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

question 77

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.
$\begin{array}{c}\begin{array}{|l|}\hline \text {Balance Sleet Data}\\\text {(conmonent percentages)}\\\hline \text {Cash}\\\hline \text {Accounts Receivable}\\\hline \text {Inventory}\\\hline \text {Property, Plant \& Equipment}\\\hline \\\hline \text {Income Statement Data}\\\text {(conmonent percentages)}\\\hline \text {GrossProfit}\\\hline \text {Profit before Taxes}\\\hline \\\hline \text {Ratios}\\\hline \text {Current ratio (over the last five years)}\\\hline \text {Inventory turnover ratio}\\\hline \text {Debt-to-equity ratio}\\\hline \end{array}\begin{array}{l|}\hline\text {Company}\\ \mathbf{1} \\\hline 7.2 \\\hline 28.0 \\\hline 21.4 \\\hline 32.0\\\hline\\\hline\\\\\hline 15.2 \\\hline 1.8 \\\hline\\\hline\\\hline 1.6 \\\hline 27.8 \\\hline 1.8 \\\hline\end{array}\begin{array}{l|}\hline\text {Company}\\ \mathbf{2} \\\hline 22.0 \\\hline 40.0 \\\hline 0.5 \\\hline 19.0 \\\hline \\\hline \\\\\hline \text { Not Applicable } \\\hline 3.3 \\\hline \\\hline \\\hline 1.3 \\\hline \text { Not Applicable } \\\hline 2.3 \\\hline\end{array}\begin{array}{l|}\hline\text {Company 3}\\\\\hline6.0 \\\hline3.4 \\\hline0.9 \\\hline75.1\\\hline\\\hline\\\\\hline\text {Not Applicable}\\\hline2.5\\\hline\\\hline\\\hline0.5\\\hline\text {Not Applicable}\\\hline5.8\\\hline\end{array}\begin{array}{l|}\hline\text {Company 4}\\\\\hline11.2\\\hline23.0 \\\hline 27.4 \\\hline 25.0\\\hline\\\hline\\\\\hline44.0\\\hline7.0\\\hline\\\hline\\\hline1.8\\\hline3.4\\\hline1.4\\\hline\end{array}\end{array}$

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Definitions:

Support Department Allocations

The process of distributing the costs of support departments (e.g., human resources, maintenance) to producing departments based on their usage of services.

Operating Income Before

Income generated from normal business operations before deductions such as taxes and interest.

Responsibility Accounting Reports

Financial reporting tools designed to track revenue and expenses associated with specific departments or operations, highlighting the financial performance and accountability of departmental managers.

Profit Centers

Designated segments within a company for which the managers are responsible for both revenues and expenses, effectively measuring each segment's profitability.