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.) Data Collected (in dollars) Like Games Our Play Industry Average Accounts receivable 2,700 3,900 3,850 Net fixed assets 55,000 80,000 216,750 Total assets 95,000 125,000 234,600 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 but both companies are collecting their receivables less qu than that of Like Games. This could be because Our Play is a than the recorded cost of Like Games's net fixed assets. 2. Our Play's fixed assets turnover ratio is acquisition cost of its fixed assets is which is r 3. Like Games's total assets turnover ratio is higher total assets turnover ratio indicates greater efficiency. is collecting industry average. Our Play company, so the Like Games than the industry's average total assets turnover ratio. In general, a
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.) Data Collected (in dollars) Like Games Our Play Industry Average Accounts receivable 2,700 3,900 3,850 Net fixed assets 55,000 80,000 216,750 Total assets 95,000 125,000 234,600 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 but both companies are collecting their receivables less qu than that of Like Games. This could be because Our Play is a than the recorded cost of Like Games's net fixed assets. 2. Our Play's fixed assets turnover ratio is acquisition cost of its fixed assets is which is r 3. Like Games's total assets turnover ratio is higher total assets turnover ratio indicates greater efficiency. is collecting industry average. Our Play company, so the Like Games than the industry's average total assets turnover ratio. In general, a
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text: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.)
Data Collected (in dollars)
Like Games Our Play
Industry Average
Accounts receivable
2,700
3,900
3,850
Net fixed assets
55,000
80,000
216,750
Total assets
95,000
125,000
234,600
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
but both companies are collecting their receivables less qu
than that of Like Games. This could be because Our Play is a
than the recorded cost of Like Games's net fixed assets.
2. Our Play's fixed assets turnover ratio is
acquisition cost of its fixed assets is
which is
r
3. Like Games's total assets turnover ratio is
higher total assets turnover ratio indicates greater efficiency.
is collecting
industry average.
Our Play
company, so the
Like Games
than the industry's average total assets turnover ratio. In general, a
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