Essay on Case of Unidentified Industries
With The Case of Unidentified Industries, William E. Fruhan Jr. wants us to visualize the balance sheets belonging to fourteen unknown companies and connect them with the suitable industries.
In order to determine which balance sheets belong to which industry, we studied several companies in those industries. Using a number of different sources such as Yahoo Finance, Google Finance, Wikipedia and Investopedia, we were able to the link the unidentified firms balance sheets with their associated industries.
In order to give structure to our analysis, we will have two main parts. In part one we will analyze the Service oriented companies and in the second part we will turn towards the …show more content…
The low inventory and fast inventory turnover are also main characteristics of an online business.
Furthermore, we can see that the inventory holds the same percentage as the accrued items. This could mean that the suppliers of the books present in our inventories will be paid later on (best after the number of days necessary for inventory turnover). In other words, the online bookseller will be paid for the books sold before paying the book supplier. This equality also means that the online bookseller is pushing efficiency with a just-in-time distribution process.
Which in retrospect, explains why the percentage of assets detained in cash and marketable securities is so high (54%).
Company B, which we attributed to the bookstore chain, is mainly recognizable by a high inventory percentage. In addiction, the bookstore chain needs several stores and equipment. All of this explained by the high percentage of PP&E visible in its balance sheet.
The company B, like its competitor company A, pays its suppliers after having sold the books. Which explains the percentage of accrued items (22%).
When we compare the accrued items to the inventory we can see that the latter is higher than the former. Meaning that the company, being a physical bookstore, can’t be as efficient as company A with a just-in-time distribution process. Furthermore, with competitors