Chapter 4 AssignmentYou 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 marketshare 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 industrycompetitors 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 receivableNet fixed assetsTotal assetsData Collected (in dollars)Like Games2,70055,00095,000Our Play Industry Average3,9003,85080,000216,750125,000 234,600Using 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 collectingcash from its customers faster than Like Gamesbut 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 theacquisition cost of its fixed assets isthan the recorded cost of Like Games's net fixed assets.than the industry's average total assets turnover ratio. In general, a3. Like Games's total assets turnover ratio is 1.05x ▼ which is lowerhigher total assets turnover ratio indicates greater efficiency.

Financial ratios such as Days of Sales Outstanding (DSO), Fixed Asset Turnover, and Total Asset…

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

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter24: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 3MAD: Papa Johns International, Inc. (PZZA), operates over 5,000 restaurants in the United States and 45...