Unidentified Industries the Case of the Unidentified Essay

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Unidentified Industries

The Case of the Unidentified Industries - 2006

Match companies from 14 different industries to corresponding financial data. Be very thorough how and why you obtain your answers. Make sure to clearly write up your assumptions and back them up with specific references, your personal knowledge of these industries, and any other relevant information. When possible, compare industries using more than one financial ratio.

In The Case of the Unidentified Industries, our group used a number of means to discern the identities of the fourteen listed unknown entities. We found that it was important to keep in mind the year that the case was written because business conditions have changed and companies are at a different place in their development. Publicly available financial filings were helpful in some instances as well as our combined general knowledge of industries and the process of elimination.

In this section we will present our determinations of which companies matched with what financial data. In order to be concise, we will list the companies by letter as presented in the spreadsheet and discuss the items most relevant in making the determination.

A. This is the online book seller. Most significant here were the relatively low inventory for a retail business and high inventory turnover. We felt that this pointed to the online nature of the business. Also related to being an online business is the low plant and equipment.

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We were also able to research the 2006 10-K for Amazon.com, a large and well-known online book seller (http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-sec&control_selectgroup=Annual%20Filings) and found that the high percentage of cash in the balance sheet as well as the high long-term debt percentage is both reflected accurately. We surmised that the debt may have been due to the company using leverage to grow during that stage of their enterprise.

B. This is the bookstore chain. This determination was indicated by the high inventory coupled with the high plant and equipment both of which would be present in a retail chain with many stores filled with books. The inventory here turns over slower than at Amazon and their profit per revenue is lower due to their increased costs of overhead.

C. This is the online PC vendor. The case indicates that more than half of sales are to business customers. This would translate into the relatively high accounts receivable number as businesses would be invoiced and pay on account. The case also states that most manufacturing is outsourced which would explain the low numbers for inventory and plant and equipment and very high inventory turnover. They would not need to own factories and inventory….....

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