Investors and lenders who read financial statements must determine the age, composition, and productivity of operating assets.
Question:
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
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1285183237
9th edition
Authors: Gary A. Porter, Curtis L. Norton