Companies 1 2 3 4 Balance sheet data (component %) Cash 3.5 4.7 8.2 11.7 Account
ID: 2665077 • Letter: C
Question
Companies
1 2 3 4
Balance sheet data
(component %)
Cash 3.5 4.7 8.2 11.7
Accounts receivable 16.9 28.9 16.8 51.9
Inventory 46.8 35.6 57.3 4.8
Property and equipment 18.3 21.7 7.6 18.7
Income statement data
(component %)
Gross profit 22.0 22.5 44.8 N/A
Profit before taxes 2.1 0.7 1.2 3.2
Selected ratios
Current ratio 1.3 1.5 1.6 1.2
Inventory turnover ratio 3.6 9.8 1.5 N/A
Debt-to-equity ratio 2.6 2.6 2 3.2
This financial information pertains to the following information:
A. retail for store
B. advertising agency
C. wholesale candy company
D. car manufacturer
Required:
Match each company with its financial information
Explanation / Answer
Company 1= Wholesale candy company
Company 2= Car manufacturer: Car manufacturing is capital intensive and company 2 has maximum property & equipement.
Company 3= Retail for store: Retail store generate most of its sale in cash, company 3 has more cash than company 1, so company 3 suits more to retail for store.
Company 4= Advertising agency: Company 4 does not have any inventory (negligible inventory), advertising agency is the one that suits most here since an advertising agency does not have any inventory.
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