The Case of the Unidentified Industries
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The Case of the Unidentified Industries
A-Department stores- would fit this financial data because their long-term debt stands outs it shows that this department store must borrow a lot of money to finance their inventories and buildings. They have an average inventory turnover rate which means that they currently efficient. This firm overall is at a good pace and its generates a lot of asset. Its shows little signs of any deffieciency except for the many long term debts- and account payable.
B- Retail drug- would fit this financial data because they are just like any other retailer; they would have a quite low collection period- around 2 weeks or so. This also would show why they have a low account receivable because they are not expected to have money coming in longer than 2 weeks unless on some occasions it takes a while for insurance companies to pay them. Their main source of revenues is selling prescriptions drugs, getting these drugs
are expensive to buy from the vendor, this explains the high liabilities. You must also have to get licenses insurance etc.
C-Online direct factory to customer personal computer vendor- Most of their business is sales to businesses, and manufacturing are outsource. This means most of their transactions are done online. All of their business is done online and through credit transaction. This means they will have a large account receivable and large marketable securities since everything will be converted to cash quickly. Their inventories should be very low due to most of it will be outsourced or made to order. They order their parts through other vendors.
D-computer software developer- Sell most of their products online and direct to customers, so most of their sales and transaction online. This explains the high receivable collection period because most of their transactions can be bought with their own business credit card and that will take up to 1 month for it to be received.