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 $200,000 each. You've gathered up company data to compare Like Games and Our Play. Last year, the average sales for industry competitors was $510,000. 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: Like Games
Accounts receivable: 5,400
Net fixed assets: 110,000
Total assets: 190,000
Our Play
Accounts receivable: 7,800
Net fixed assets: 160,000
Total assets: 250,000
Industry Average
Accounts receivable: 7,700
Net fixed assets: 433,500
Total assets: 469,200
Using this information, complete the following statements in your analysis.
1. A days of sales outstanding represents an efficient credit and collection policy. 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.
2. 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 it fixed assets is that the recorded cost of Like Games's net fixed assets.
3. Like Games's total assets turnover ratios is , which is , than the industry's average total assets turnover ratio. In general, a higher total assets turnover ratio indicates greater efficiency.