unidentified industries

1499 words 6 pages
The Case of the Unidentified Industries—2006
FIRM A- Department Store Chain Looking at the balance sheet of firm A, we can notice several things right away. We can see that a large chunk (54%) of its assets is in cash and marketable securities. From this fact we can deduce that this firm does a majority of their business with consumers and not other businesses. On the liabilities side, we can see that the company has large percentages of accounts payable and long-term debt (37% and 41% respectively). When we put these pieces of information we can see how a department store can have financial data that is consistent with firm A. The majority of transactions would be cash sales; however the company still has some accounts receivables,
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This would suggest a retail store of some kind. A retail grocery chain would have a large inventory that they use to stock their shelves as well as plants and equipment such as the buildings, refrigeration, etc. to operate properly. This high capital investment would be funded via long-term debt, explaining the long-term debt of Firm I.
FIRM J- Family Restaurant Chain Firm J has a moderate amount of inventory as well as a high percentage of long-term debt. The long-term debt suggests that the firm financed several buildings for their operations. The inventory suggests that there needed to be enough inventory but there cannot be too much inventory, opening up the possibility that the inventory is perishable. This would fit the model of a family restaurant chain, being that there is a lot of long-term debt involved in opening multiple restaurants and that the inventory of a restaurant is perishable and must be at the perfect level in order to prevent waste and provide the freshest ingredients.
FIRM K- Bookstore Firm K has large percentages of inventory as well as plant &equipment (35% and 41% respectively. It also has a fairly large percentage of accounts payable (24%). This would suggest a physical location where revenue is generated by this firm. A bookstore would have a lot of inventory located in their

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