Fmgt - rate of return The company may be holding obsolete...

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2009 Days sales outstanding (DSO) = days Fixed assets turnover = Sales/ Net fixed assets = Sales/ (Total asset – Total current asset) = 114,552,000/ (114,799,000 – 52,539,000) = 1.84x Total assets turnover = Sales/Total assets = 114,552,000/114,799,000 = 1x 2008 Days sales outstanding (DSO) = Receivables/(Annual sales/365) = 29,359,000/(118,364,000/365) = 91 days Fixed assets turnover = Sales/ Net fixed assets = Sales/ (Total asset – Total current asset) = 118,364,000/(113,331,000 – 51,728,000) = 1.9x Total assets turnover = Sales/Total assets = 118,364,000/113,331,000 = 1.04x Asset management 2008 2009 Comments Inventory turnover 1.5x 18.7x It is holding too much inventory so unproductive and represents an investment with a low or zero
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Unformatted text preview: rate of return The company may be holding obsolete goods that are not worth their stated value. Days sales outstanding (DSO) 91 days 61 days In 2009, the low average DSO indicates that if some customers are not paying on time, so their receivables may end up as bad debts that can never be collected. Fixed assets turnover 1.9x 1.84x The company has about the right amount of fixed assets relative to its sales. Total assets turnover 1.04x 1x Inventories should be reduced and receivables collected faster, which would improve operations. In 2009, the asset management is stable and better than the asset management in 2008....
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