Ch 04: Assignment - Analysis of Financial Statements 3. Asset management ratios Asset management ratios are used to measure how effectively a fim 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 werage collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fwed asset turnover ratio, and the total asset turnover ratio Consider the following case: Franklin Aerospace has a quick ratio of 2.00%, 536,225 in cash, $20,125 in accounts receivable, some inventory, total current assets of $80,500, and total current habilities of $28,175. The company reported annual sales of $200,000 in the most recent annual report Over the past year, how often did Franklin Aerospace sell and replace its inventory? ty 05.01 9.11 2.86% The inventory turnover rate acrous companies in the space industry.1084 Based on this information, which of the following statements true for Franklin Aerosi The inventory turnover ratio across companies in the aerospace industry is 9.108x. Based on this information, which of the following statements is true for Franklin Aerospace? Franklin Aerospace is holding more inventory per dollar of sales compared with the industry average. Franklin Aerospace is holding less 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. 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 yets. However, both companies have an equal market share with sales of $200,000 each. You ve collected company data to compare Like Games and Our Play. Last year, the average sales for all Industry competitors was $510,000. 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: (Note: Assume there are 365 days in a year.) Accounts receivable Net fixed assets Data Collected (in dollars) Like Games Our Play 5,400 7,800 110,000 160,000 190,000 250,000 Industry Average 7,700 433,500 469,200 Total assets Ch 04: Assignment - Analysis of Financial Statements WHICOS u Piay sa very w panty lat na een open Hy we sewu yedi. TVE, es nave directia share with sales of $200,000 each. You've collected company data to compare Like Games and Our Play. Last year, the average sales for all industry competitors was $510,000. 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: (Note: Assume there are 365 days in a year) Data Collected in dollars) Like Games Our Play Industry Average Accounts receivable 5,400 7.800 7,700 Net fixed assets 110,000 160,000 433,500 Total assets 190,000 250,000 469,200 Using this information, complete the following statements to include in your analysis, story is 1. A days of sales outstanding represents an efficient credit and collection policy. Between the two companies collecting cash from its customers faster than but both companies are collecting their reonivables des 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 not fixed assets 3. Like Games's total assets turnover ratio 15 . which is than the industry's average total assets turnover ratio. In general, a higher total assets turnover ratio indicates greater efficiency