An analyst collects the following information for two companies
2023 2022 2021 2020
Anson Industries
Inventory turnover 76.69 89.09 147.82 187.64
Days of inventory on hand (DOH) 4.76 4.10 2.47 1.95
Receivable turnover 10.75 9.33 11.14 7.56
Days of sales outstanding (DSO) 33.95 39.13 32.77 48.29
Accounts payable turnover 4.62 4.36 4.84 4.22
Days payable 78.97 83.77 75.49 86.56
Cash from operations/Total liabilities 31.41% 11.15% 4.04% 8.81%
Total assets turnover 1.11 0.95 0.93 0.84
Clarence Corporation
Inventory turnover 9.19 9.08 7.52 14.84
Days of inventory on hand (DOH) 39.73 40.20 48.51 24.59
Receivable turnover 8.35 7.01 6.09 5.16
Days of sales outstanding (DSO) 43.73 52.03 59.92 70.79
Accounts payable turnover 6.47 6.61 7.66 6.52
Days payable 56.44 55.22 47.64 56.00
Cash from operations/Total liabilities 13.19% 16.39% 15.8% 11.79%
Total assets turnover 1.06 1.00 1.10 1.38
Which of the following choices best describes reasonable conclusion an analyst might make about
the companies’s effciency?
A. Over the past four years, Anson has shown greater improvement in efficiency than
Clarence, as indicated by its total asset turnover ratio increasing from 0.84 to 1.11
B. In 2022, Anson’s DOH of only 4.76 indicated that it was less efficient at inventory
management than Clarence, which had DOH of 39.73
C. In 2022, Clarence’s receivables turnover of 8.35 times indicated that it was more efficient at
receivable management than Anson, which had receivable turnover of 10.75.
