Os DS Ch 04- Assignment - Analysis of Financial Statements 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: Polk Software Inc. has a quick ratio of 2.00x, $30,825 in cash, $17,125 in accounts receivable, some inventory, total current assets of $68,500, and total current liabilities of $23,975. The company reported annual sales of $200,000 in the most recent annual report. Additionally, the company's cost of goods sold is 75% of sales. Over the past year, how often did Polk Software Inc. sell and replace its inventory? 8.01x 7.30x 2.86x O8.03x The inventory turnover ratio across companies in the software industry is 6.205x. Based on this information, which of the following statements is true for Polk Software Inc.? O Polk Software Inc. is holding less inventory per dollar of sales compared with the industry average. O Polk Software Inc. is holding more inventory per dollar of sales compared with the industry average.
Os DS Ch 04- Assignment - Analysis of Financial Statements 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: Polk Software Inc. has a quick ratio of 2.00x, $30,825 in cash, $17,125 in accounts receivable, some inventory, total current assets of $68,500, and total current liabilities of $23,975. The company reported annual sales of $200,000 in the most recent annual report. Additionally, the company's cost of goods sold is 75% of sales. Over the past year, how often did Polk Software Inc. sell and replace its inventory? 8.01x 7.30x 2.86x O8.03x The inventory turnover ratio across companies in the software industry is 6.205x. Based on this information, which of the following statements is true for Polk Software Inc.? O Polk Software Inc. is holding less inventory per dollar of sales compared with the industry average. O Polk Software Inc. is holding more inventory per dollar of sales compared with the industry average.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Ch 04- Assignment - Analysis of Financial Statements
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:
Polk Software Inc. has a quick ratio of 2.00x, $30,825 in cash, $17,125 in accounts receivable, some inventory, total current assets of
$68,500, and total current liabilities of $23,975. The company reported annual sales of $200,000 in the most recent annual report.
Additionally, the company's cost of goods sold is 75% of sales.
Over the past year, how often did Polk Software Inc. sell and replace its inventory?
8.01x
7.30x
2.86x
8.03x
The inventory turnover ratio across companies in the software industry is 6.205x. Based on this information, which of the following statements is
true for Polk Software Inc.?
Polk Software Inc. is holding less inventory per dollar of sales compared with the industry average.
O Polk Software Inc. is holding more inventory per dollar of sales compared with the industry average.
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