Investment Bank
Main reasons: High level of leverage, demonstrated in the highest ratios of all companies: assets/equity and debt/equity. Highest number of days of receivable – banks lend money to their costumers (ex. long term loans) and expect to receive this money in a not very short period of time, reflected in the days of receivables (1941 days = 5.3 years approximately). Low level of equity, characteristics of investment banks, which in this case only represents 8.5% of its structure, and is also the lowest from all the firms.
Warehouse shopping club
Main reasons: This company has a high level of inventory (17.3%) and a high level of inventory turnover (11.0). Compared to the supermarket chain, this company has a higher percentage of net, plant and equipment (65.4% vs. 46.5%) and higher margins, since generally they have more value aggregated products. The warehouse-shopping club also has a similar number for days of receivables, characteristics of the payments in cash and payment cards.
Express delivery firm
Main reasons: Among all firms, we realize that firm C has the highest percentage for long-term debt (32.9%), characteristic of this type of companies that need long term debt to finance many of their assets. In terms of days of receivable, this firm has an average number (41.2) as generally they give credit to some of its costumers. If we see its intangibles (21%) we also see this takes into account a representative number of non-current assets, that might come from its brand name, know-how, etc.
Hotel Chain
Main reasons: This company has a high level of non-current assets (59.7%), typical from hotel chains that have generally real estate properties. This company has a modest long-term debt policy that represents only 6.1% of its non-current liabilities. It can also be observe that the company has the highest level of inventory turnover, showing its efficiency in managing its inventory, despite being long (only 1.6% of its current assets).
Manufacturer of electronics
Main reasons: In terms of ROA (net income/assets) this company performed the highest of all the firms (0.2), which demonstrates that the company is very efficient in managing its assets, mainly non current assets (66.6%), such as their equipment. Despite being low, we observe there is a low level of R&D/sales (1.6%), which might be since it really focus on the manufacturing of product and not developing new ones. We also observe a good level of intangibles (28.6%) that might come from patents, brand value, technology know-how involved in the production of this electronics, etc.
Pharmaceutical manufacturer
Main reasons: Highest levels of intangibles among the companies (52.1%), combined with some level inventory (4.3%), since it is a manufacturing company. Besides this, we realize that the company has been investing in R&D, demonstrated in the R&D/sales ratio (14.1%). Finally, we see that this company has a high level of gross margins (81.6%) characteristic of this type of companies.
Consumer product firm
Main reasons: This company has the second highest days of receivables (137.2 days) that might come from the fact that it gives credit to its costumers, generally retailers. As a consumer product company, they have some level of inventory (11.8%), however, we can see that their non-current assets are not reflected on plant, property and equipment, as their generally don’t produce the products themselves, but buy them from other manufacturers.
Supermarket Chain
Main reasons: Lowest level of days of receivables among all of the firms (4 days), which is very characteristics for companies that receive payments either in cash or payment cards. High levels of inventories (24.8%), a high percentage of account payables (24.5%), and a low level of gross margins (13.5%).
Temp agency
Main reasons: First of all, we see this company does not have any inventory at all (0%), however it has the highest level of Net receivables (59.3%) among all the firms. This company also does not have long-term debts, no investments at equity, which lead us to believe that they focus on their service they provide. In term of days of receivables, we have a 59.8 days value, which indicates that in general, their costumers pay them every two months.
Software firm
Main reasons: We observe that the company has high levels of intangibles (40.4%) combined with no inventory at all. Besides that, we realize that they have the highest level of R&D/sales from all the firms (16.5%) As far as margins, this company also has high levels of margins (87.7%) characteristics of TI companies.
