Asset management ratios11/13/2023 ![]() ![]() However, the information provided does not include the COGS or the average inventory. To calculate the inventory turnover ratio, we need to divide the cost of goods sold (COGS) by the average inventory. As an analyst, you want to make comments on the expected performance of these two companies in the coming year, Youve collected data from the companies financial statements. Sales for all industry competitors was $765,000. The company reported annual sales of $300,000 in the most recent annual report. InĬrockett Electronics has a quick ratio of 2.00x, $28,125 in cash, $15,625 in accounts receivable, some inventory, total current assets of $62,500, and total current liabilities of $21,875. Than the industrys average total assets turnover ratio. Like Gamess total assets turnover ratio is, which is general, a higher total assets turnover ratio indicates greater efficiency. Our Play's fixed assets turnover ratio is 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.ģ. Between the two companies, is collecting cash from its customers faster than, but both companies are collecting their receivables less quickly than the industry average. A days of sales outstanding represents an efficient credit and collection policy. Using this information, complete the following statements to include in your analysis.ġ. This information is listed as follows:ĭata Collected (in dollars Like Games Our Play 8,100 11,700 165,000 240,000 285,000 375,000Īccounts receivable Net fixed assets Total assets Sales for all industry competitors was765,000. ![]() O Crockett Electronics is holding more inventory per dollar of sales compared to the industry average. ![]() Based on this information, which of the following statements is true for Crockett Electronics? The inventory turnover ratio across companies in the electronics industry is 13.60x. Over the past year, how often did Crockett Electronics sell and replace its inventory The company reported annual sales of 300,000 in the most recent annual report. 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.Ĭrockett Electronics has a quick ratio of 2.00x, 28,125 in cash,15,625 in accounts receivable, some inventory, total current assets of 62,500, and total current liabilities of21,875. 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. ![]()
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