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Firm B
One manufactured pharmaceuticals and a variety of low-margin hospital
supplies, and both product lines were marketed primarily through direct
sales to doctors and hospitals. The firm had recently acquired a large
hospital supply company and therefore had significant goodwill on its
books.
Firm A
The other firm manufactured and nationally mass-marketed a broad line
of name-brand toiletries, nonprescription drugs, and consumer and baby-
care products, through 165 decentralized subsidiaries.
Reasons :
FirmD
The other company attempted to segment the market for the same
products by selling under its own name and under three other brand
names. The second firm had a contract to sell one brand solely as a
private-label item through a large department-store chain.
Reasons :
Firm F
The other firm manufactured large main-frame computers and had an
emerging position in the supercomputer segment; it also developed and
marketed related software and provided financial and insurance services
as well. Computer and software sales were responsible for about two-
thirds of the company’s revenues, and financial services for the remaining
one-third.
Reasons
Firm G
The other firm was a rapidly growing chain of discount department stores
and wholesale clubs that owned a large portion of its outlets. As a
discounter, it provided little or no credit to customers.
Reasons
Firm J
The other firm was financially conservative. It specialized in radio and
television equipment and made semiconductors as a secondary, but
increasingly important, line of business (over 30 percent of revenues).
Reasons
1. Firm J had bigger cash & Equivalents because they are financially
conservative.
2. Firm Jhad less total liabilities because they try to avoid debt.
3. Firm J had 78.3% COGS, with the assumption 30% of its COGS comes
from semiconductor as second line business firm J still has 48.3% COGS
that comes from its main line business.
HOTELS
Firm K
One company owned one of the largest food-service contractors in the
country, a large chain of family restaurants, and a large chain of fast-food
restaurants. This firm financed its hotels via off-balance-sheet limited
partnerships. The company had significant assets in the form of food
service and hotel management contracts. Hotel revenues accounted for
about 40 percent of the total, and contract services for about 45 percent.
Firm L
The other firm operated a worldwide chain of high-quality hotels and
motels in addition to a smaller line of casinos.
Reasons
1. Firm K had bigger grossprofit because they gained profit from contract
service for about 45% which doesn’t have cost of goods sold.
2. Hotel K also had much lesser liabilities thann Hotel L which can be
interpreted as result of the firm financing (using off-balance-sheet limited
partnership).
NEWSPAPERS
Firm N
One had a large flagship newspaper that was sold around the country and
around the world. Because the company was centered largely around one
product, it had strong central controls.
Firm M
The other firm owned a number of small newspapers throughout the Mid-
West. Broadcasting was its secondary line of business and accounted for
about 27 percent of total revenues. This company had a significant
amount of goodwill stemming from acquisitions.
Reasons
1. Firm N has lesser other asset than M because only focus on one product.
2. Firm M has more gross profit than N because they have income from
broadcasting.
3. Firm M has goodwill because of acqusitions and it can be seen on the
statement where its other assets are bigger than its fixed assets.
4. This company also got income from acquisitions that is written on other
expenses (income) account.
TRANSPORTATION
Firm O
One was a large, national trucking and freight- forwarding company.
Firm P
The other was primarily a railroad, although 20 percent of its revenues
were derived from real estate and exploitation of natural resources.
Reasons