The Financial Detective

Company I – world’s largest maker of paper, paperboard, and packaging. The company has spent the last few years rationalizing capacity by closing inefficient mills, implementing cost-containment initiatives, and selling nonessential assets.

Accounts receivable turnover measures the efficiency of a business in collecting its credit sales during the period. Apple Inc. had an accounts receivable turnover ratio of 14.32 in 2012, 13.04 in 2013 and 10.47 in 2014. HP’s ratio was 4.75, 4.56, and 5.33 in the past three years. Since HP has lower values than Apple on accounts receivable turnover, it because that HP has a high amount of cash receivables for collection from its various debtors. HP should pay more attention on their credit term to avoid the lack of payments from debtors.

Debtor’s collection period: Debtors turnover ratio or accounts receivable turnover ratio indicates the velocity of debt collection of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over during a year. Significance: Accounts receivable turnover ratio or debtor’s turnover ratio

Cash and short-term investment for Company A (24.2%) is higher than Company B (16.1%). A is

As the business grows it would be wise for Mr. Will Bury to invest in other technology that reduces the conversion time for each book and increases opportunities for mass production. Initially the costs of these new

This research examines the extent of the use of the financial investigation method to advance the process of fraud investigation. To achieve this aim, an exploratory case study was utilised to allow the researcher conducting an in-depth investigation. This case study is carried out by exploring several fraud cases that significantly used financial investigation method in the process of investigation.

In this coursework I am going to compare the two companies Burberry Group Inc and Hermes company and their ratios. Both companies are two well known companies. This study will financially compare these two companies by using ratio analysis.

Account receivable turnover ratio, accounts payable turnover ratio and working capital turnover ratio have decreased over the time. This may indicate, inefficiency in collection and more investment in debtors than required, that the creditors are not paid in time or have increased credit period,

Bill is concerned about the inventory and account receivables turnover ratios because of their purpose and meaning in converting the situation of the business into figures. Inventory turnover ratio is to measures how efficient a business is at managing their inventory and generating sales from it, the formula for the ratio is (Cost of Good Sold)/(Average Inventory). From the statement, Linda Berhad initially had 5.1 turnover ratio where 1/5.1 ×365 days=71.57 days, this indicates that Bob initially only used approximate 72 days to clear off his entire inventory. Meanwhile, Bill had noticed that the ratio had decreased to 2.7 where it took about 136 days (1/2.7 ×365 days=135.19 days) for Linda Berhad to clear off their entire inventory. This means Linda Berhad are having a tough time to sell off their goods which is true as Bob said their computers were unable to sell during the holiday season.

Current socio-economic conditions in the country are profitable for businesses in the pulp and paper industry. While paper and paperboard consumption in the Philippines is still low at 19 kg per capita, total annual demand is growing at 2.5% per year, with packaging and tissue grades experiencing high growth rates. Moreover, total paper and board demand in the Philippines is projected to surpass 2 million tons within five years, or an additional of 0.3 million tons per year at current consumption

In contrast ratios have drawbacks as well. Initially the possibility of calculating different data between companies and as a consequence the result can lead to false conclusion. Furthermore comparing businesses with different turnovers could lead to a less meaningful result. Moreover ratios are consisted of an initial point for a further analysis. Also as we saw above ratios show us the financial strengths and weaknesses, but they cannot explain by themselves the reason of existence of the specific strengths and weaknesses or the changes that might have been happened. Another disadvantage is the existence of plenty of ratios but a small number of them is considered useful. Finally the absence of accepted list of ratios which can be implemented to financial statements and the lack of a standard calculation method for some of the

Income has been declining for International Paper Company in recent years. According to IP’s 10k, their income declined from 2,476 million to (1,332) million to (124) million from 2013 to 2014 to 2015 respectively. The decline in profit is mostly due to the decline in sales in recent years. Sales during the most recent quarter saw a (1.97) growth. Trailing twelve month growth compared to last year saw (7.54) growth. IP’s 4 year growth rate is at a low of (5.38) (“Financial Highlights”). While IP has negative growth, their growth is significantly less than the negative growth than industry, sector, and S&P 500 (International Paper “Financial Highlights”). Since the entire industry of paper mills is facing a steep decline in growth, it is expected that IP’s sales would also decline. The market for paper products in changing, leading to a decline in sales across the board. Paper imports are increasing as well as prices of raw materials and they are projected to continue increasing according to IBISWorld’s projections. Although IP appears to be doing a better job than most of their industry at keeping sales from falling too dramatically due to these factors, their sales and income are still affected negatively by these changes.

Financial characteristics of companies vary both from industry to industry and within a single industry for a variety of reasons.   The challenge for any company in planning its strategy is the consideration of the industry’s economics in conjunction with their own strategy to help the company’s financial statements remain strong and competitive across both lines.   In this case, we are asked to use this consideration of strategies to determine which company description belongs to which company’s financial statements.   And explain the differences in the financial results across industries.

First of the disadvantage of using ratio analysis is difference in accounting methodologies. Certain ratios may be adversely affected by a company’s accounting practices. Different company may be using different accounting method. For instance, inventory valuation methods may differ and it can be depreciation methods. As a result, comparing ratios of such companies may not describe a correct picture as what should express.

Ratio analysis involves comparisons because company ratios are compared with those of other firms in the same