Answer:
A <u>LOW</u> days of sales outstanding represents an efficient credit and collection policy. Between the two companies, <u>Like Games</u> is collecting cash from its customers faster than Our Play, but both companies are collecting their receivables less quickly that the industry average. <u>(5.51 days)</u>
Our Play’s fixed assets turnover ratio is <u>lower</u> 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 <u>higher</u> than the recorded cost of Like Games’s net fixed assets.
Like Games’s total assets turnover ratio is <u>1.05x</u>, which is <u>lower</u> than the industry’s average total assets turnover ratio. In general, a higher total assets turnover ratio indicates greater efficiency.
Explanation:
DSO
Like Game 365 / (100,000 / 2,700) = 9.855
Our Play 365 / (100,000 / 3,900) = 14.235
Average 365 / (255,000/3,850) = 5.510
Fixed assets turnover:
LG 100,000 /55,000 = 1.82
100,000 / 95,000 ) = 1.052
average 255,000 / 234,600 = 1.087
OP 80,000 /55,000 = 1.45
Avg 255,000 / 216,750 = 1.18
