Company A has a much higher ratio of Cash & Short Term Investments, Receivables, and Inventories (24. 2%, 12. 8%, 7.
0%) as compared to Company B (16. 1%, 8. 1%, 5. 4%) which is lower in every asset category ratio besides Intangibles and Investments & Advances, 46. 1% to 22. 2% and 3.
1% to . 1%. This proves that Company A has cash on hand from the sale of side divisions and that they have a large production facility. Company B is a more diverse company in terms of production, which has a larger ratio of their assets in Intangibles such as patents and proprietary rights from the mass amount of products they sell.
On the liability side, both Company A and Company B are nearly identical with only slight differences in their ratios. Company B has Debt in Current Liabilities that is 18. 2x than Company A. Additionally, Company B decided to defer amount of taxes, 10. 2% compared to . 8%.
This shows that Company B defers taxes to take advantage of extra capital for production and as a float, showing that the cash ratio and short term investments are actually smaller than shown because much of that money is earmarked for deferred taxes.It is easy to say that Company A has a higher ratio of cost of goods sold because of their substantial budget for research and development which is normal in a pharmaceutical company who creates their own products from research as opposed to Company B whose cost of goods sold is significantly lower, 11. 1% to 23. 9% because their over the counter and common products have no needed research.
