Brief Case Analysis

In the dissertation, the financial ratios are given for eight pairs of the companies which are unidentified and it is needed to compare the companies based on their financial profile derived from the ratio. Within an industry, a structured exploration of the paired companies tends to afford the significant insights into financial and strategy performance. The primary purpose of the case is to compare the financial data with description of the company.

Similarities between Two Matched Companies

The similarities found between the two companies within same industries are discussed below;

• Airline industry: under airline industry, company A and company B has same level of inventory. Also SG&A and depreciationexpenses are also same.
• Beer industry: under beer industry, the income tax expense of company C and D are similar. Also the systematicriskandvolatility of two companies are also similar.
• Hospitality industry: within this industry, companies G and H have similar market beta.
• Newspaper industry: companies I and J have similar proportion of current liabilities.
• Pharmaceutical industry: within this industry companies K and L have same proportion of current assets that the firms can use to convert to cash within “One” fiscal year.
• Power industry: companies within power industries have same level of compulsion to pay off short term debt to its suppliers or creditors.

The Financial Detective Harvard Case Solution & Analysis

Differentiation of each Company’s Managerial Choices Based on Financial Profile

The companies are differentiated based on the diverse strategies that the companies have employed. The strategies are chosen which can favorably position the company in the competitive jockeying within an industry. The adapted strategies can be different among companies within same industry, due to this there is a difference in the financial results of the companies within a same industry.

Airline industry:

“One” company is primarily engaged in providing its services both domestically and internationally, and cater airplane repair and travel package services, also it get merged with the renowned US airline carriers.The “Other” company has not expanded its services and catered its services within US, it provides services in lower fares with fewer comfort.

Thus the net profit margin of company “One” is greater than “Other” company. Also the ROE of company “One” is higher which measures the profitability generated with the shareholder’s invested money.

Beer industry:

“One” company produces and sells beers to mass market with numerous brand names. The company offers products at large scale and maximize profit share from various beer related business.“Other” company produces small amount of beer comparatively smaller than large scale breweries.

Thus, the net profit margin of “One” company is higher depicting that the company caters larger customer base and maximize profit returns.

Computer industry:

“One” company usually sells supercomputer to government bodies and commercial businesses;the company does not seek to invest largely as the risk tolerance lies between low and moderate.

“Other” company always seeks to expand the business by expanding the product line and to increase the customer base through innovating products.

The financial statement does not match with the description as the profits of “One” company are higher than “Other” company..................

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