Firstly, identifying the companies in the data for their relevant sectors in the industry. Starting from company A, which might be community nursing, as it possesses the characteristics as per financial structure. It has low quick ratio and current ratio and hence, the liquidity in short-run and is more exposed to solvency issues, as compared with other companies in the industry. The structure of the company shows high debt financing in relation to equity while the return on invested capital is 3% which is similar to low performing companies in the industries. Moreover, the company is making about 4% profit of its total sales which shows low profitability against more technical companies within the industry.
As for company B that is more relatable to biotechnology as it has high expenses of R&D and SG&A due to its nature of the business. The liquidity of the company is appreciable of having the highest liquidity in the industry with quick ratio of almost 1 and in line with this having the highest current asset ratio of 4.59 which seems to be huge and this will require the company to take steps as to making better use of the resources. The capital structure of the company depicts a highly equity financed company with very limited amount of long term debts which means the company is low geared and is less risky.
The asset turnover is very low as compared to all other companies in the industry as most of its sales are based on the R&D expenditure of the company rather than generating revenues specific assets. Being a loss making company the return on assets is also negative and the success of the company gives a view that company might be having advantages such as subsidies, etc. which will be supporting factors for its survival, having growth rates of -9% is also a negative sign however, due to the nature of the company, the statement seems to be incomparable with other operating firms in the industry.
For the company C; it can be related to the insurance company providing insurance for healthcare. The company is sound in terms of short term liquidity having the second largest ratio in the industry and similarly a high current ratio which might be due to high level of receivables. On other hand, the capital structure of the company is such that it is totally equity financed and having very high asset turnover of 1.44 which is due to having low fixed tangible assets. However, the return on total assets is quite low due to low profitability of the company in comparison with other firms.
Company D might relate to medical distributor that supplies goods and services globally. It has comparatively the lowest acid test ratio which might be very risky for the company, while having sufficient current ratio due to inventory levels. On the other hand, the capital structure of the company shows that financing is done through both equity and finance with low gearing level. The return on assets is just 4% although similar to that of other low performing companies mainly due to low profitability of the company with only 1% net income.
Company E can be related to home care providing skilled nursing services. The liquidity position of the company is comparably high but individually it is not sufficient to cover its current liabilities and even though the current ratio depicts the same position due to no inventories. The capital structure is comprised of equity and debt finance with about 22% debts, while the return on assets is comparably high due to high profitability along with high growth rates.
Company F can be matched with the lab and diagnostic firm having high tangible and intangible assets and comparatively high R&D expenditure. The short-term liquidity of the company is among the lowest of the firm in the industry whereas the current ratio is high enough. Moving towards the capital structure it represents that company is not highly geared. The asset turnover is considerably high whereas the return on invested capital is low. The profitability of the company is sound having 15% of net profit of its sales…………………….
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