1. Monroe manufacturing has a quick ratio of 2.00x $26,100 in cash $14,500 in accounts recivable some inventory total current assets of $58,000 and total current liabilities of $20,300 the company reported annaul sales of $700,000 in the most recent annual report
Over the past year how often did Monroe manufacturing sell and replace its inventory
A) 8.01 x
B) 44.25 x
C) 40.23 x
D) 2.86 x
2. The inventory turnover ratio across companies in the manufacturing industry is 44.25x. Based on this information, which of the following statements is true for Monroe Manufacturing?
a) Monroe Manufacturing is holding less inventory per dollar of sales compared to the industry average.
b) Monroe Manufacturing is holding more inventory per dollar of sales compared to the indsutry average.
3. You are analyzing two companies that manufacture electronic toys- Like Games Inc. and Our Play Inc. Like Games was launched 8 years ago, whereas Our Play is a relatively new company that has been in operations for only the past two years. However, both companies have an equal market share with sales of $700,000 each.
You've gathered up company data to compare Like Games and Our Play. Last year, the average sales for industry compeitiors was $1,785,000. 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. This information is listed as following:
Like Games Our Play Industry Average
Accounts receivable 18,900 27,300 26,950
Net Fixed Assets 385,000 560,000 1,517,250
Total Assets 665,000 875,000 1,642,200
1. Our Play has____ days of sales tied up in receivables, which is much ____ than the industry average. It takes Our Play____ time to collect cash from its customers than it takes Like Games.
2. Like Games's fixed asset turnover ratio is ____ than that of Our Play. This is because Like Games was formed eight years ago, so the acquisition cost of its fixed assets is recorded at a historic values when the company bought its assets and has been depreciated since then. Assuming that fixed assests prices (not book values) rose over the past years due to inflation, Our Play paid a ______ amount for its fixed assets.
3. The average total assets turnover in the electronic toys industry is 1.09x, which means that $1.09 of sales is being generated with every dollar of investment in assets. A ____ total assets turnover ratio indicates greater efficiency. Both companies' total asset turnover ratio are ____ than the industry average.