Essay about unidentified industries

1520 Words Apr 24th, 2014 7 Pages
The Case of the Unidentified Industries—2006
FIRM A- Department Store Chain Looking at the balance sheet of firm A, we can notice several things right away. We can see that a large chunk (54%) of its assets is in cash and marketable securities. From this fact we can deduce that this firm does a majority of their business with consumers and not other businesses. On the liabilities side, we can see that the company has large percentages of accounts payable and long-term debt (37% and 41% respectively). When we put these pieces of information we can see how a department store can have financial data that is consistent with firm A. The majority of transactions would be cash sales; however the company still has some accounts receivables,
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This would suggest that the company has a product that they are selling that is aimed mainly for cash sales to consumers and has some intellectual property value to it, explaining the “other assets” percentage. Furthermore, the firm has very litter plants and equipment, eliminating the possibility that it is a retail operation. This would fit with the model of a computer software developer who has claims to intellectual property for their software and who also sells their software directly to the end user.
FIRM G- Health Management Organization Firm G has a large percentage of assets consisting of accounts receivable (51%), yet it has no inventory. This would suggest that the firm is based on services that require payments in installments. Furthermore, it has a large percentage (46%) dedicated to accounts payable suggesting that it is making payments to other firms. A health management organization would fit this description because it receives payments from customers and would pay hospitals and other health care providers. HMOs act as liaisons between consumers and health care providers and the financial data for Firm G would be suggest that it the case.
FIRM H- Airline Firm H has very low inventory, yet it has a very high percentage of plants & equipment. This would suggest that the firm is engaged in a service-intensive industry. The airline industry would fit this description as they provide services