FlNC308 Week 01 Problem Set 02 2021 Question 4 Effective nancial statement analysis requires an understanding of a rm's economic characteristics. The relationships among various nancial statement items provide evidence of many of these economic characteristics. The table below presents common size condensed balance sheets and income statements for 12 rms in different industries in the US. These common size balance sheets and income statements express various items as a percentage of operating revenues [that is, the statement divides all amounts by operating revenues for the year}. The last line of the table also shows the cash flow from operations to capital expenditures ratio. Absence of a particular item percentage does not necessarily mean that the amount is zero. it merely indicates that the amount is not sufciently large for the rm to disclose it. The 12 companies and a brief description of their activities are: 1 All Steel: manufactures and sells a broad line of steel products. 2 Allstate insurance: sells property and casualty insurance, primarily on buildings and automobiles. Operating revenues include {a} insurance premiums collected or due from customers and (bi revenues earned from investments made with cash received from customers before Allstate must pay customers' claims. Operating expenses include amounts actually paid or expected to be paid in the future on insurance coverage outstanding during the year. 3 Gillette: manufactures and sells a variety of consumer personal care and household products. Gillette has acquired several branded consumer products companies in recent years. 4 Hewlett-Packard: develops, manufactures and sells computer hardware. The rm outsources many of its computer components. 5 Household international: lends money to consumers for periods ranging from several months to several years. Operating expenses represent estimated uncoilectible loans. 6 lnterpublic Group: creates advertising copy for clients. Purchases advertising time and space from various media for sale to clients. Operating revenues represent the commission or fee earned by interpublic for advertising copy created and media time and space said. Operating expenses include compensation paid to employees. lnterpublic has acquired other marketing services rms in recent years. .7 Kelly Services: provides temporary ofce services to business and other rms. Operating revenues represent amounts billed to customers for temporary help services, and operating expenses include amounts paid to Kelly temporary help employees. 8 Lands' End: sells apparel through catalogues, primarily through third-party credit cards. 9 May Department Stores: operates several department store chains throughout the US. Offers its own credit card