... has more certain future cash flows, meaning that the company is less risky; highlighted by the lower Beta. Based on the above analysis, I conclude that the first company is Company D, and the second company is Company C. Computers: The first company is a mail-order seller, and therefore would have a higher receivables turnover as most payment is made through online credit card payment. Its key target is to achieve high sales at lower prices and therefore would have a lower profit margin and higher inventory turnover. The second company sells through dealers and a sales force. I would therefore hold higher levels on inventory and have a lower inventory turnover ratio. The company aims to be the market leader in service and quality and therefore would have a correspondingly higher profit margin. Lastly the company aims to offer a broad product line and therefore due to this diversification would be ...

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