Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com.
Required:
1. With regard to depreciation methods:
a. What depreciation method does Under Armour use? What depreciation method does Columbia use?
b. What are the typical useful lives of each company's operating assets?
c. What effect will the useful lives have on the company's financial statements?
2. Refer to the statement of cash flows:
a. What is the amount of depreciation and amortization expense that each company reported for the 3 years presented?
b. How much did each company spend on the acquisition of operating assets (capital expenditures) in each of the last 3 years?
c. Is the change in depreciation and amortization expense consistent with the pattern of capital expenditures observed? Why or why not?
3. Compute the fixed asset turnover and the average age of fixed assets for each company for 2016. What conclusions can you draw from these ratios?