Case 6: the Financial Detective Essay

1695 Words Jan 28th, 2012 7 Pages
Case 6 : The Financial Detective

Financial data is the most crucial information in describing any sort of business, but this information is also useful in differentiating between different types of businesses. In any specific industry, many key players are present, yet their strategies and implementations of business vary greatly. Two firms may achieve the same earned profit, yet go about securing this profit in radically different ways .A close analysis of financial data for each business can be used to understand and explain these different strategies employed by a given company and how that strategy affects the financial performance of each company. This case calls for the examination of two different companies within the same
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As well, since company F is a bricks & mortar retailer as opposed to an online vendor, F has had to adopt and aggressive retail strategy that requires advertising their products and stores and employees in which to sell their products, which accounts for the relatively higher SGA expense (23.1).
Books and Music Of the two companies profiled here, the first focuses its sales based on a vast retail-store presence. This company is the leader of traditional book retailing, and also maintains an online presence and owns a publishing imprint. The other company sells books and music solely through its web site. Media is the majority of their sales, but they also sell electronics and other merchandise, and the company has only recently become profitable due to an aggressive strategy of acquiring related online businesses.
Company G is the online retailer while company H is the traditional seller. G reaches customers solely through the internet, and besides various warehouses used for shipping it would have no need to keep large fixed assets, which explains why their net fixed assets (7.6) are significantly lower than the traditional seller (24.4), who requires the retail outlets needed to reach their customers. Along these lines, as H is a traditional seller of goods, their inventories (38.6) are bound to be much

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