Chapter 4 Assignment 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: (Note: Assume there are 365 days in a year.) Accounts receivable Net fixed assets Total assets Data Collected (in dollars) Like Games Our Play 2,700 55,000 95,000 Industry Average 3,850 216,750 125,000 234,600 3,900 80,000 Using this information, complete the following statements to include in your analysis. I 1. A low 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. 2. Our Play's fixed assets turnover ratio is lower than that of Like Games. This could be because Our Play a relatively new company, so the acquisition cost of its fixed assets is than the recorded cost of Like Games's net fixed assets. 3. Like Games's total assets turnover ratio is 1.05x ▼ which is lower higher total assets turnover ratio indicates greater efficiency. " than the industry's average total assets turnover ratio. In general, a
Chapter 4 Assignment 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: (Note: Assume there are 365 days in a year.) Accounts receivable Net fixed assets Total assets Data Collected (in dollars) Like Games Our Play 2,700 55,000 95,000 Industry Average 3,850 216,750 125,000 234,600 3,900 80,000 Using this information, complete the following statements to include in your analysis. I 1. A low 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. 2. Our Play's fixed assets turnover ratio is lower than that of Like Games. This could be because Our Play a relatively new company, so the acquisition cost of its fixed assets is than the recorded cost of Like Games's net fixed assets. 3. Like Games's total assets turnover ratio is 1.05x ▼ which is lower higher total assets turnover ratio indicates greater efficiency. " than the industry's average total assets turnover ratio. In general, a
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Chapter 4 Assignment
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: (Note: Assume there are 365 days in a year.)
Accounts receivable
Net fixed assets
Total assets
Data Collected (in dollars)
Like Games
2,700
55,000
95,000
Our Play Industry Average
3,900
3,850
80,000
216,750
125,000 234,600
Using this information, complete the following statements to include in your analysis.
1. A low 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.
2. Our Play's fixed assets turnover ratio is lower 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 net fixed assets.
than the industry's average total assets turnover ratio. In general, a
3. Like Games's total assets turnover ratio is 1.05x ▼ which is lower
higher total assets turnover ratio indicates greater efficiency.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education