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 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 tumover ratio, Consider the following case: Monroe Manufacturing has a quick ratio of 2.00x,$28,125 in cash, $15,625 in accounts recelvable, some inventory, total current assets of $62,500, and total current liablities of $21,875. The company reported annual sales of $400,000 in the most recent annual report. Additionally, the company's cost of goods sold is 75% of sales. Over the past year, how often did Monroe Manufacturing sell and replace its inventory? 17.60x 16.00x 2.96x 8.01x The inventory turnover ratio across companies in the manufacturing industry is 17.6x. Based on this information, which of the following statements is true for Monroe Manufacturing? Monroe Manufacturing is holding less inventory per dollar of sales compared with the industry average. Monroe Manufacturing is holding more inventory per dollar of sales compared with the industry average. You are analyzing two companies that manufacture electronic toys-Like Games Inc. and Our Play Inc. Lke Games was launched eight years ago, whereas Our Piay is a relatively new company that has been in operation for only the past two years. However, both companies have an equal market share with sales of $400,000 each. Youve collected company data to compare Like Games and Our Piay. Last year, the average saies for all industry competitors was $1,020,000. As an analyst, you want to make comments on the expected performance of these two companies in the coming year; You've collected data from the companies' financiat statements. This information is listed as follows: (Note: Assume there are 365 days in a year.) 1. A days of sales outstanding represents an efficient credit and collection policy. Between the two companies, is collecting cash from its customers faster than , but both companies are collecting their receivables less quickly than the industry average. 2. Our Play's fixed assets turnover ratio is than that of Like Games. This could be because Our Play is a relatively new company, so the acquisition cost of its fixed assets is than the recorded cost of Like Games's net fixed assets. 3. Lke Games's total assets turnover ratio is , which is than the industry'stoverage total assets turnover ratio. In general, a higher total assets turnover ratio indicates greater efficiency