- Using numbers 7, 8 and 9 on Exhibit 6.3 match the companies to the respective number.
- Using numbers 10, 11 and 12 on Exhibit 6.3 match the companies to the respective number.
Exhibit 6-3 Common-size Financial Statements 2 3 4 5 7 9 10 11 12 Balance sheet (year-end) Cash and marketable 2. 19% 20.09% 22 5% 37.9% 13.4% 11.7% 4.0% 30.876 17.6% 19.925 42 7% 14.1%% securities Receivables 75 18.0 17.8 12.5 26.0 4.2 76.8 13.6 257 B.9 3.7 2.1 01 17.7 22.5 7.3 8.6 0.9 2.4 94 5 51.3 79.0 753 Property, plant, and 301 5 182.6 equipment Accumulated depreciation (99.7) 1490) (38.6] (16.3) (30.7) (16.6) (15.6] (27.7) (2.7 (1 1.5] (25.4) 7.0 15.2 8.6 3.5 28.8 3.2 2.6 7.5 8.8 13 5.2 Investments 104.8 Other assets 472 3.1 51.1 123.5 7.4 30.4 15.8 70.6 33.8 Total assets 269.3% 173.6% 235.5% 136.876 53.6% Current liabilities 40.4% 32 8% 50.4% 34.4% 46.2%% 26.4% 118.4% 33.696 28.736 34 3% Long-term debt 76.3 26.0 39 6 13.9 14.4 28.2 13.4 30.3 12.4 1.0 73.4 16.5 24.8 Other noncurrent liabilities 81.0 41.3 13.8 4.3 Shareholders' equity 109.3 129.9 40.9 269 39 162 86 103.5% 136.8%6 53.6% 192 16 100.4% 47.2% 100.9 186.39 Total liabilities and shareholders' equities Income statement Operating revenues 100.0% 100.0% 100 0%% 100.0% 100.0% 100.0%% 100.076 100:096 100 0%% 100 09% 100.0% Other revenues 0.7% 1.4% 4.3%% Cost of goods sold 58.7 74.4 11.1 86.5 73.E 74.9 98.3 45.1 31 33.1 [excluding depreciation] or operating expenses 5. 2.9 OLT 2 8 Depreciation and amortization Selling and administrative 16.2 32. 11.3 16.2 36.0 B.7 25.1 31.0 7.9 Interest expense 1.3 1.1 0.7 1.4 0.1 25 OL1 Research and development 14.4 4.2 1.6 0.9 13. Income taxes 25 27 2 2 5.1 1.7 3.7 1.2 218 28 10.1 2.8 0.8 0.7) (4.0) Other (1.51 115 5.2 (1.8) (1.D] 1.8 91 6% 95.2% 97 0% 78.49% 92.1% 97.7% 97.7% 108. 796 92.3% 93 836 82.6% 92.0% Total expenses Net income 8.4%% 4.8% 3.7% 21.6% 9.0% 2.3% 18.J 7.79% 5.2% 17.4% B.0% Cash flow from operations 17.79% 31.1% 10.6% 13.3% 5.8% 7.13% 12:0% 10 836 24 3%% 26.2% Free operating cash flow 10 6 19 51 5.9 25.6 5.5 4.7 4.B 7.6 18.5PROBLEMS 6.1 Financial Statement Detective Exercise Dell Exhibit 6.3 shows common-size balance sheets and income state- Dell is the world's #1 direct-sale computer vendor. In addition to a ments for 12 companies, described below. Your job is to match full line of desktop and notebook PCs (about 80% of total sales). each company with its financial statements. Dell also offers workstations, storage systems, network servers, and Ethernet switches. Dell's direct-sales, built-to-order model allows Accor for lower inventories and lower operating costs, a necessity for the One of the world's leading hotel operators, owning or managing PC price wars and the occasional slump in corporate IT spending. almost 4000 properties throughout the world. It serves travelers in Europe through its flagship chains Mercure, Novotel, and Sofitel, and Deutsche Telekom its economy chains Ibis and Formule 1. In the United States, it oper- The #1 telecom company in Europe. Deutsche Telekom is Ger- ates budget brands Motel 6 and Red Roof Inns. Accor has embarked many's leading fixed-line phone operator, its T-Mobile unit serves on a sale and leaseback strategy for its upscale properties to reduce millions of wireless phone customers, and T-Online is one of the exposure to slowdowns in the market and is working to transition Europe's leading internet service providers. Although privatized in many of its midscale hotel leases to variable cost arrangements. the 1990s, the German government still holds a 15% stake and an additional 22% through a state-owned development bank. Arcelor Arcelor was formed by the combination of three European steel The FPL Group companies and is now the second largest steel manufacturer in the The FPL Group is a holding company with operations across the world. The company produces carbon steel and stainless steel for United States. Most revenue comes from its utility subsidiary, the the automotive, construction, appliance, and packaging industries. largest electricity provider in the state of Florida. The electricity is generated from the company's nuclear and fossil-fueled power plants. Carrefour Carrefour is the world's second largest retailer. Based in France, it Interpublic operates more than 11 000 stores under two dozen brand names, Interpublic is one of the world's largest advertising and marketing including Carrefour (hypermarkets), Champion (supermarkets), services companies. Operating through offices in 130 countries, its and Shopi (convenience stores). Unable to build new stores in flagship agencies include Mccann Worldgroup, Lowe & Partners, France, until recent changes in French law, Carrefour has expanded and Hill Holliday. Like all of the global players in its industry. through acquisitions, at home and abroad. much of Interpublic's growth has come from acquisitions.Nestle customer base provides a steady stream of recurring licensing and Nestle is the world's #1 food company. It is the world leader in cof- service revenue. fee (Nescafe), and is also one of the largest bottled water (Perrier) and baby-food manufacturers. At last count, it is the owner of over Southwest Airlines 9000 branded products worldwide. Nestle's recent purchase of Southwest Airlines offers low-cost, no-frills air travel to 60 cities Ralston-Purina has made it a top player in the pet food business. In in the United States. A model for low-fare upstarts the world over. addition to its food business, Nestle owns nearly 27% of cosmetic the company has enjoyed over 30 straight years of profitability. giant L'Oreal. Southwest's business model is simple: flights are short (most are under two hours), and the airline usually lands at small airports Pfizer to avoid congestion at large hubs. Originally concentrated in the Pfizer is the world's largest research-based pharmaceutical company. western part of the United States, Southwest has expanded into Its best-known products include Viagra, Zoloft, and Lipitor. In addi- key eastern markets, such as Philadelphia. tion to prescription drugs, Pfizer also makes a broad range of popular over-the-counter remedies, including Sudafed and Benadryl. Toyota SAP Toyota is the world's #2 car maker (by sales) and its most profita- ble. In addition to longstanding core brands - Camry, Land Cruiser, SAP is the world's leading provider of enterprise resource plan- Celica, Corolla, and the luxury Lexus line - Toyota has pioneered ning software used to integrate corporate back-office functions the market for hybrid-powered sedans (Prius). While most of its such as human resources, accounting, distribution, and manu- North American and European competitors are downsizing opera- facturing. The company also offers a range of products on sup- tions, Toyota continues to pursue an aggressive growth strategy. ply chain and customer relationship management. SAP's large
