Both companies' total assets turnover ratios are than the industry average. A total assets turnover ratio indicates greater efficiency. The average total assets turnover in the electronic toys industry is, which means that of sales is being generated with every dollar of investment in assets. Assuming that fixed assets prices (not book values) rose over the past six years due to inflation, Our Play paid a amount for its fixed assets. This is because Like Games was formed eight years ago, so the acquisition cost of its fixed assets is recorded at historic values when the company bought its assets and has been depreciated since then. Like Games's fixed assets turnover ratio is than that of Our Play. It takes Our Play time to collect cash from its customers than it takes Like Games. Our Play has days of sales tied up in receivables, which is much than the industry average. This information is listed as follows: (Note: Assume there are 365 days in a year.) Using this information, complete the following statements to include in your analysis. You've collected data from the companies' financial statements. As an analyst, you want to make comments on the expected performance of these two companies in the coming year. Last year, the average sales for all industry competitors was $765, 000. You've collected company data to compare Like Games and Our Play. However, both companies have an equal market share with sales of $300, 000 each. The ratio may look distorted if a company has leased some of its assets. The ratio may look distorted if a company has sold off some of its assets. The ratio does not take into account the difference in accounting methods used by different companies. Like Games was launched eight years ago, whereas Our Play is a relatively new company that has been in operation for only the past two years. The ratio does not take into account the age of a company’s asset purchases. You are analyzing two companies that manufacture electronic toys-Like Games Inc. Crawford Construction is holding less inventory per dollar of sales compared with the industry average. Based on this information, which of the following statements is true for Crawford Construction? Crawford Construction is holding more inventory per dollar of sales compared with the industry average. Over the past year, how often did Crawford Construction sell and replace its inventory? 2.86 x 11.98 x 8.01 x 13.18 x The inventory turnover ratio across companies in the construction industry is 13.178 x. The company reported annual sales of $300, 000 in the most recent annual report. Consider the following case: Crawford Construction has a quick ratio of 2.00 x, $37, 575 in cash, $20, 875 in accounts receivable, some inventory, total current assets of $83, 500, and total current liabilities of $29, 225. Examples of asset management ratios include the average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio. Asset management ratios are used to measure how effectively a firm manages its assets, by relating the amount a firm has invested in a particular type of asset (or group of assets) to the amount of revenues the asset is generating.
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