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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Comparative Analysis: Under Armour, Inc., versus Columbia Sportswear

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:

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?

To determine

Introduction:

Fixed turnover ratio means is the ratio which measure the fixed assets comparisons to net sales.

How much sale in the current year against the total assets? High ratio indicates the efficiency is very high in the company using the assets for production.

To compute:

Compute the fixed turnover and the average age of fixed for each company for 2016. What conclusions can you draw form these ratio? What conclusions can you draw from these ratios?

Explanation

fixed assets turnover = net saleaverage net fixed assetsAverage net fixed assets = opening assets + closing assets2

Given information in annual report

Under the COLUMBIASPORTSWEARCOMPANY

Particular 2016 ($) 2015 ($)
Fixed Assets

Net sale

601,871

2,377,045

596 764

2,326,180

fixed assets turnover = $2,377,045$599,317.5=3.966Average net fixed assets = $596,764+ $601,8712=$599,317

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