Ratios Tell a Story Case

Bryant Zeng

Professor Osmond

FINA 2301

1/30/12

Ratios Tell A Story Case Study

1. Airline Company: Column 10

* Highest net plant and equipment because of the planes

* High payables and long-term debt (high capital cost of planes)

* Highest accrued expenses (expenses in the airline industry pile up)

* Airlines hold very, very little inventory

2. Automobile Manufacturer: Column 8

* High financial-service assets as well as liabilities since most automobile companies sell with financing options or warrantees with the cars

* High liabilities because production of automobiles is costly

3. Pharmaceutical Company: Column 11

* Highest minority interest (a good amount of pharmaceutical companies have a parent company where the parent company might not have all shares of it)

* Relatively low inventory since not that many drugs need to be stored at a time

4. Commercial Bank: Column 2

* The receivables is the highest with 60

* The days receivables outstanding are years. Only industry that would allow such long debt is the banking industry.

* No inventory

* Highest total liabilities

5. Computer and Office Equipment Manufacturer: Column 6

* Highest current assets as well as current liabilities (office equipment will always be in demand, which makes the manufacturer produce with debt as well as sell on credit)

6. Discount General-Merchandise Store Chain: Column 7

* High inventory (general stores can hold an item for months, maybe years at a time)

* High net plant and equipment for the multiple stores since it is a chain store

7. Electric Utility: Column 5

* High net plant and equipment for the power plants, transformer stations, and equipment for safe transference of electricity to its clients

8. Fast-Food Chain: Column 4

* Highest inventory turnover (needs to be somewhat fresh so they buy not too much but very frequently)

* Not that much inventory because it needs to be...