Case 6 Financial Detective 2016

Ratio analysis is only as good as the financial statements that underlie it. In particular,
one needs to understand the accounting policies—such as the treatment of goodwill—
that generated the statements. In addition, the absence of data can reduce the value
of 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.

Industry:
1. Airlines: JetBlue Airways Corporation (JetBlue) / Delta Air Lines, Inc. (Delta)
2. Beer: Anheuser-Busch InBev SA/NV (Anheuser-Busch) / Boston Beer Company
(Boston Beer)
3. Computer: Cray Inc. (Cray) /Apple Inc. (Apple)
4. Hospitality: Marriott International, Inc. (Marriott)/Hyatt Hotels Corporation (Hyatt)
5. Newspaper: The New York Times Company (New York Times)/A. H.Belo
Corporation (A.H. Belo)
6. Pharmaceuticals: Eli Lilly and Company (Eli Lilly)/ Valeant Pharmaceuticals
(Valeant)
7. Power: AES Corporation (AES) / First Solar, Inc. (First Solar)
8. Retail: NordstromInc. (Nordstrom)/Amazon.com, Inc.(Amazon) I

1. Airlines: Company A an airline company operates domestically and

internationally /Company B operates in the US , also covers countries in
Caribbean and Latin America/ Key financial ratios to cover in
analysis: Net PP&E/Goodwill and intangibles/Gross profit versus net
profit/Dividend payout/ Inventory turnover/Receivables turnover/Fixed-
asset turnover/Return on equity (ROE)
2. Beer: Company C is Anheuser-Busch, a producer and mass-marketer of
over 200 beer brands / Company D seller of the popular line of beers, a
category of niche beers called “microbrews”/ Key financial ratios to
cover in analysis: Cash and short-term investments/ Goodwill and
intangibles/ Long-term debt/ Current ratio/ Debt to assets and debt to
shareholders’ equity/ Net income/ Dividend payout
3. Computers: Company E a manufacturer of a highly differentiated group
of personal computers, software, and consumer electronics/ a broad line
of electronics/ charging premium prices /Company F sells supercomputers,
software, and data storage systems/ a narrowly defined product line/ a
strong profit margin/ Key financial ratios to cover in analysis: Cash
and short-term investments/ Receivables percentage and receivables
turnover/ Inventory percentage and inventory turnover/ Long-term
marketable securities/ Long-term debt/ Net income/ Dividend payout
4. Hospitality: Company G a multinational hospitality company with hotels
and resorts/ Company H a global footprint for the hotels, resorts, and
residential properties that it manages and franchises/ Key financial
ratios to cover in analysis: Net PP&E/ Goodwill and intangibles/
Stockholders’ equity/ Receivables percentage/ Receivables turnover/ Asset
turnover/ Net income/ROE/ Dividend payout
5. Newspapers: Company I a company that publishes a newspaper, highly
acclaimed and widely subscribed to/ Company J a media company owns
and operates two daily newspapers/slowly been investing more in digital
marketing / Key financial ratios to cover in analysis: Cash and short-
term investments/ Goodwill and intangibles/ Stockholders’ equity/ Gross
profit/SG&A expense percentage/ Fixed-asset turnover/ Dividend payout
6. Pharmaceuticals: Company K a diversified manufacturer of
pharmaceuticals and medical devices/ Company L a company that
manufactures pharmaceuticals/ Key financial ratios to cover in
analysis: Goodwill and intangibles/ Long-term debt/ R&D expense/ Net
income percentage/ Long-term debt to equity/ Interest coverage
ratio/Dividend payout
7. Power: Company M a global power and utility company /Company N a
company that focuses on solar energy and the selling and maintenance of
solar panels/ Key financial ratios to cover in analysis: Cash and
short-term investments/ Net PP&E/ Long-term debt percentage/ Equity
percentage/ Net income percentage/ Interest coverage ratio/ Dividend
payout
8. Retail: Company O the e-commerce retailer of books, music, and a
variety of other consumer goods/ Company P an upscale fashion retailer
that operates in the United States and Canada/ Key financial ratios to
cover in analysis: Cash and short-term investments/ Net PP&E/ Long-
term debt/ Long-term debt/shareholders’ equity/ R&D expense/ Net
income/ Inventory turnover/ Receivables turnover/ Dividend payout