Team Project: Analysis of Long-Lived AssetsAs a team select an industry to analyze Reuters...

Team Project: Analysis of Long-Lived Assets

As a team select an industry to analyze Reuters provides lists of industries and their makeup at   Each team member should acquire the annual report or 10-K for one publicly traded company in the industry, with each member selecting a different company. (Library files, the SEC EDGAR service at,  or the company itself are good sources.)

Required:

1. List the accounts and amounts of the company’s long-lived assets (land, buildings, equipment, intangible assets, natural resources, and/or other) for the last three years.

a. What is the percentage of each to total assets?

b. What do the results of your analysis suggest about the strategy your company has followed with respect to investing in long-lived assets?

2. What cost allocation method(s) and estimates does the company use for each type of long-lived asset?

3. Compute the approximate average remaining life of property, plant, and equipment overall.

4. What does the company disclose regarding asset impairment? What was its impairment loss, if any, in the most recent year?

5. Ratio analysis:

a. What does the fixed asset turnover ratio measure in general?

b. Compute the ratio for the last three years.

c. What do your results suggest about the company?

d. If available, find the industry ratio for the most recent year, compare it to your results, and discuss why you believe your company differs or is similar to the industry ratio.

6. What was the effect of depreciation expense on cash flows from operating activities? Compute the percentage of depreciation expense to cash flows from operating activities for each of the past three years.

7. From the statement of cash flows, what were capital expenditures over the last three years? Did the company sell any long-lived assets?