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Beer Company Essay Sample

Beer Company Pages
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Beer Company 1 is a “national brewer of mass-market consumer beers sold under a variety of brand names” (pg. 120). As one might expect, this national company has “an extensive network of breweries and distribution systems and owns some beer-related businesses” (pg. 120). It also owns several major theme parks.

Beer Company 2 is a brewer of “seasonal and year-round beers with smaller production volume and higher prices” that “outsources most of its brewing activity” (pg. 120). It is financially conservative, and has undergone a “major cost-savings initiative to counterbalance the recent surge in packaging and freight costs” (pg. 120).

Beer Company C has net fixed assets of 54.7% of total assets while Beer Company D’s net fixed assets were 16.0% of total assets, which leads me to believe Beer Company C is the national company because it owns a network of breweries and distribution centers, as well as beer-related businesses – while Beer Company D doesn’t own distribution centers, beer-related businesses or a number of breweries (they outsource most of their brewing).

Beer Company C’s long-term debt is 51.2% of its total liabilities, while Beer Company D’s long-term debt represents only 0.00% of its total liabilities. Carrying this much long-term debt also leads me to believe Beer Company C is the national company because it is this long-term debt that is paying for the net fixed assets.

The total debt to total asset ratio for Beer Company C is 51.19 while the ratio for Beer Company D is 0.00. The smaller debt to asset ratio means that Beer Company D carries less debt, or is more conservative, than Beer Company C. Beer Company D’s description was one of being financially conservative; therefore, it stands to reason that Beer Company D is the smaller brewer.

Inventory turnover for Beer Company C is 12.6 times, while Beer Company D’s inventory turnover rate is 7.44 times. The higher turnover rate tells me that Beer Company C is selling a higher volume of beer, and able to replace the beer being sold, much more rapidly than Beer Company D – which leads me to believe Beer Company C is the national company (it has the capability of producing the high volume and turnover, Beer Company D does not).

Beer Company 1, the national brewer, is Beer Company C. Anheuser-Busch Beer Company 2, the smaller brewer, is Beer Company D. Boston Beer Co.

Computers

Computer Company 1 “focuses exclusively on mail-order sales of built-to-order PCs, including desktops, laptops, notebooks, servers, workstations, printers and handheld devices” (pg. 120). This company “allows its customers to design, price and purchase through its website”, and is “an assembler of PC components manufactured by its suppliers” (pg. 120).

Computer Company 2 is led by its “charismatic founder” and is beginning to “recover from a dramatic decline in its market share” (pg. 120). It has an aggressive retail strategy designed to get people into their stores, which sell a “highly differentiable line of computers, consumer-oriented electronic devices, and a variety of proprietary software products” (pg. 120).

Computer Company E’s Investments & Advances is 18.6% of its total assets, while Computer Company F’s is 0.0% of its total assets. I believe the high investment amount of Computer Company E could be the result of their hefty components inventory requirement for assembling custom-ordered electronic devices, as well as the result of a customized website that allows a customer to build their device. Therefore, I believe Computer Company E is Company 1.

Accounts Payable: E=38.3%, F=18.0%
Current Liabilities: E=60.9%, F=33.3%
Long-Term Debt: E=2.2%, F=0.00%
Total Liabilities: E=72.1%, F=36.9%

Computer Company E’s accounts payable, current liabilities, long-term debt and total liabilities are a higher percentage of its liabilities & stockholder’s equity than Computer Company F’s. It seems to me that large inventory needs, immediate demand, and high obsolescence of electronic components requires a higher, revolving, outstanding debt than the debt required to have finished products available in a store. I believe Computer Company E is Company 1.

Computer Company E’s Intangibles represent 0.0% of its total assets, while Computer Company F’s Intangibles are 1.2% of its total assets. Intangibles like patents (for highly differentiable devices) and a company brand (led by its charismatic founder) have value. I believe Computer Company F is Company 2.

SG&A Expenses for Computer Company E are 9.7% of its total sales, while they are 23.1% for Computer Company F. Higher selling, general and administrative expenses could be the result of having retail stores (building costs, utilities, personnel) to sell products; therefore, I believe Computer Company F is Company 2.

Computer Company F’s Net Income is 3.3% of its total sales, while Computer Company E’s Net Income is 6.2% of its total sales. Computer Company F’s lower net income could be a result of its “beginning to recover from a dramatic decline in its market share”, which is why I believe Computer Company F is Company 2.

Computer Company 1, the mail-order sales, customizable electronics company, is Company E. Dell, Inc. Computer Company 2, the highly differentiable electronic device company, is Company F. Apple, Inc.

Newspapers

Newspaper Owner 1 is a “diversified media company that generates most of its revenues through newspapers sold around the country and around the world” (pg. 122). Competition for subscribers and advertising revenues in this industry is “fierce”. This company has strong central controls (it’s centered largely around one product) and has recently built a new headquarters building.

Newspaper Owner 2 owns newspapers in small Midwest and Southwest communities. This company can be said to be “holding a portfolio of small local monopolies in newspaper publishing” (pg. 122), has a significant amount of goodwill on its balance sheet (from acquisitions), and believes its operating success comes from its decentralized decision-making and administration.

