financial detective

Note the drastic difference in the operation of the two companies, even though their ROEs are nearly the same. Chem-Med makes relatively few sales (low asset turnover), but makes a lot of money on each one (30%). Pharmacia is just the opposite - its profit margin is low, but it manages much higher sales in relation to assets. Also by using more debt than

Once again both companies have seen a reduction in this ratio over the past two years, meaning that the company were less effective in ’generating sales from [it’s] assets’. (Leopold, A et al, 1999, 249).

c. Smaller payments mean more time in debt. d. Your lower interest loans also get rolled into the deal so you end up with minimal savings.

1. Describe a real or made up but realistic situation that could cause you or someone you know to have to use money from a financial reserve. (3-6 sentences. 2.0 points)

My parents receive an earned income, meaning they work for it, unlike unearned income like child support and disability. My mom works as a Human Resources Director; she over sees all investigations in her facility and hires and fires people. My dad works as an Operations Sales Manager, so he over sees all of the different sales. They both have salary wages, so their income isn’t based on hours.

Commutronics had not accumulated enough profits and had no sufficient capital reserves. The company’s registered capital was therefore very low. The withholding tax rate of

3. Household International is a financial institution and I would link this company with the first balance sheet. First clue is that they have no inventory which is the case with financial institutions. Second, the receivables are the largest part of the total assets, 81, 9%, and the total debt is much higher than the equity, 88, 8 % of total liability and shareholders’ equity. The last clues are that this company has the lowest PPE form all five listed here.

F remains the pharmaceutical firm because it has higher Margins due to the capacity to keep high drug prices. It also spends a significant amount on R&D while the competition is always coming up with a new product.

Second City Options (SCO) is a small firm that specializes in option trading. Employing 35 people, SCO is located on LaSalle Street in the Chicago financial district. It is a member firm of the Chicago Board Options Exchange (CBOE), where it trades options on stocks and stock indices. It is also a member firm of the Chicago Mercantile Exchange Group (CME Group), where it trades options on futures and the underlying futures contracts.

We believe that Company I represents the Smaller Producer of printing papers and Company J represents the World’s Largest Market of Paper.

Table of Contents ................................................................................................................................................ 1 Assignment Background .................................................................................................................................. 2 Bigg-Glowbell Overview ...................................................................................................................................... 3 The Company History ...................................................................................................................................... 3

The costs of capital and capital structures for Pfizer Inc. and its two competitors Merck & Co. Inc. and Johnson & Johnson in the pharmaceutical industry are analyzed in this memo.

The case of the Investment Detective laid out the cash flows for us in each of eight different projects. Before doing any calculations we came up with the assumption that we could not rank the projects simply by inspecting the cash flows.

The last one is the Balance Sheet which tells a person the lists of assets he has, the list of

Company Y has 2.55, which implies relatively under utilization of the resources. Company X has 1.8, which is preferable