0. 15 |0. 33 | |22. Long-term debt/capitalization |0. 08 |0. 47 | |23. Revenue/total assets |0. 439 |0. 423 | |24. Net profit/revenue |0. 158 |0. 068 | |25. Net profit/total assets |0. 069 |0. 029 | |26. Total assets/net worth |0. 78 |3. 3 | |27. Net profit/net worth |0. 23 |0. 096 | Table 4 |Balance Sheet Percentages |A |C | |1. Cash and marketable securities |54 |39 | |2. Accounts receivable |7 |24 | |3. Inventories |15 |2 | |4. Other current assets |2 |11 | |5. Plantequipment(net) |9 |9 | |6. Other assets |11 |15 | |7. Total assets |100 |100 | | | | | |8. Notes payable |0 |0 | |9. Accounts payable |37 |43 | |10. Accrued items |15 |26 | |11. Other current liabilities |0 |0 | |12. Long-term debt |41 |2 | |13. Other liabilities |0 |11 | | | | | |14. Preferred stock |0 |0 | |15. Common stock |7 |18 | |16. Total liabilities and net worth |100 |100 | |Selected Financial Data | | | |17. Current assets/current liabilities |1. 52 |1. 11 | |18. Cash, MS, and Ars/current liabilities |1. 8 |0. 91 | |19. Inventory turnover(X) |11. 4 |79. 8 | |20. Receivables collection period(days) |12 |36 | |21. Total debt/total assets |0. 41 |0. 02 | |22. Long-term debt/capitalization |0. 86 |0. 11 | |23. Revenue/total assets |2. 297 |2. 19 | |24. Net profit/revenue |0. 042 |0. 064 | |25. Net profit/total assets |0. 097 |0. 155 | |26. Total assets/net worth |15. 02 |0. 6 | |27. Net profit/net worth |1. 459 |0. 865 | Table 5 |Balance Sheet Percentages |F |H | |1. Cash and marketable securities |49 |1 | |2. Accounts receivable |13 |1 | |3. Inventories |2 |7 | |4. Other current assets |6 |3 | |5. Plantequipment(net) |4 |81 | |6. Other assets |25 |6 | |7. Total assets |100 |100 | | | | | |8. Notes payable |0 |6 | |9. Accounts payable |4 |7 | |10. Accrued items |3 |8 | |11. Other current liabilities |25 |13 | |12. Long-term debt |0 |16 | |13. Other liabilities |10 |9 | | | | | |14. Preferred stock |0 |0 | |15. Common stock |58 |41 | |16. Total liabilities and net worth |100 |100 | |Selected Financial Data | | | |17. Current assets/current liabilities |2. 18 |0. 37 | |18. Cash, MS, and Ars/current liabilities |1. 94 |0. 08 | |19. Inventory turnover(X) |5. 2 |22. 3 | |20. Receivables collection period(days) |77 |2 | |21. Total debt/total assets |0 |0. 23 | |22. Long-term debt/capitalization |0 |0. 26 | |23. Revenue/total assets |0. 636 |1. 9 | |24. Net profit/revenue |0. 285 |0. 059 | |25. Net profit/total assets |0. 181 |0. 112 | |26. Total assets/net worth |1. 74 |2. 45 | |27. Net profit/net worth |0. 314 |0. 275 |