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Asset management ratios are used to measure how effectively a firm 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 average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio. Consider the following case: Crockett Electronics has a quick ratio of 2.00x, $33,525 in cash, $18,625 in accounts receivable, some inventory, total current assets of $74,500, and total current liabilities of $26,075. The company reported annual sales of $200,000 in the most recent annual report. Over the past year, how often did Crockett Electronics sell and replace its inventory? 8.01x 8.95x 2.86x 9.85x The inventory turnover ratio across companies in the electronics industry is 9.845x. Based on this information, which of the following statements is t true for Crockett Electronics?

Asset management ratios are used to measure how effectively a firm 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 average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio. Consider the following case: Crockett Electronics has a quick ratio of 2.00x, $33,525 in cash, $18,625 in accounts receivable, some inventory, total current assets of $74,500, and total current liabilities of $26,075. The company reported annual sales of $200,000 in the most recent annual report. Over the past year, how often did Crockett Electronics sell and replace its inventory? 8.01x 8.95x 2.86x 9.85x The inventory turnover ratio across companies in the electronics industry is 9.845x. Based on this information, which of the following statements is t true for Crockett Electronics?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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3. Asset management ratios Asset management ratios are used to measure how effectively a firm 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 average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio. Consider the following case: Crockett Electronics has a quick ratio of 2.00x, $33,525 in cash, $18,625 in accounts receivable, some inventory, total current assets of $74,500, and total current liabilities of $26,075. The company reported annual sales of $200,000 in the most recent annual report. Over the past year, how often did Crockett Electronics sell and replace its inventory? 8.01x 8.95x 2.86x 9.85x The inventory turnover ratio across companies in the electronics industry is 9.845x. Based on this information, which of the following statements is true for Crockett Electronics?
Transcribed Image Text:3. Asset management ratios Asset management ratios are used to measure how effectively a firm 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 average collection period (also called the days sales outstanding ratio), the inventory turnover ratio, the fixed asset turnover ratio, and the total asset turnover ratio. Consider the following case: Crockett Electronics has a quick ratio of 2.00x, $33,525 in cash, $18,625 in accounts receivable, some inventory, total current assets of $74,500, and total current liabilities of $26,075. The company reported annual sales of $200,000 in the most recent annual report. Over the past year, how often did Crockett Electronics sell and replace its inventory? 8.01x 8.95x 2.86x 9.85x The inventory turnover ratio across companies in the electronics industry is 9.845x. Based on this information, which of the following statements is true for Crockett Electronics?
Ch 04: Assignment-Analysis of Financial Statements The inventory turnover ratio across companies in the electronics industry is 9.845x. Based on this information, which of the following statements is true for Crockett Electronics? Crockett Electronics is holding less inventory per dollar of sales compared with the industry average. Crockett Electronics is holding more 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 years. 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 Total assets Data Collected (in dollars) Like Games Our Play Industry Average. 5,400 7,700 7,800 160,000 433,500 110,000 190,000 250,000 469,200 Using this information, complete the following statements to include in your analysis. 1. A days of sales outstanding represents an efficient credit and collection policy. Between the two companies, cash from its customers faster than 2. Our Play's fixed assets turnover ratio is acquisition cost of its fixed assets is is collecting , but both companies are collecting their receivables less quickly than the industry average. than that of Like Games. This could be because Our Play is a relatively new company, so the than the recorded cost of Like Games's net fixed assets. which is than the industry's average total assets turnover ratio. In general, a higher 3. Like Games's total assets turnover ratio is total assets turnover ratio indicates greater efficiency.
Transcribed Image Text:Ch 04: Assignment-Analysis of Financial Statements The inventory turnover ratio across companies in the electronics industry is 9.845x. Based on this information, which of the following statements is true for Crockett Electronics? Crockett Electronics is holding less inventory per dollar of sales compared with the industry average. Crockett Electronics is holding more 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 years. 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 Total assets Data Collected (in dollars) Like Games Our Play Industry Average. 5,400 7,700 7,800 160,000 433,500 110,000 190,000 250,000 469,200 Using this information, complete the following statements to include in your analysis. 1. A days of sales outstanding represents an efficient credit and collection policy. Between the two companies, cash from its customers faster than 2. Our Play's fixed assets turnover ratio is acquisition cost of its fixed assets is is collecting , but both companies are collecting their receivables less quickly than the industry average. than that of Like Games. This could be because Our Play is a relatively new company, so the than the recorded cost of Like Games's net fixed assets. which is than the industry's average total assets turnover ratio. In general, a higher 3. Like Games's total assets turnover ratio is total assets turnover ratio indicates greater efficiency.
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