Case Study - Financial Detective
EXAMINE & ANALYZE THE FINANCIAL RATIOS FOR EIGHT PAIRS OF UNIDENTIFIED COMPANIES A) Health Products From the market data, the beta of company B is slightly higher than company A. Company A appears to be less risky than company B. It is likely because company A is a diversified health-products company. Since it manufactures various products and involves in different segments, risk could be reduced. The liquidity ratios show that both companies A and B might not face liquidity problem. Current ratio and quick ratio of company A are higher than company B. Company A holds more current asset in term of cash and short term investments. These cash and short term investments can be used to invest in the future. In terms of asset management, company A has a higher inventory turnover than company B. This is probably due to the mass-market-oriented strategy adopted by company A.