The case is in attachment which is CASE 7: The Financial Detective, 2005

In the Case Report, you must relate the description to the company (A,B,C,etc.) and list and discuss
the ratios that justify your choice. You will need more than one ratio to support your choice. The
chosen ratio must be relevant to the industry.

Conditions; the case report I recommend you use the following general format.

1.Introduction: (a) to the case (b) the problem or situation (c) the people involved (when applicable).
This should be a few paragraphs (as needed).

2.Analysis: Most cases will require both quantitative and qualitative analysis. You must show step by
step, all formulas used, and all calculations performed. If you like, some of the details can be moved
to the appendix. Spreadsheets should be uploaded as separate documents. It is not enough just to
do the number crunching. You must explain and interpret all your analysis.

3.Conclusions: Some cases require you to make recommendations. You will have to justify them with
the appropriate arguments and calculations. You can also write here any additional things you
recommend the company should do or look at.

The work must be your original work and must be 6 complete pages without any references

more information

Comparisons among industries

This case is primarily about the effects of managerial strategy on financial ratios, but it also affords
several insights about the effect of industry differences on financial ratios. For instance, differences
in asset intensity can produce dramatically different asset structures (for example, compare the
percentages of inventory and net property, plant, and equipment [PP&E] for paper products with
computers). The rate of technological change can manifest itself in several ways including the
reinvestment rate required to stay competitive (for example, compare dividend-payout ratios for
newspapers, and books and music). Industry structure is believed to affect the profitability through
the pricing power of the firm. The newspaper industry can be characterized as locally oligopolistic (in
some areas, however, monopolistic); the discount retail industry is much more competitive in
structure. The gross profit margins of the two industries differ substantially. The general insight is
that, in conducting the financial analysis of a firm, one must understand the nature of the industry.
Some observations about the art of ratio analysis:

Ratio analysis is only as good as the financial statements that underlie it. In particular, one needs to
understand the accounting policies that generated the statements. The various treatments of
goodwill, lease obligations, and equity interests in subsidiaries appear in the discussions. In addition,
the absence of data can frustrate ratio analysis.

Frameworks such as the DuPont system of ratios and categories of ratios (activity, profitability,
liquidity, and leverage) are useful organizing schemes for an analysis.

Nave ratio analysis can absorb considerable time, as one seeks to find a pattern (any pattern) in the
blizzard of numbers. Effort is economized by thinking first about the underlying business that
generated the ratios.