3. Asset management ratios Aa Aa 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. 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. Consider the following case: Adams Furniture has a quick ratio of 2.00x, $29,475 in cash, $16,375 in accounts receivable, some inventory, total current assets of $65,5DD, and total current liabilities of $22,925. The company reported annual sales of $30D,000 in the most recent annual report. Over the past year, how often did Adams Furniture sell and replace its inventory? O 16.80 x O 8.01 x O 2.86 x O 15.27 x The inventory turnover ratio across companies in the furniture industry is 12.98x. Based on this information, which of the following statements is true for Adams Furniture? O Adams Furniture is holding less inventory per dollar of sales compared to the industry average. O Adams Furniture is holding more inventory per dollar of sales compared to the industry average. You are analyzing two companies that anufacture electronic toys-Like Games Inc. and our Play Inc. 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. However, bath companies have an equal market share with sales of $300,0DD each. You ve collected company data to compare Like Games and Our Play. Last year, the average sales for all industry competitors was $765,000. As an analyst, you want to make comments on the expected performance of these two companies in the coming year. Youve collected data from the companies financial statements. This information is listed as follows Data Collected (in dollars) Accounts receivable Net fixed assets Total assets Like Games 8,100 165,000 285,000 Our Play Industry Average 11,550 550,250 703,8DD 11,700 240,0DD 375,DDD Using this information, complete the follawing statements to include in your analysis. 1. Our Play has time to collect cash from its customers than it takes Like Games. days of sales tied up in receivables, which is much than the industry average. It takes Our Play 2. Like Games's fixed assets turnover ratio is aoquisition cost of its fixed assets is recorded at historic values when the company boughtits assets and has been depreciated since then. Assuming that fixed assets prices (not book values) rose over the past six years due to inflation, Our Play paid a assets. than that of Our Play. This is because Like Games was formed eight years ago, so the amount for its fixed 3. The average total assets turnover in the electronic toys industry is 1.0sx, which means that $1.09 of sales is being generated with every dollar of investment in assets. A total assets turnover ratio indicates greater efficiency. Both companies' total assets turnover ratios than the industry average