Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are analyzing two companies that manufacture electronic toys-Like |Games Inc. and Our Play Inc. Like Games was lunched eight years ago, whereas Our Play

image text in transcribed
You are analyzing two companies that manufacture electronic toys-Like |Games Inc. and Our Play Inc. Like Games was lunched 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 $400.000 each. You've gathered up company data to compare like Games and Our Play. Last year, the average sales for industry competitors was $ 1, 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 company's financial statements. This information is listed as follows: Using this information, complete the following statements to include in your analysis. A high days of sales outstanding represents an efficient credit and collection policy. Between the two companies Our Play is collecting cash from its customers faster than Like Games, but both companies are collecting their receivables less quickly than the industry average. Our Play's fixed assets turnover ratio is higher 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 higher than the recorded cost of Like Gomes's net fixed assets. Like Gomes's total assets turnover ratio is 0.80x, which is lower than the industry's average total assets turnover ratio. In general a higher total assets turnover ratio indicates greater efficiency

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

Performance Measurement In Finance

Authors: John Knight, Stephen Satchell, Nathalie Farah

1st Edition

0750650265, 978-0750650267

More Books

Students also viewed these Finance questions