Identify the industry Harvard Case Solution & Analysis

Identify the industry Case Study Solution

The second organization mentioned in the exhibit is known to a liquor producer and distributor. As the company has gross profit of about 69.7 percent of the sales. The highest percentage of inventories i.e. 21.6 percent is suggested the organization to be the liquor producer and distributor with high general and administrative expenses i.e. 37.2 percent suggesting that the organization deals in both production and distribution of liquor product. Similarly, the high value of long-term debt i.e. 22.1 percent of total liabilities and net worth. The assets are primarily financed by the long-term debt and retained earnings like other manufacturing businesses. The company has 1.80 value for the acid test ratio, suggesting that the organization indicated high inventories value.

The third corporation tends to be the manufacturer of semiconductors. The cost of goods sold is known to be 25.2 percent as well as selling, general and administrative expenditure is also 33.1 percent resulting in net income of about 21 percent of sales. Due to the reason, the semiconductor manufacturing corporation generally with sufficient values of inventory i.e. 5.3 percent. They also have high value of property, plant and equipment which suggests the requirement of investment i.e. 79.8 percent of net plant, property and equipment. The retained earnings have known to be 39.3 percent of total liabilities and net worth. The assets of the organization are barely financing the liabilities with respect to the current and acid test ratio i.e. 2.32 and 1.67 respectively.

The fourth corporation is expected to be Pharmaceutical Corporation. It tends to be manufacturing firm as demonstrated by the financial data. As there is always a requirement of high investment in pharmaceutical organizations. 29.6 percent of sales is referred to as operating incomes excluding depreciation. Retained earnings of the organization i.e. about 37 percent is primarily for the investment purpose after the complete payment of long-term debt. As the organization is known to have a long-term debt of about 14.7 percent. Although, the company has feasible liquidity ratio but coverage ratios were not disclosed.

The fifth firm is evaluated to be the computer software organization with relatively low cost of goods sold i.e. 15.6 percent. This clearly demonstrates that the organization is not manufacturing firm but a service provider. This is, therefore, confirmed on the basis of high selling, general and administrative expense i.e. 54.8 percent. As a service provider firm, the organization is liable to pay higher tax to the state government which were not disclosed in the financial data provided in the case study for analysis.

Company 6 is thought to be alarge integrated Oil and Gas company. With the fact, Oil and Gas Company is expected to have a high cost of goods sold with a less value of net income. In context to the income statement provided in the case, it can be significantly considered that Oil and Gas Company is likely to have increased value of finished goods and higher equipment, plants and property. Therefore, the cost of the goods sold is 77.3 percent which is quite high value with the net income of about 2.6 percent illustrating low profit for the organization. Additionally, in the liabilities section, the long-term debt of the organization is 14.7 percent of total liabilities and equity which is considered high suggesting that in starting-up of the corporation money was borrowed. On the other hand, the capital surplus is low i.e. 6.5 percent with positive retained earnings of about 30.7 percent demonstrating that is not facing losses over a period of three years.

Evaluation of company seven in consideration with its financial data shows it to be a mobile phone service provider. The organization is known to have a high value of receivables i.e. 55.1 percent of total asset which suggest that the corporation had a belief in credit sales. The corporation have relatively low value of equipment, plant and property i.e. 0.8 percent defining the probability of the organization of being a service corporation rather being a manufacturing one as it primarily does not have requirement of significant investment. Similarly, the shareholder’s equity is nearly about 11.0 percent of total liabilities and net worth. Therefore, each number and ratio suggests it confirmation of being a service provider organization particularly mobile phone service.

The eighth organization is known to be discount airline with highest number of inventories i.e. 21.5 percent. On the other hand, high value of cost of goods sold is known to be 73.6 percent with a less net income value i.e. 3.5 percent. Similarly, high cost of selling, general and administrative expense is known to 19.1 percent. However, the long-term debt of the organization is known to be 22.2 percent but with significant retained earnings i.e. 35.5 percent.Additionally, the return on equity is considered good which is estimated to be 0.20 whereas coverage ratio of the organization is not given.

The ninth – last organization on the exhibit of the case tends to be commercial bank. It is on the basis of the financial data analysis with greater equity of the shareholder i.e. 48.8 percent. Although, the capital surplus of the organization in zero, but the retained earnings have known to be 103.9 percent highest among all the organizations. The inventories are quite low but with high cost of goods sold i.e. 80.7 percent as well as selling, general and administrative expense to be 3.8 percent resulting in net income to be approximately 9.5 percent. Therefore, on the basis of numbers and ratios is to conclude that the organization is a commercial bank.

Conclusion:

Evaluation of nine different companies with respect to their financial data analysis as well as ratios have been successfully determined. As per financial data, the industry of the companies evaluated falls in the category of retail grocery organization, liquor producer and distributor, manufacturer of semiconductors, Pharmaceutical Corporation, computer software organization, large integrated Oil and Gas Company, mobile phone service provider, discount airline and commercial bank respectively...........

 

This is just a sample partical work. Please place the order on the website to get your own originally done case solution.

Other Similar Case Solutions like

Identify the industry

Share This