Newspaper Owner P’s Net Fixed Assets represent 34.6% of total assets, while Newspaper Owner O’s Net Fixed Assets are only 14.1% of total assets. This leads me to believe that Newspaper Owner P is Newspaper Owner 1 because it had recently built a new headquarters building.

Newspaper Owner O’s Intangibles represent 76.8% of its total assets, while Newspaper Owner P’s Intangibles represent only 37.1% of its total assets. Because Newspaper Owner 2 has a significant amount of goodwill on its balance sheet, I believe Newspaper Owner 2 is Newspaper Owner O.

Total Debt to Total Equity Ratio: O=23.04%, P=33.66%
Total Debt to Total Asset Ratio: O=15.22%, P=26.81%

Newspaper Owner P’s higher Total Debt to Total Equity Ratio means it used a much higher proportion of debt and equity to finance its assets than Newspaper Owner O used. Newspaper Owner P’s higher Total Debt to Total Asset Ratio means it took more risk when investing in its assets than Newspaper Owner O did. Newspaper Owner 1 invested in a new headquarters building (net fixed asset), which would have required financing through debt and/or equity; therefore, I believe Newspaper Owner P is Newspaper Company 1.

SG&A Expense: O=23.0%, P=39.7%
Net Profit Margin: O=12.65%, P=8.86%

Newspaper Owner P’s SG&A Expense could be much higher than Newspaper Owner O’s SG&A Expenses because Newspaper Owner P’s “competition for subscribers and advertising revenues…is fierce”, so it costs them more to generate sales, compared to Newspaper Owner O’s small local monopolies. Having to spend more money to sell the newspapers will cause this increase in SG&A Expenses; therefore, I believe Newspaper Owner P is Newspaper Owner 1.

The higher costs incurred by Newspaper Company P played a role in its Net Profit Margin being 8.86%, lower than Newspaper Owner O’s Net Profit Margin of 12.65%. Another reason I believe Newspaper Owner P is Newspaper Owner 1.

Newspaper Owner 1, the diversified media company, is Company P. The New York Times Co. Newspaper Owner 2, the small local monopolies company, is Company O. Lee Enterprises, Inc.

Health Products

Health Company 1 is the “largest prescription-pharmaceutical company in the world” (pg. 120). It has a wide, deep pipeline of ethical pharmaceuticals, has a robust research and development budget, and has recently divested itself of some of its nonpharmaceutical businesses. It is also a partner of choice for licensing deals between pharmaceutical & biotechnology firms.

Health Company 2 is a “diversified health-products company” (pg. 120). It manufactures and mass markets a variety of pharmaceuticals, non-prescription items, health and beauty products and medical devices. Its mass marketing strategy relies on brand development and management.

Health Company A’s Net Fixed Assets represent 19.6% of total assets, while Health Company B’s Net Fixed Assets are only 14.9% of total assets. This leads me to believe that Health Company A is Health Company 2 because they carry a large variety of health products that require more equipment to produce.

Health Company A’s Intangibles represent 22.2% of its total assets, while Health Company B’s Intangibles represent 46.1% of its total assets. Because Health Company 2’s marketing strategy relies on brand development and management, a brand’s goodwill influences its sales. Goodwill is an Intangible; therefore, I believe Health Company 2 is Health Company A.

Health Company A’s Cost of Goods Sold represent 23.9% of its total sales, while Health Company B’s Cost of Goods Sold represents only 11.1% of its total sales. Health Company 1’s heavy investment in research and development leads to higher product costs; therefore, I believe Health Company 1 is Health Company B.

Health Company 1, the “largest prescription-pharmaceutical company in the world”, is Company B. Health Company 2, the “diversified health-products company”, is Company A.

Books and Music

B&M Company 1 has a vast retail store presence, are leaders in traditional book retailing, maintains an on-line presence and owns a publishing imprint.

B&M Company 2 sells a variety of media products through its web site, has recently become profitable, and has recently acquired related on-line businesses. 75% of its sales are media sales, while the rest is electronics and other goods.

Net Fixed Assets for B&M Company H is 24.4% of total assets, while it is only 7.6% for B&M Company G. B&M Company 1 has a vast retail store presence, while B&M Company 2 does not; therefore, I believe B&M Company 1 is B&M Company H.

Inventories for B&M Company H is 38.6% of total assets, while it is only 14.8% for B&M Company G. B&M Company 1, as a leader in the traditional book retailing industry, would require a great deal more sedentary inventory than a company without a physical retail store, therefore, I believe B&M Company 1 is B&M Company H.

Long-Term Debt for B&M Company G is 56.9% of total liabilities & equity, compared to 7.4% of total liabilities & equity for B&M Company H. B&M Company 2’s recently acquired on-line businesses are most likely the cause of the large Long-Term Debt proportion for B&M Company G, which means that B&M Company G is B&M Company 2.

Fixed Assets Turnover for B&M Company G is 29.42 times, compared to 6.54 times for B&M Company H. B&M Company 2 has very little fixed assets compared to B&M Company 1; therefore, B&M Company g is B&M Company 2.

