Asset management ratios are used to measure how effectively a firm manages its assets, by reloting the amount a firm has invested in o particular type of acket tor group of asbets) to the smount of rovenues the asset it oenerating. Eramples of asset management ratios inclube the average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fored asset turnover ratio, and the total asset turnover ratio. Adams Furniture has a quick ratio of 200,538,250 in cash, $21,250 in accounts recelvable, somse inventory, cotai current assets of $85,000, and total current liabilities of $29,750. The company reported annual sales of $800,000, and cost of goods sold equal to 75% of wales in the most cecent anual repert. Over the past yeag how often did Adams Furniture sell and replace its inventory? 31.37 29.59x 25.88x 2.86 The inventory turnaver ratio across companies in the furnture industry is 25.84. Based on this information, which of the following statements is true for Adams Furniture? Adams Fumiture is holding less inventory compared to the industry average. Adams Furriture is hoding more inventory compared to the induter werege. You are analyzing two companies that manufacture esectronic toys; Like Games Inc and Our Play Inc. Like Games was lounched eighe years ago, whereas Our Play is a relatively new company that has been in oeration for only the past two years. However, both companles have an equal markat You are anarrang two companies that manufocture electronic toys: Lke Games Inc: and Our Play fnc. Uke Games was launched eight years ago. whereas Our Pary is at relatively now company that has been th operation for onfy the past two years, However, both companles have an equat market share with sales of $800,000 each. You've collected company data to compare Like Games and Our Play. Last year, the average sales for all industry competitors was $2,040,000. As an analyst, you want to make comments on the expected performance of these two companies in the coming yeae. You've collected data from the companies' financial statements, This information is listed as follows:(Mote: Assume there are 365 days in a year.) Using this information, complete the fowowing statements to include in your analysts. 1. Our Pisy has days of sales bed up in receivables, which is much than the industry average. It takes Our Play time to collect cash from its customers than it takes tike Games. 2. Like Games's foxed assets tumover ratio is than that of Our Play. This is because Like Games was formed eight years ago, so the acquisitien cost of its fixed assets is recorded at historic values when the company bought its assets and has been depreciated since then. Assuming that fixed assets prices (not book values) rose over the past sox years due to inflation, Our Play pold a amount for its foxed assets. 3. The average total assets turnever ratio in the electronic toys industry is , which means that of sales is being generated wh every dollar of investment in assets. A total assets turnower ratio indieates greater efficiency, Both companies' total assets turnover ratios are than the industry average
