Marias, Leanne Patrish T.

Peafiel, Cyril C.

Financial Statement Industry Justification

There are four Retail industries [A, I, J, K] in the case, a
department store chain, an online retailer, a retail drug
chain, and a retail grocery chain. Among those four,
Balance Sheet A only has 22% of Plant and Equipment
compared with Is 605, Js 32%, and Ks 36%. The balance
sheet with the lowest plant and equipment should be for
A Online Retailer the Online Retailer Industry because they will not need a
huge percent of plant and equipment in the conduct of
their business. Additionally, among those four balance
sheets, only balance sheet A has a receivable collection
period, which is 20, that is near to 30 days, the usual
payment in availing payment for discounted purchases.
[A]
Bookstores needs to have lots of inventories [A, B, I, J, K]
with low inventory turnover [narrowed to A, B, J, K].
There will be a low inventory turnover because
bookstores ends with more inventories being kept than
what it sold. Another, since it is a bookstore, National
B Bookstore Chain
Bookstore for example, will have a low accounts
receivable [A, B, K] because there is a direct transaction
between the business and the customer, thus, having the
shortest receivables collection period [A = 20, B = 8, K =
11]. [B]
An online direct factory to customer personal computer
vendor is an industry where low inventories [C, D, F, H, L]
are necessary due to its pre-selling type of business. Since
Online direct factory to
the business sells to business customers, there will be
C customer personal
high accounts receivable [C, F] due to sales on account.
computer vendor
Another, since it outsource it manufacturing, it will tend
to have low percentage for plant and equipment [C = 4; F
= 7]. [C]
Pharmaceutical Manufacturers do have lots of raw
materials for the production of the goods. Those raw
materials are classified under other assets categories,
thus, pharmaceutical manufacturer industry will have a
high percentage for other assets [C, D, E, H, K, L]. This
Pharmaceutical industry must have inventory units, thus removing
D
Manufacturer Balance Sheet E from the options [C, D, H, K, L]. Among
the remaining choices, Balance Sheet D has the highest
receivables collection period [C = 63; D = 77; H = 8; K = 11;
L =51]. The highest collection period is the basis because
buyers of a pharmaceutical manufacturer tend to pay late
due to the high prices marked on the products. [D]
Parcel Delivery Service industry will not have any
inventories [E, G, M, N] but will have a high plant and
equipment for delivery trucks and machines [E, M]. Also,
E Parcel Delivery Service
parcel delivery services industry tends to have long
receivable collection period because the inflow of cash
happens upon delivery of the service. [E]
A business in a computer software developer industry will
Computer Software
F have low inventories [C, D, F, H, L] because they focus on
Developer
providing services, also will have only few percentage for

G Social Networking Service
H Restaurant Chain
I Retail Grocery Chain
J Department Store Chain
K Retail Drug Chain
L Electric and Gas Utility
M Airline
N Commercial Bank
plant and equipment [C, D, F]. Since computer software
developer industry sales in wholesale, there will be only a
low inventory turnover [D, F] and a long receivables
collection period [D = 77; F = 82]. [F]
Social Networking Services, such as Facebook, will have
no Inventories [E, G, M, N]. And since businesses in the
Social Networking Services will have low profit, thus will
have low return on equity [E = 0.171; G = 0.005; M =
0.060; N = 0.039]. [G]
Restaurants have high plant and equipment [E, H, I, J, K, L,
M], like kitchen utensils, etc. and with inventories [H, I, J,
K, L]. Restaurants have high inventory turnover [H = 31.5;
I = 14.9; J = 5.5; L = 2.3] because goods are perishable. [H]
Groceries will have high inventories [B, I, K] with also high
inventory turnover [B = 3.7; I = 14.9; K = 7.3] because
groceries experience stock outs. Also, groceries will have
a short receivable collection period [B = 8; I = 4; K = 11]
because customers pay at the counters. [I]
Department stores will have high plant and equipment [E,
H, I, J, K, L, M] with inventories [H, I, J, K, L]. Since these
department stores have its own brand of charge card,
there will be a high percentage for accounts receivable [I,
J, K]. And, since it is a charge card, there will be a long
receivable collection period [I = 4; J = 64; K = 11]. [J]
Since drug chains are chain stores, there will be a high
percentage for inventories [B, I, K]. Since the products are
drugs, it will be expensive to the customers, thus having
accounts receivables higher than the cash collected [B = 4
= 4; I = 4 < 5; K = 6 > 4]. [K]
Electric and Gas Utilities Industry will have low
inventories [C, D, F, H, L] because only 20% of its revenue
are based on natural gas sales. Also, electric and gas
utilities industries have low inventory turnover [D, L]
because they never experience stock outs. Lastly, like
Meralco, these companies have high plant and
equipment [D = 8; L = 60]. [L]
Airlines dont have any inventories [E, G, M, N]. Airlines
also have a short receivables collection period [E = 41; G =
52; M = 7; N = 8,047] since services are rendered upon
payment of cash. Also airlines have high plant and
equipment [E = 46; G = 16; M = 69; N = 0] for airplanes
and such. [M]
Banks dont have inventories [E, G, M, N]. Banks alos have
high total debt/total assets ratio [E = 0.33; G = 0.10; M =
0.17; N = 0.63] because of the money deposited to them.
Also, banks have long receivables collection period [E =
41; G = 52; M = 7; N = 8,047] due to loans, etc. [N]