Financial Detective, 1996
Case 6, Financial Detective, 1996
NEWSPAPERS :
1) Centralized (Worlwide) - NEW YORK TIMES Fierce competition price depends on the market More efficient ° Higher inventory turn L ° Beta closed to 1.00 (worldwide) L
2) Decentralized (Midwest) - LEE ENTREPRISE Monoplolist price like you want ° Higher gross margin K ° Higher other assets (goodwill) K
STEEL :
1) Big - INLAND ° Lower receivable turn O ° higher D/E (older, stable) O
2) Small - NUCOR ° Higher P/E P ° Higher margins P
BEER :
1) National - ANHEUSER-BUSCH ° Higher inventory turnover M ° Higher debt to equity (more debt than cash) M
2) Micro - BOSTON BEER CO. ° Higher P/E ratio (young) N ° Higher A/P (outsourcing) N ° Higher ROA (not lot of assets) N ° No dividend (IPO) N ° Higher cash (IPO) N ° No Beta (IPO) N ° Higher gross margin (niche market) N
RETAIL
1) National - SEARS ° Lower receivable turn G ° Higher D/E G
2) Cat. Killer - HOME DEPOT ° Lower gross margin H ° Higher P/E (fast growing) H ° Inventory (only assets) H ° Higher assets turnover (doesn’t have any assets) H
HEALTH PRODUCTS
1) Mass Market - J & J ° Higher inventory turnover A ° Higher receivable turnover (quicker) A
2) Ethical - Lily ° Higher gross margin (patterns, monopolistic) B
HOUSEHOLD APPLIANCES
1) Quality (own brand name) - MAYTAG ° High gross profit C ° Net Loss (crisis, bad year) C
2) Captive (private labels) - WHIRLPOOL ° Higher Inventory turn (no really significant) C ° Lower receivable turnover D ° Lower current ratio (predictable, stale business) D
HOTELS
1) Quality - HILTON ° High profit margin I ° High cash (casino) I ° High fixed assets (own hotels) I
2) Service - MARRIOTT ° High gross margin (service, no COGS) J ° Higher A/P J ° Higher Inventory turn J ° High asset turn J
COMPUTERS
1)
NEWSPAPERS :
1) Centralized (Worlwide) - NEW YORK TIMES Fierce competition price depends on the market More efficient ° Higher inventory turn L ° Beta closed to 1.00 (worldwide) L
2) Decentralized (Midwest) - LEE ENTREPRISE Monoplolist price like you want ° Higher gross margin K ° Higher other assets (goodwill) K
STEEL :
1) Big - INLAND ° Lower receivable turn O ° higher D/E (older, stable) O
2) Small - NUCOR ° Higher P/E P ° Higher margins P
BEER :
1) National - ANHEUSER-BUSCH ° Higher inventory turnover M ° Higher debt to equity (more debt than cash) M
2) Micro - BOSTON BEER CO. ° Higher P/E ratio (young) N ° Higher A/P (outsourcing) N ° Higher ROA (not lot of assets) N ° No dividend (IPO) N ° Higher cash (IPO) N ° No Beta (IPO) N ° Higher gross margin (niche market) N
RETAIL
1) National - SEARS ° Lower receivable turn G ° Higher D/E G
2) Cat. Killer - HOME DEPOT ° Lower gross margin H ° Higher P/E (fast growing) H ° Inventory (only assets) H ° Higher assets turnover (doesn’t have any assets) H
HEALTH PRODUCTS
1) Mass Market - J & J ° Higher inventory turnover A ° Higher receivable turnover (quicker) A
2) Ethical - Lily ° Higher gross margin (patterns, monopolistic) B
HOUSEHOLD APPLIANCES
1) Quality (own brand name) - MAYTAG ° High gross profit C ° Net Loss (crisis, bad year) C
2) Captive (private labels) - WHIRLPOOL ° Higher Inventory turn (no really significant) C ° Lower receivable turnover D ° Lower current ratio (predictable, stale business) D
HOTELS
1) Quality - HILTON ° High profit margin I ° High cash (casino) I ° High fixed assets (own hotels) I
2) Service - MARRIOTT ° High gross margin (service, no COGS) J ° Higher A/P J ° Higher Inventory turn J ° High asset turn J
COMPUTERS
1)