Tillman, Matt

EXSUM Finance I Case Study of Cardinal Health

Question: Provide a financial analysis of Cardinal Health company.
Domain/Competencies: Health Resources Allocation
Individual and Organizational Behavior: Group Dynamics/Public Speaking
Method of research/Model: Business Case Study / Finance Ratio Analysis
Assumptions: N/A
Overview: Tammy Smoak and I utilized the financial statements of Cardinal Health to assess
their financial strength. We utilized the annual report for the shareholders of the company to
interpret financial ratios into a subjective assessment of financial health using profit, liquidity,
asset management, and debt management ratios.
Cardinal Health did over $100B (nearly 80% of the market share) in sales in 2013. Despite this
huge number, Cardinal only had a total margin of .339% compared to a 3.77% total margin of the
industry. While this is an extremely low number, it is based on the business model of the
company and strategic decisions to maintain a relationship with Express Scripts. BLUF:
Cardinal operates on a low margin, high volume design.
Cardinal makes a lot of revenue with very few assets which is reflect in their current ratio of 1.22
versus the industry average of 1.89.
As 2013 showed and some events in 2014 will show, Cardinal is facing a changing market and
many of their financial metrics demonstrate strategic moves.
If taken independently, some of the financial measures chosen for analysis would be disturbing.
However, in context of the strategic moves, the company is positioning itself for the future.