A Comparison of the Financial Characteristics of U.S. and U.K. Manufacturing Firms

In this paper, we compare the financial characteristics of U.S. and U.K. manufacturing firms with the MANOVA (Multivariate Analysis of Variance) methodology using data from the Research Insight/Global Vintage database. Our findings indicate that U.S. firms have more liquidity compared with U.K. firms. This implies that U.S. firms have less technical insolvency risk compared with their U.K. counterparts. We find that U.K. firms have more efficient use of inventories and fixed assets compared with U.S. firms. However, U.S. firms have more efficient collection of accounts receivable compared with U.K. firms. Net profit margin is higher in U.S. firms than in U.K. firms. Since firms cannot raise prices to increase the profit margin in competitive markets, this finding implies that U.S. firms have lower manufacturing costs compared with their U.K. counterparts.