Reading and Using the Annual Report Case Study. This choice will work only if the company is using...

Question

Reading and Using the Annual Report Case Study. This choice will work only if the company is using the straight-line depreciation method. The company’s choice of depreciation method can be located in the notes to the financial statement in the annual report. If the company does not use this method or does not have long-term assets, you will need to choose another company.

Using your selected company’s financial statement,

Calculate the average life, average age, and asset turnover ratios. Discuss what each ratio tells you in the context of your chosen company.
Calculate the accounts receivable turnover ratio and convert that ratio into days. Discuss what each ratio tells you in the context of your chosen company.

hmannual-report-2019-u0hjfira-5ignrznj.pdf annual-report-2018-hm-v555vfib-fqwdg40t.pdf

Khushboo · Accepted Answer

Solution 1:
The company is having two assets majorly under PPE which includes the building and equipment. The useful life of building is 32 years and the average useful life of equipment is 8 years which is also as per industry standards. The average age of both assets are 14 years and 4 years respectively at end of financial year 2019 which show that nearly half of the total useful lives have been lapsed. The calculation of avg. useful life and avg. age is as below:
	Particulars
	Building
	Equipment
	Opening Acquisition value (a)
	         1,153 
	         74,454 
	Dep for the year (b)
	               36 
	           9,406 
	Average life (Yrs.) (a/b)
	               32 
	                   8 
	Particulars
	Building
	Equipment
	Accumulated dep (a)
	            521 
	         39,510 
	Dep for the year (b)
	               36 
	           9,

Reading and Using the Annual Report Case Study. This choice will work only if the company is using the straight-line depreciation method. The company’s choice of depreciation method can be located in...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment