Numbers are imperative to not only describing how a firm is doing, but can also display what the firm actually does. Knowing for certain what the assets are made up of in a firm, where the debt is held, and where its equity stands are all key financial information that provide insight to managers on how the firm is performing. Moreover, understanding and dissecting the financial ratios of a company can paint a clearer picture as to what industry the corporation is involved in along with its financial statements. In this memo, assumptions are made off of critical analysis when matching certain companies with their respective industries. The three companies that I have chosen to do my analysis on are supermarket chains, computer software development, and commercial banking. After going through a list of thirteen companies that were provided along with their financial information and ratios, these were the three most confident choices made.
Company #1 – Supermarket Chain
After careful analysis, it made the most sense to match company #1 and its financials with supermarket chains. The three line items from the financials that supports this claim is the inventory turnover ratio, the return on sales ratio, and the net property plant and equipment.
Inventory Turnover Ratio
The first figure that stands out is the significantly high inventory turnover of 14.0. Inventory turnover, which is revenue divided by inventory, indicates the amount of times inventory is sold and replaced…