ANNUAL REPORT PROJECT
Assignment #6
Investing Activities
Generally, investing activities involve the acquisition or disposal of long-term assets. In
this assignment you will review and evaluate the investing activities that your companies
engaged in during the most recent year.
1. Identify the changes in your firms’ long-term asset accounts that occurred during the
most recent accounting period. Not every balance sheet contains every account listed
below. Your companies may also have items not listed below; therefore, blank lines have
been provided for you to write in any addition items.
Long-term investments
Balance sheet amount for current year
Balance sheet amount for prior year
Change in dollars
Machinery and equipment
Balance sheet amount for current year
Balance sheet amount for prior year
Change in dollars
Buildings and leasehold improvement
Balance sheet amount for current year
Balance sheet amount for prior year
Change in dollars
Land
Balance sheet amount for current year
Balance sheet amount for prior year
Change in dollars
Other:___________________________
Balance sheet amount for current year
Balance sheet amount for prior year
Change in dollars
Less: Accumulated depreciation
Balance sheet amount for current year
Balance sheet amount for prior year
Change in dollars
Company #1
Company #2
Company #1
Company #2
Goodwill
Balance sheet amount for current year
Balance sheet amount for prior year
Change in dollars
Other Intangibles:_____________________
Balance sheet amount for current year
Balance sheet amount for prior year
Change in dollars
Total long-term assets
2. What percent of the cost of PP&E was written off as depreciation expense in the most
recent year?
Company #1
Company #2
What does your answer imply about the average life of your company’s PP&E?
Company #1
Company #2
What percent of the cost of PP&E is in the Accumulate Depreciation account?
Company #1
Company #2
On average, then, are the PP&E relatively new, relatively old, or in mid-life?
Company #1
Company #2
3. Inspect the investing activities section of the statement of cash flows and report the
following:
a. Cash spent to acquire long-term assets
Current year
Prior year
b. Cash received from sale of long-term assets
Current year
Prior year
4. Based on the information in Parts 1-3 above, briefly summarize the significant
investing activities, if any, that your company engaged in during the most recent year.
Are your firms expanding their long-term asset base? Shrinking the base?
Company #1
Company #2
4. Evaluating the effect of asset growth on return on assets.
a. Return on assets = (net income – preferred dividends)/total assets
Company #1
Company #2
Return on assets
b. Return on assets: This time in calculating net income exclude extraordinary
items, discontinued operations, and cumulative accounting changes.
Adjusted return on assets
c. Asset Turnover = Sales/Total assets
Asset Turnover
d. Profit margin = Net income/Sales
Profit margin
5. Evaluating your firms’ segment information.
a. Near the end of the notes to the financial statements you should find
information about your company’s lines of business. Are your firms’ segments all
contributing equally to sales and profits? Complete the table of segment information
below. List the operating income, identifiable assets of each segment for the current year
and one prior year. If your firm operates as a single segment, substitute geographic data
(if any) in the anlaysis below. Divide column A by column B to obtain the return on
identifiable assets.
(A)
(B)
Operating
Identifiable Return on
Segment Name
Year Income
Assets
Iden. Assets
Company #1
1.
2.
Company #2
1.
2.
b. Discuss the results of your segment analysis. Are some segments performing better
than others? Might overall profitability be enhanced by reallocating assets to some
segments and away from others? What questions would you have for management
regarding its various lines of business? Does management address ”segment strategies”
in the MD&A? Discuss and explain.
Company #1
Company #2