Selected ratios for three different companies that operate in three different industries (merchandising, pharmaceuticals, utilities) are reported in the table below:
|
Ratio
|
Co. A
|
Co. B
|
Co. C
|
|
Gross profit margin ratio
|
18%
|
53%
|
n.a.
|
|
Net profit margin ratio
|
2%
|
14%
|
8%
|
|
Research and development to sales
|
0%
|
17%
|
0.1%
|
|
Advertising to sales.
|
7%
|
4%
|
0.1%
|
|
Interest expense to sales
|
1%
|
1%
|
15%
|
|
Return on assets
|
11%
|
12%
|
7%
|
|
Accounts receivable turnover
|
95 times
|
5 times
|
11 times
|
|
Inventory turnover
|
9 times
|
3 times
|
n.a.
|
|
Long-term debt to equity
|
64%
|
45%
|
89%
|
n.a. =not applicable
Required:
Identify the industry that each of the companies, A, B, and C, operate in. Give at least two reasons supporting each of your selections.