Hi,
Recently had an interview question that asked how I can tell an industrials company from a healthcare company just from its financial statements. I said industrials probably had higher pp&e and D&A expense. Are there any other factors? Would a healthcare co have lower cogs? Thanks
Depending on type of HC firm, I would say higher R&D (Pharma/Biotech) and probably more of a variable cost structure for some of the other sub-verticals (Med Devices maybe?).
Industrials companies would have high CapEx, D&A, PP&E but also high fixed cost structure.
I'd also add to the above: - potentially a higher value for patents in the Balance Sheet of a healthcare company - R&D in cash flow statement instead of capex for healthcare company (assuming they show them separately) - PP&E won't necessarily change a lot as pharma companies also need huge sites to manufacture current products and to develop new ones - Similarly, D&A won't necessarily be higher. However, I would expect amortisation of patents to mean that the amortisation expense would be much higher for healthcare companies than industrials
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