You are analyzing two companies that manufacture electronic

You are analyzing two companies that manufacture electronic toys-IntelliGames Inc. and BrainGames Inc. IntelliGames was launched eight years ago, whereas BrainGames is a relatively new company that has only been in operation for the past two years. However, both companies have an equal market share with sales of $100,000 each You\'ve gathered up company data to compare IntelliGames and BrainGames. For the same period, the average sales for 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, and the information follows: Data Collected (in dollars) Accounts receivables Net fixed assets Total assets IntelliGames Inc. $2,700 55,000 95,000 BrainGames Inc. $3,900 80,000 125,000 Industry Average $3,850 216,750 234,600 Using the preceding information, complete the following statements. days sales outstanding, or average collection period, 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. BrainGames Inc.\'s fixed-asset turnover ratio is than that of IntelliGames Inc. This could be because BrainGames is a relatively new company, such that the acquisition costs and book values of its fixed assets is than the acquisition costs and book values of IntelliGames\'s net fixed assets 3. IntelliGames\' total asset turnover ratio is which is than the industry\'s average total asset turnover ratio. In general, a higher total asset turnover ratio indicates greater efficiency

Solution

Assumption: 365 days in a year

1. A 5.5 (3850/255000*365)   days sales outstanding or average collection period represents an efficient credit and collection policy. between the two companies, Intelligegames Inc. is collection cash from its customers faster than BrainGames Inc. ; but both companiesare collection their recievables less quickly than the industry average.

Intelligegames collection period = 2700/100000= 9.86 days

BrainGames Inc. collection period = 3900/100000 = 14.235 days

2. BrainGamesInc\'s Fixed-Asset turnover ratio is lower (100000/80000 = 1.25) than of IntelliGamesInc (100000/55000 = 1.81). This could be because BrainGames is a relatively new company, such that the acquisition cost and bookvalues of its fixed assets is Higher than the acquisition cost and bookvaluesof IntelliGame\'s ner fixed assets.

3. IntelliGames\'s Total Asset turnover is 1.05 (100000/95000 = 1.05); which is Lower than the Industry\'saverage total asset turnover ratio (255000/234600 = 1.087) In general total asset turnoverratio indicates greater efficiency.