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Macleod Made the Book

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Submitted By macleod
Words 627
Pages 3
#2 = Software
Goodwill is a common trend in the technology industry, and this firm has a high amount of goodwill, indicating that it might have overtaken some subsidiaries. Its huge margins, too, are typical of the software industry, which does not require much cost during production. This company hasn’t issued stock, indicating that it might be young and emerging, which is also common in technology. The high R&D is a big indicator of software companies, which always look to expand and adjust to volatile trends. The firm has no inventory, which would not be required of a technological service company. Because software’s assets are mostly intangible and not fixed, it has a high current ratio.

#9 = Pharmaceutical
This company has the highest R&D, which is vital for any company in medicine, and especially in pharmaceuticals. 40.3% of this firm’s total assets are categorized in “other,” which could indicate money tied in patents. Because pharmaceuticals require low costs to physically produce and are often sold for large markups, this firm has a high gross margin. The high receivables are due to the way in which pharmaceuticals are sold and paid for, which often involves the acceptance of credit. The firm pays out over 100% in dividends, which is a bit concerning and perhaps illogical.

7= Commercial bank
Firstly, the company has no money in R&D. It has high return on assets due to the interest it charges on loans, a high financial leverage index due to the liability of its deposits, and, therefore, a high return on equity (ROA x Financial leverage). The high cash was typical of a bank in 2007, which needed extra, liquid security in 2007. The high current ratio supports this idea. The high revenue growth is likely due to the recovery of the market in 2007, which might also have caused the low gross margins.

11= Specialized services
Specialized

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