Martek_Biosciences_Co-1 - To: Dr. Jan From: Lina Xia,...

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To: Dr. Jan From: Lina Xia, LiPing Zhou. Date: May 22, 2007 Subject: Analysis Martek Biosciences Corp.’s assets depreciation The kind of assets that is subject of the controversy described in the Wall Street Journal article is “idle asset” in part of property, plant and equipment of Martek Biosciences Corporation (MATK) which is “held-for future use.” These assets are located in the property, plant and equipment within the asset category under the construction in progress of the balance sheet. In the company’s 10Q, MATK used straight line method to depreciate of PPE. The asset held for future use amount is $94302 millions. The effective tax rate is 3211/ 8794 = 36.5%. The asset useful life is 15 years. The depreciation after tax is (94302/15)*(1- 36.5%) =3.992 millions. The company fixed asset turnover ratio is Net Sales divided by Average Fix asset, which $70,261/ [(291,445+293,564) / 2] = 0.24. The Profit Margin on Sales is Net Income divided by Net Sales which is $3,779/$70,261 = 0.053785. These
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Martek_Biosciences_Co-1 - To: Dr. Jan From: Lina Xia,...

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