Asset Management Ratios

Free Spirit Industries Inc. has a quick ratio of 2.00x, $36, 225 in cash, $20, 125 in accounts receivable, some inventory, total current assets of $80, 500, and total current liabilities of $28, 175. The company reported annual sales of $500,000 in the most recent annual report. Over the past year, how often did Free Spirit Industries Inc. sell and replace its inventory? 22.77x 0.39x 0.35x 20.70X The inventory turnover ratio across companies in the industry is 17.60x. Based on this information, which of the following statements is true for Free Spirit Industries Inc.? Free Spirit Industries Inc. is holding less inventory per dollar of sales compared to the industry average. Free Spirit Industries Inc. is holding more inventory per dollar of sales compared to the industry average. You are analyzing two companies that manufacture 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, both companies have an equal market share with sales of $500,000 each. You've gathered up company data to compare Like Games and Our Play. Last year, the average sales for industry competitors was $1, 275,000. 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' financial statements. This information is listed as follows: Using this information, complete the following statements to include in your analysis. Our Play has days of sales tied up in receivables, which is much_____than the industry average. It takes Our Play_____time to collect cash from its customers than it takes Like Games. Like Games's fixed assets turnover ratio is_____than that of Our Play. 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. 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. The average total assets turnover in the electronic toys industry is 1.09x, 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 are_____than the industry average