IntelliGames Inc. vs BrainGames Inc: A Financial Analysis
1. Which company has a more efficient credit and collection policy?
A. IntelliGames Inc.
B. BrainGames Inc.
C. Both companies
D. Industry Average
2. Why does BrainGames Inc.'s fixed-asset turnover ratio differ from IntelliGames Inc.'s?
A. BrainGames is a new company
B. Acquisition costs of fixed assets
C. Book values of fixed assets
D. Both A and B
3. How does IntelliGames Inc.'s total asset turnover ratio compare to the industry average?
A. Higher
B. Lower
C. Equal
D. Not mentioned
1. Answer:
The answer is A. IntelliGames Inc.
2. Answer:
The correct answer is D. Both A and B.
3. Answer:
The total asset turnover ratio for IntelliGames Inc. is higher, indicating greater efficiency compared to the industry average.
IntelliGames Inc. and BrainGames Inc. are two companies in the electronic toy manufacturing industry with equal market shares. Upon analyzing their financial data, several key points emerge.
A. Credit and Collection Policy Efficiency
IntelliGames Inc. has a lower days sales outstanding ratio, meaning it collects cash from customers faster than BrainGames Inc. However, both companies lag behind the industry average in receivables collection. This suggests they may have room for improvement in their credit and collection policies.
B. Fixed-Asset Turnover Ratio
BrainGames Inc.'s lower fixed-asset turnover ratio compared to IntelliGames Inc. can be attributed to being a new company with higher acquisition costs and book values of fixed assets. This difference highlights how the age and cost structure of a company can impact financial ratios.
C. Total Asset Turnover Ratio
IntelliGames Inc. has a higher total asset turnover ratio than the industry average, indicating greater efficiency in utilizing assets to generate sales. This shows that IntelliGames is performing well in terms of asset turnover compared to its competitors.
In conclusion, while BrainGames Inc. is showing promising signs of outperforming IntelliGames Inc. in certain areas, both companies have room for improvement in their financial efficiency, particularly in terms of credit policies and asset utilization.