The Case of the Unidentified Industries-2006 By Masiven From the balance sheet and the financial date given in Exhibition 1, I manage to connect the dates with the companies in the following order: 1. The online book seller correspond to balance sheet A, due to high inventory turnover but at the same time keeping low inventory, high cash and long term debt. 2. The book store chain correspond to balance sheet B, due to keeping high inventory, high plant and equipment assets, and profit per revenue is low. . The online direct factory to customer personal pc vendor correspond to balance sheet C, due to high number of account receivable, low inventory, low plant and equipment, but high inventory turnover. Because the inventories are presold, the company doesn’t need long term assets and high inventory.
4. The pharmaceutical manufacturer corresponds to D, due to high number of assets in other assets (know-how, or some intangible assets), high profit-revenue, high stock price and low profit-net worth. 5.The advertising agency correspond to E, firs because of the hint given for the company and second because the acc receivable and acc payable are almost equal both relatively high, also the plant-equipment assets are low. 6. The computer software developer corresponds to F, due to the low inventory percentage showing it is a service. It also has low plant-equipment showing that this business is more of an office type. This company is one of the most profitable of the all 14 firms, which is usual for high-tech company.
. The health maintenance organization corresponds to G, because of having low plant-equipment and no inventory and accounts receivable are very high. Also revenue per assets is high which is typical for a medicine company. 8. The restaurant chain corresponds to H, due to the very high inventory turnover, typical for a restaurant. The plant-equipment assets are high and the accounts receivable are low, because in this business the customer pays right after receiving the goods.
9.The retail grocery store corresponds to I, because the numbers show high inventory and high plant-equipment, because a grocery store has to be well stocked at all times. Also the accounts payable is high which indicates that a retail grocery store would have several suppliers. Also, high revenue to assets and low profit to revenue is typical for grocery store. 10. Department store chain refers to J, because of the high inventory, high plant-equipment and high accounts payable.
The common stock and receivables collection period are relatively high which is common for a department store chain. 11. The retail drug chain refers to K, due to high inventory, high accounts payable and high plant/equipment. The higher accounts receivable indicates when drug chains bill insurance companies which is common for this business. 12. The electric and gas utility goes to L on the balance sheet (with 72% of its revenue from electricity sales and 28% of its revenue from natural gas sales).
This is the reason for the company inventory. The high plant-equipment number and the receivable collection period it’s usual for company that sends bills monthly. 13. The airline company goes to M, because there is no inventory which means it is a service business. The high plant-equipment is due to the price of the aircrafts. Usually people pay with cash or credit card when they book a flight which explains why the accounts receivable number is low.The profit is low, probably of the crises, fuel cost and the very competitive market in that industry.
14. The commercial bank refers to M (“fitted into the most nearly comparable balance sheet and ratio categories of the nonfinancial companies”) due to no inventory on the balance sheet, shows that the company provides services. This company has the highest accounts receivable (90%) which can be explained by the loans given from the bank to the clients.
Also it has the highest receivable collection period with it being 4071 days.