Question

Financial​ ratios: Asset management. The financial statements for Tyler​ Toys, Inc. are shown below. Calculate the inventory​ turnover, days' sales in​ inventory, receivables​ turnover, days' sales in​ receivables, and total asset turnover for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the​ shareholders?

Tyler Toys, Inc.
Income Statement for Years Ending December 31, 2013 and 2014
	2014	2013
Revenue	$14,147,844	$13,566,081
Cost of goods sold	$-8,448,121	$-8,131,751
Selling, general, and administrative expenses	$-997,351	$-981,956
Depreciation	$-1,498,005	$-1,471,279
EBIT	$3,204,367	$2,981,095
Interest expense	$-375,975	$-355,216
Taxes	$-1,074,789	$-997,834
Net income	$1,753,603	$1,628,045

                                                                                       

Tyler Toys, Inc.
Balance Sheet as of December 31, 2013 and 2014
ASSETS	2014	2013	LIABILITIES	2014	2013
Current assets			Current liabilities
Cash	$191,800	$186,995	Accounts payable	$1,545,434	$1,456,815
Investments	$180,888	$120,534	Short-term debt	$311,087	$333,794
Accounts receivable	$667,251	$631,113	Total current liabilities	$1,856,521	$1,790,609
Inventory	$588,772	$563,814	Long-term liabilities
Total current assets	$1,628,711	$1,502,456	Debt	$7,285,670	$6,603,931
Long-term assets			Other liabilities	$1,462,111	$1,346,207
Investments	$3,053,195	$2,828,266	Total liabilities	$10,604,302	$9,740,747
Plant, property, and equipment	$8,496,792	$8,481,309	OWNERS’ EQUITY
Goodwill	$347,021	$347,194	Common stock	$1,457,331	$1,453,971
Intangible assets	$1,158,088	$957,411	Retained earnings	$2,622,174	$2,921,918
			Total owners’ equity	$4,079,505	$4,375,889
			TOTAL LIABILITIES
TOTAL ASSETS	$14,683,807	$14,116,636	AND OWNERS’ EQUITY	$14,683,807	$14,116,636

What is the inventory turnover ratio for​ 2014? ________ ​(Round to four decimal​ places.)

What is the inventory turnover ratio for​ 2013? ________ ​(Round to four decimal​ places.)

What is the​ days' sales in inventory ratio for​ 2014? ________ days (Round to four decimal​ places.)

What is the​ days' sales in inventory ratio for​ 2013? ________ days ​(Round to four decimal​ places.)

What is the receivables turnover ratio for​ 2014? ________ ​(Round to four decimal​ places.)

What is the receivables turnover ratio for​ 2013? _________ ​(Round to four decimal​ places.)

What is the​ days' sales in receivables ratio for​ 2014? _______ days (Round to four decimal​ places.)

What is the​ days' sales in receivables ratio for​ 2013? _______ days ​(Round to four decimal​ places.)

What is the total asset turnover ratio for​ 2014? _______ ​(Round to four decimal​ places.)

What is the total asset turnover ratio for​ 2013? ________ ​(Round to four decimal​ places.)

Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the​ shareholders? (Select the best​ response.)

A. The company has a very poor turnover of assets and collects its receivables​ quickly; thus there are some concerns from these ratios.

B. The company has a very good turnover of assets but collects its receivables​ slowly; thus there are some real concerns from these ratios.

C. The company has a very good turnover of assets and collects its receivables​ quickly; thus there are major concerns from these ratios.

D. The company has a very good turnover of assets and collects its receivables​ quickly; thus there are no real concerns from these ratios.

Answer 1

PARTICULARS	2014	2013
A.COST OF GOODS SOLD	84,48,121.00	81,31,751.00
B. INVENTORY*	5,88,772.00	5,63,814.00
C.INVENTORY TURNOVER RATIO (A/B)	14.3487	14.4228
D.DAY'S SALES IN INVENTORY RATIO (B/A)*365	25.4378	25.3072
E.CREDIT SALES (ASSUMING WHOLE REVENUE FROM CREDIT SALES)	141,47,844.00	135,66,081.00
F.ACCOUNTS RECEIVABLE#	6,67,251.00	6,31,113.00
G.RECEIVABLE TURNOVER RATIO(E/F)	21.2032	21.4955
H.DAY'S SALES IN RECEIVABLE RATIO(F/E)*365	17.2144	16.9803
I.TOTAL ASSETS^	146,83,807.00	141,16,636.00
J.ASSET TURNOVER RATIO (E/I)	0.9635	0.9610
*USUALLY FOR CALCULATION OF INVENTORY TURNOVER RATIO, AVERAGE INVENTORY IS TAKEN
SINCE NO INFORMATION ABOUT OPENING STOCK OF 2013, WE ONLY CONSIDER CLOSING STOCK OF BOTH THE YEARS FOR CALCULATION.
#USUALLY FOR CALCULATION OF RECEIVABLE TURNOVER RATIO, AVERAGE RECEIVABLE IS TAKEN
SINCE NO INFORMATION ABOUT OPENING RECEIVABLE OF 2013, WE ONLY CONSIDER CLOSING RECEIVABLE BALANCE OF BOTH THE YEARS FOR CALCULATION.
^USUALLY FOR CALCULATION OF ASSET TURNOVER RATIO, AVERAGE ASSET IS TAKEN
SINCE NO INFORMATION ABOUT TOTAL ASSET OF 2012 GIVEN, WE ONLY CONSIDER TOTAL ASSETS OF BOTH THE YEARS FOR CALCULATION.

B. The company has a very good turnover of assets but collects its receivables​ slowly; thus there are some real concerns from these ratios.