The Case of Unidentified Ratios Harvard Case Solution & Analysis

Structure and Ratios Analysis of each Industry

  Company A:  Major Investment Bank

The company A is recognized as a major investment bank due to the fact that it has higher level of leverage (debt / equity and assets / equity that is 7.29 and 11.78 respectively). In addition to this, numbers of the days of receivables (1941.0) are also higher as compared to the other remaining nine companies. The portion of the equity in its debt to equity structure is also lower than other companies from the different industries.

  Company B:  Warehouse Shopping Club

The warehouse club has the high inventory turnover ratio that is 11.0 as well as the 17.3% level of inventory. Moreover, Warehouse Shopping Club also has the greater number of net plant, property and equipment with the percentage of 65.4% that is highest percentage in comparison with the remaining nine companies. The numbers of days of receivables (5.0) are less than other firms as well as it’s also have lower higher level of leverage.

Company C: Express delivery firm

Express delivery firm has the greater long term debt percentage that is 32.9% as companies like this kind require higher level of debt in order to meet the financing needs of their resources/ assets. Furthermore, the company has the average days of receivables that is 41.2. This is due to the reason that express delivery gives credit to very few customers. The levy of inventory is 8.2% whereas, inventory turn over day are 4.9.

  Company D:Hotel Chain

The company D is recognized as the Hotel Chain due to the reason that it has the highest level of the assets that are non-current which in term of percentage are 59.7%. However, it has the higher number of receivables days and inventory turnover ratio that is 42.5 and 71.5 respectively.  The company also does not have very higher level of leverage ratios (assets/equity is 1.80, debt/equity 0.11 and LT debt/Total capital 0.10).

 Company E: Manufacture of Electronic Communications Equipment

 The E is recognized as the Manufacture of Electronic Communications Equipment because of the reason that higher level of investment in fixed assets as well as high long-term debt. The company has number days of receivables that is due to the fact that it receives cash in longer duration. However, due to this reason is need higher debt in order to finance its business operations and activities. 

  Company F: Pharmaceutical Manufacturer

The F is recognized as the Pharmaceutical Manufacturer because of the reason that it has highly invested in the fixed assets due to which it also has higher percentage of gross profit that is 81.6%. Secondly, The Company has higher numbers of receivable days that 81.2 whereas, on the other side, it has lower inventory turnover ratio of 1.2.The Company highly invested in the R & D that is 14.1% and has new income/sales ratio of 12.2%.

  Company G: Temp Agency

The G is recognized as the Temp Agency because of the reason that it has greater level of payables as well as receivables (note payable 2.8%, Accounts Payable 9.0% whereas, 30.4% Net receivables). The main reason is that it has larger number of customers on credit. It has high numbers of receivable days that is 137.2 whereas, 4.3 lower inventory turnover ratio.

  Company H: Supermarket Chain

The H is recognized as the Supermarket Chain because of the reason that it has the great level of inventories and also high inventory turnover ratio that is 12.5. The company also has highest percentage in the net plant, property and equipment that is 46.5%. The days of receivable (4) is less as compared to the other remaining nine companies. The company have higher asset to equity ratio while lower debt to equity and LT debt to equity ratio.The Case of Unidentified Ratios Case Solution

  Company I: Software Firm

The I is recognized as the Software Firm because of the reason that these type of companies do not have inventories and well as they do not need long term debt in order to finance their assets. Secondly, it has sufficient assets in order to meet their current obligations that allow them to maintain good liquidity position. The company has the higher percentage of 70.1% of current assets in order to meet their current liabilities (43.2%)............................

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