Investors and lenders who read financial statements must determine the age, composition, and productivity of operating assets.

Refer to the financial information at the back of the book for Under Armour and Columbia Sportswear.

Required

Part A. The Ratio Analysis Model

For each company, determine:

What is the average life of the assets?

What is the average age of the assets?

How productive are the assets in producing revenue for the company. This is referred to as asset turnover. Replicate the five steps in the Ratio Analysis Model on page 387 to perform the analysis.

1. Formulate the Question

2. Gather the Information from the Financial Statements

3. Calculate the Ratio

4. Compare the Ratio with Other Ratios

5. Interpret the Ratios

Part B. The Business Decision Model

1. Formulate the Question

2. Gather Information from the Financial Statements and Other Sources

3. Analyze the Information Gathered

4. Make the Decision

5. Monitor Your Decision