Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help this is for a final grade HUSLOSTICI 125:10 You are analyzing two companies that manufacture electronic toys-Like Games Inc. and Our Play Inc.

please help this is for a final grade
image text in transcribed
HUSLOSTICI 125:10 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 $100,000 each. You've collected company data to compare Like Games and Our Play. Last year, the average sales for all Industry competitors was $255,000. 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: Accounts receivable Net fixed assets Total assets Data Collected (in dollars) Like Games Our Play 2,700 3,900 55,000 80,000 95,000 125,000 Industry Average 2,875 216,750 234,600 Using this information, complete the following statements to include in your analysis than the industry average. It takes Our Play time to collect 1. Our Play has days of sales tied up in receivables, which is much cash from its customers than it takes Like Games. 2. 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. 3. 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. Save & Continue Continue without saving

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Asset Allocation From Theory To Practice And Beyond

Authors: Mark P. Kritzman, William Kinlaw, David Turkington, Harry M. Markowitz

1st Edition

1119817714, 978-1119817710

More Books

Students also viewed these Finance questions