hello

I want you to help me in solving this

do I need to do any numbers and ratios?

Theme 1: Financial analysis and forecasting Case Discussion 1 THE FINANCIAL DETECTIVE, 2005 Guidance sheet Synopsis and Objectives The case presents some financial ratios for eight pairs of unidentified companies and makes the description of the company with the financial profile derived from the ratios. The primary objective of this case is to introduce students to financial ratio analysisin particular, the range of ratios and the insights each one affords. The structured exploration of pairs of companies within an industry affords a number of important insights into strategy and financial performance. First, the economics of individual industries account for significant variations in financial ratios because of differences in technologies, product characteristics, or competitive structures. Second, financial performance results from managerial choices: within industries, the wide variation in financial ratios is often a result of the differences in corporate strategy in marketing, operations, and finance. For those reasons, this case is a good springboard (catalyst) into subsequent classes, which deal with the interaction of strategy and financial performance. Structure of the case The problem in this case is self-explanatory so no formal assignment questions are required. Each group of students can study one or two industries only. In addition, the group of students may benefit from suggested textbook readings and the distributed slides (Chapter 1: financial analysis) that define and discuss the various financial ratios. Case discussion In order to explore these axes, you are asked to study the case according to the following steps (AD). A. Present briefly the characteristics of the different industries. B. Discuss the major facts that make the difference between the industries. C. What is (are) the major problem(s) for each industry? D. Analyze the case and discuss the industries as presented by the case: 1. 2. 3. 4. 5. 6. 7. 8. Health Beer Computers Books and Music Paper products Hardware and tools Retailing Newspapers Hints for the comparison among industries - This case is primarily about the effects of managerial strategy on financial ratios, but it also affords several insights about the effect of industry differences on financial ratios. For instance, differences in asset intensity can produce dramatically different asset structures (for example, compare the percentages of inventory and net property, plant, and equipment [PP&E] for paper products with computers). The rate of technological change can manifest itself in several ways including the reinvestment rate required to stay competitive (for example, compare dividend-payout ratios for newspapers, and books and music). Industry structure is believed to affect the profitability through the pricing power of the firm. The newspaper industry can be characterized as locally oligopolistic (in some areas, however, monopolistic); the discount retail industry is much more competitive in structure. The gross profit margins of the two industries differ substantially. The general insight for students must be that, in conducting the financial analysis of a firm, one must understand the nature of the industry. - Use identifiers to all firms. For example, call the health products: A = Johnson & Johnson and B = Pfizer Inc. This will make your analysis easier. (See Exhibit 1, page 123). - Close your analysis by focusing on commenting briefly the following elements: Market positioning/customer focus Consumer versus institutional (health products) Discount versus full price (retail, computers) Single high-profile versus diversified low-profile (newspapers) On-line versus bricks-and-mortar (books and music) Product mix Specialty versus full line (retail, paper) Mass market versus niche (beer, tools) Asset mix Asset intensity versus service intensity (books and music) Financial policy Debt versus equity (paper, beer, tools) Off-balance-sheet financing (retail, beer)