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The Following Selected Financial Data Pertain to Four Companies: a Hotel,a

Question 81

Essay

The following selected financial data pertain to four companies: a hotel,a travel agency,a meat packing company and a pharmaceutical company.
Required: Match each with the financial information and explain why you made your choice as you did.
 Balance Sheet Data  (component percentages)  Company 1 Company 2 Company 3 Company 4 Cash 7.222.06.011.2 Accounts Receivable 28.040.03.423.0 Inventory 21.40.50.927.4 Property, Plant & Equipment 32.019.075.125.0 Income Statement Data  (component percentages)  Gross Profit 15.2 Not  Applicable  Not  Applicable 44.0 Profit before Taxes 1.83.32.57.0 Ratios  Current ratio (over the last  five years) 1.61.30.51.8 Inventory turnover ratio 27.8 Not  Applicable  Npplicable 3.4 Debt-to-equity ratio 1.82.35.81.4\begin{array}{l|c|c|c|c}\hline \begin{array}{l}\text { Balance Sheet Data } \\\text { (component percentages) }\end{array} & \begin{array}{c}\text { Company } \\1\end{array} & \begin{array}{c}\text { Company } \\2\end{array} & \begin{array}{c}\text { Company } \\3\end{array} & \begin{array}{c}\text { Company } \\\mathbf{4}\end{array} \\\hline \text { Cash } & 7.2 & 22.0 & 6.0 & 11.2 \\\hline \text { Accounts Receivable } & 28.0 & 40.0 & 3.4 & 23.0 \\\hline \text { Inventory } & 21.4 & 0.5 & 0.9 & 27.4 \\\hline \text { Property, Plant \& Equipment } & 32.0 & 19.0 & 75.1 & 25.0 \\\hline \begin{array}{l}\text { Income Statement Data } \\\text { (component percentages) }\end{array} & & & & \\\hline \begin{array}{l}\text { Gross Profit }\end{array} & 15.2 & \begin{array}{c}\text { Not } \\\text { Applicable }\end{array} & \begin{array}{c}\text { Not } \\\text { Applicable }\end{array} & 44.0 \\\hline \text { Profit before Taxes } & 1.8 & 3.3 & 2.5 & 7.0 \\\hline & & & & \\\hline \text { Ratios } & & & & \\\hline \begin{array}{l}\text { Current ratio (over the last } \\\text { five years) }\end{array} & 1.6 & 1.3 & 0.5 & 1.8 \\\hline \begin{array}{l}\text { Inventory turnover ratio }\end{array} & 27.8 & \begin{array}{c}\text { Not } \\\text { Applicable }\end{array} & \begin{array}{c}\text { Npplicable }\end{array} & 3.4 \\\hline \text { Debt-to-equity ratio } & 1.8 & 2.3 & 5.8 & 1.4 \\\hline\end{array}

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Company 1: Meat packing company (high in...

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