3. Asset management ratios 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 ratics include the average collection period (also called the days sales outstanding ratio), the inventory turnower rabio, the fixed asset turnover ratio, and the total asset turnower ratio. Consider the following case: Orawford Construction has a quick ratio of 2.00x,$32,175 in cash, $17,875 in accounts recevable, some inventory, total current assets of $71,500, and total current fiabilities of $25,025. The company reported annual sales of $300,000 in the most recert annual report. Additionally, the company's cost of goods sold is 75% of sales. Over the past vear, how often did Crawford Construction sell and replace its inventory? 10.49K 8.01x 11.54x 2.86x The inventory tumover ratio across cempanes in the censtruction industry is 8.9165x. Bast ont this ieformation, wfich of the following itatements is. true for Crawford construction? Cravford Construction is holding more invertory per dolar of sales coospared with the industry average. Crawford Construction is holding less inventory per dollar of sales compared with the industry averape. You are analyzing two companies that manutacture electronic toys-Lke Games inc. and Our Flay Inc. Like Games was launched eight years ago, whereas Our Way is a relatively new company that has been in operation for only the past two years. However, boch companies have an equal market share with sales of $300,000 each. You ve collncted compafy data to compare Lke Gaenes and Our Hay. Last yeac, the average sales for all industry compebtors was $765,000. As an analyst, vou want to make comments on the expected performance of these two companies in the coming yeat. You've collected data from the companies' finandal statements. This information is listed as follews: (Note: Assume ttere are 365 dars in a vear) Using this infermation, complete the folowine statements to indude in your analys. 1. Our Nar has dars of sales tied up in receivabite, which is much thas the industry average. It takes Our Bay Eime to collect cach from its curtemers than it takes uke Games: 2. Like Gamess fored assets furnover ratio is than that of Oor Diw. This is becaute tiee Games was formed tioht vears ajo, so the acquisibon cost of its fixed astets is fecorded at fivteric values whea the company bought its assets and has been depredated vince then. Assuming that fixed assets prices (not book values) rose ever the pat Lix vears bue to inflation, Ouf Bar pald a ambunt for its fived assuts, 3. The average total assets tumover in the efectronic toys industor is Which means that of sales is being generated with every dollar of ifvestment is assets : A total assets tumover ratio indicates creater efficency. Both companies' total ansts turnever ratios are than the industry averape: 3. Asset management ratios 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 ratics include the average collection period (also called the days sales outstanding ratio), the inventory turnower rabio, the fixed asset turnover ratio, and the total asset turnower ratio. Consider the following case: Orawford Construction has a quick ratio of 2.00x,$32,175 in cash, $17,875 in accounts recevable, some inventory, total current assets of $71,500, and total current fiabilities of $25,025. The company reported annual sales of $300,000 in the most recert annual report. Additionally, the company's cost of goods sold is 75% of sales. Over the past vear, how often did Crawford Construction sell and replace its inventory? 10.49K 8.01x 11.54x 2.86x The inventory tumover ratio across cempanes in the censtruction industry is 8.9165x. Bast ont this ieformation, wfich of the following itatements is. true for Crawford construction? Cravford Construction is holding more invertory per dolar of sales coospared with the industry average. Crawford Construction is holding less inventory per dollar of sales compared with the industry averape. You are analyzing two companies that manutacture electronic toys-Lke Games inc. and Our Flay Inc. Like Games was launched eight years ago, whereas Our Way is a relatively new company that has been in operation for only the past two years. However, boch companies have an equal market share with sales of $300,000 each. You ve collncted compafy data to compare Lke Gaenes and Our Hay. Last yeac, the average sales for all industry compebtors was $765,000. As an analyst, vou want to make comments on the expected performance of these two companies in the coming yeat. You've collected data from the companies' finandal statements. This information is listed as follews: (Note: Assume ttere are 365 dars in a vear) Using this infermation, complete the folowine statements to indude in your analys. 1. Our Nar has dars of sales tied up in receivabite, which is much thas the industry average. It takes Our Bay Eime to collect cach from its curtemers than it takes uke Games: 2. Like Gamess fored assets furnover ratio is than that of Oor Diw. This is becaute tiee Games was formed tioht vears ajo, so the acquisibon cost of its fixed astets is fecorded at fivteric values whea the company bought its assets and has been depredated vince then. Assuming that fixed assets prices (not book values) rose ever the pat Lix vears bue to inflation, Ouf Bar pald a ambunt for its fived assuts, 3. The average total assets tumover in the efectronic toys industor is Which means that of sales is being generated with every dollar of ifvestment is assets : A total assets tumover ratio indicates creater efficency. Both companies' total ansts turnever ratios are than the industry averape