Question

The following are simplified, vertical, common-size balance sheets for three firms: a retailer, a service firm, and a manufacturer.

Assets	Firm A	Firm B	Firm C
Cash	6.1%	8.1%	8.7%
Receivables	23.2	4.4	12.1
Inventory	31.1	1.5	24.5
Total Current Assets	60.4	14.0	45.3
Plant, Property, and Equipment (net)	30.3	83.4	51.8
Investments	9.3	2.6	2.9
Total Assets	100.0%	100.0%	100.0%
Liabilities and Stockholders' Equity
Total Current Liabilities	29.3%	11.5%	21.6%
Long-Term Debt	18.1	24.8	37.8
Total Stockholders' Equity	52.6	63.7	40.6
Total Liabilities and Stockholders' Equity	100.0%	100.0%	100.0%

Required:

Identify the type of firm and explain your choice.

Answer 1

	Firm A	Retailer
	Firm B	Service
	Firm C	Manufacturer
	Explanation:
	Firm A has the more inventory % compared to others.
	A retailer usally has high percentage of inventory.
	Hence, Firm A is a retailer
	Firm B has less inventory % and more PPE % compared to others.
	For a service organisation,it will have less inventory and more PPE to provide service
	Hence, Firm b is a service provider\
	Firm C is not a retailer or service,
	Hence, we can easily identify this as manufacturer