Question 1

Read the table below for 3 firms: a bubble tea store, a bike store, a consulting firm.

	COMPANY
	A	B	C
Debt-equity ratio	0.2	0.3	0.5
Inventory Turnover	4	60	----
Current Ratio	1.8	0.9	1.28
Net profit margin	3.8%	6.4%	20%
Receivables Turnover	30.0	---	6.0

1. Distinguish each company and discuss the reason for your identification.

(12 marks)

2. Judge whether the following statement is true and explain your answer:

If the managers focus on the current stock value, they will tend to overemphasize short-term profits at the expense of long-term profits.