Case 13-4 Suplement to Identify the Industries

Case 13-4

• Basic Chemical Company

These are all the characteristics of a basic chemical company :

– No note payable, other current liabilities and preferred stock
– High retained earnings

• Maker of name-brand, quality men’s apparel

These are all the characteristics of Maker of name-brand, quality men’s apparel

– High inventories because they have to keep inventories before selling
– Not much long-term debt because less sophisticated and less expensive machineries
– High capital stock

• Meat Packer
– No notes payable and preferred stock
– High retained earnings

• Retails Jewellery stores (which lease its store properties)

– A lot of inventories because it’s a retail store so it has to keep stock
– Long term debt and retained earnings

• Coal – carrying railroad

– No inventories because it’s a company that provides services
– High in plant and equipment and long-term debt mostly for the highways and trains
– Small accounts payable because its not a manufacturing company.

• Automobile manufacture

– Small inventories and retained earnings
– High notes payable because its manufacturing company

• Advertising Agency
– High in cash, receivables and accounts payable
– No inventories because it provides services
– Small capital stock, plant and equipment because advertising company does not use a lot of equipment.

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