Analyze Financial Detective
The Financial Detective, 2005
Financial characteristics of companies vary for many reasons. The two most prominent drivers are industry economics and firm strategy. Each industry has a financial norm around which companies within the industry tend to operate. Each company within industries has different financial characteristics and strategies which can produce striking differences in financial results for firms in the same industry.
Health Products Industry
Health Products are categorized as highly differentiated products that enjoy high pricing freedom. The companies in this industry can benefit from high gross profit margin of an average of 80%.
Company A – is the world’s largest prescription-pharmaceutical company. In recent years, the company has divested several of its nonpharmaceutical businesses, and it has come to be seen as the partner of choice for licensing deals with other pharmaceutical and biotechnology company.
Statement of Problem: Comparing to Company B, the major strength of Company A is its assets management to generating sales or revenue. Its weakness is the ability in controlling its costs to improve its Gross Profit. This might be because Company A has started to invest in nonpharmaceutical businesses which has caused lower gross margin.
Company B – is a diversified health-products company. Brand development and management are a major element of this company’s mass-market-oriented strategy.
Statement of Problem: Comparing to Company A, the major competitive advantage of Company B is its benefit of high gross margin. With this advantage, even though the company has spent almost 50% of its sales for SG&A expense, it still earned a higher net profit margin. Also, even though the company has been aggressive in financing its growth with debt for its brand development and management, it has a higher debt management in paying the interest on outstanding debt.
Beer Industry
Beer Products are subject to strong price
Financial characteristics of companies vary for many reasons. The two most prominent drivers are industry economics and firm strategy. Each industry has a financial norm around which companies within the industry tend to operate. Each company within industries has different financial characteristics and strategies which can produce striking differences in financial results for firms in the same industry.
Health Products Industry
Health Products are categorized as highly differentiated products that enjoy high pricing freedom. The companies in this industry can benefit from high gross profit margin of an average of 80%.
Company A – is the world’s largest prescription-pharmaceutical company. In recent years, the company has divested several of its nonpharmaceutical businesses, and it has come to be seen as the partner of choice for licensing deals with other pharmaceutical and biotechnology company.
Statement of Problem: Comparing to Company B, the major strength of Company A is its assets management to generating sales or revenue. Its weakness is the ability in controlling its costs to improve its Gross Profit. This might be because Company A has started to invest in nonpharmaceutical businesses which has caused lower gross margin.
Company B – is a diversified health-products company. Brand development and management are a major element of this company’s mass-market-oriented strategy.
Statement of Problem: Comparing to Company A, the major competitive advantage of Company B is its benefit of high gross margin. With this advantage, even though the company has spent almost 50% of its sales for SG&A expense, it still earned a higher net profit margin. Also, even though the company has been aggressive in financing its growth with debt for its brand development and management, it has a higher debt management in paying the interest on outstanding debt.
Beer Industry
Beer Products are subject to strong price