B&M Company 1, the company with the vast retail store presence, is B&M Company H. B&M Company 2, the company that sells through its website, is B&M Company G.

Paper Products

Paper Company 1 is the world’s largest maker of paper, paperboard and packaging. It owns timberland, lumber and production facilities, and has spent the last few years cutting costs, selling inefficient and nonessential pieces of the company.

Paper Company 2 is a small producer of towels, tissues, printing and technical specialty paper. These items are marketed under different brands. Wood fiber needed to produce these items is purchased on the open market.

Paper Company J has more Inventories (14.4%), more Current Assets-Total (32.6%) and more Net Fixed Assets (62.5%) than the corresponding items at Paper Company I (Inventories-7.9%, Current Assets-Total-27.2%, Net Fixed Assets-50.8%). This would lead me to believe that Paper Company J’s ownership of timberland, lumber and production facilities is the reason for these higher figures. I believe Paper Company J is Paper Company 1.

Long-Term Debt is 41.3% for Paper Company I, compared to 18.3% for Paper Company J. Paper Company 1 has been spending recent years cutting costs, selling inefficient and nonessential pieces of the company – which probably reduced the amount of Long-Term Debt it had been carrying. Therefore, I believe Paper Company I is Paper Company 2.

Paper Company I has a much higher Intangibles value (14.6%) than does Paper Company J (1.9%), which would be consistent with the brand recognition, trademark and goodwill generated by having a number of brands owned by one company. Therefore, I believe Paper Company I is Paper Company 2.

Paper Company 1, the “world’s largest maker of paper”, is Paper Company J. Paper Company 2, the small producer, is Paper Company I.

Hardware and Tools

H&T Company 1 is a global manufacturer and marketer of power tools and their accessories, hardware, fastening systems, and home-improvement products. It sells to retailers, wholesalers and distributors under many well-known brands, who then sell to the end user.

H&T Company 2 manufactures high-quality precision tools and diagnostic equipment for professional users. Sales are handled by technical representatives and mobile franchise dealers. Franchisees and customers making large purchases are offered financing.

Receivables for H&T Company K is 18.9% of total assets, while it is 23.7% of total assets for H&T Company L. Financing offered to franchisees and customers with large purchases would lead me to believe that H&T Company L is H&T Company 2.

Investments and Advances for H&T Company L is 3.0%, but it is 0.0% for H&T Company K. Money invested in the development of the high-precision tools and diagnostics equipment, as well as the money advances to the mobile franchisees, would be classified in this section. Therefore, I believe H&T Company L is H&T Company 2.

Long-Term Debt for H&T Company K is 21.7% of total liabilities & equity, but only 8.9% for H&T Company L. Long-term debt could be caused by H&T Company 1’s position as a global manufacturer and maker of a large variety of power tools and accessories, rather than a manufacturer of a tools for a niche market. Therefore, I believe H&T Company K is H&T Company 1.

SG&A Expense is 24.8% for H&T Company K and 38.9% for H&T Company L. This means that the cost of selling, general and administrative costs for H&T Company L are higher than for H&T Company K. Considering that H&T Company 1 sells to retailers, wholesalers and distributors, while H&T Company 2 employs technical representatives and mobile franchise dealers to sell to the end user, it is clear that H&T Company 2 would incur more selling and administrative costs than H&T Company 1. Therefore, I believe H&T Company L is H&T Company 2.

H&T Company 1, the manufacturer of power tools, fastening systems and home improvement products, is H&T Company K. H&T Company 2, the manufacturer of niche market tools, is H&T Company L.

Retailing

Retail Company 1 carries a wide variety of nationally advertised general merchandise, is known for low prices, breadth of merchandise and a volume-oriented strategy. Its leased stores are near its expanding network of distribution centers, and has begun implementing plans to expand internationally and in large urban areas.

Retail Company 2 is a rapidly growing chain of upscale discount stores, competes by matching other discounter prices on similar merchandise, and partners with several leading designers. It has recently divested itself of several nondiscount department stores. Credit is offered to qualified customers in order to support sales and earnings growth.

Receivables for Retail Company N is 17.0% of total assets, compared to 1.4% of total assets for Retail Company M. The larger receivables value could be a reflection of Retail Company 2’s extension of credit to qualified customers; therefore, Retail Company N is Retail Company 2.

Inventories for Retail Company M is 24.5% of total assets, while Retail Company N’s Inventories are 16.7% of total assets. The larger amount of inventory could be from the “wide variety” of general merchandise, as well as from its close proximity to its distribution centers, which leads me to believe Retail Company M is Retail Company 1.

Intangibles for Retail Company M is 9.0% of its total assets and Intangibles for Retail Company N is 0.6% of its total assets. Retail Company 1 carries nationally advertised merchandise which is reflected as a higher Intangibles value because of the merchandise’ brand and goodwill; therefore, Retail Company M is Retail Company 1.

Retail Company 1, which carries nationally advertised merchandise, is Retail Company M. Retail Company 2, which carries similar merchandise, is Retail Company N.

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