Mgmt 200 Assignment Soln 3-11-11

Mgmt 200 Assignment Soln 3-11-11 - million). Problem 7-9B...

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Management 200 – Introductory Financial Accounting– Spring 2011 Krannert School of Management - Purdue University Solutions to class assignment for March 11, 2011 Additional Perspective 7-3 Requirement 1 The Buckle uses a combination of accelerated and straight-line depreciation methods. The estimated useful lives are as follows: Buildings 31.5 to 39 years Leasehold Improvements Shorter of the life of the lease or the life of the asset. Property and equipment 5 to 10 years Requirement 2 The cost of property and equipment is \$305,974,000. Property and equipment is increasing from \$264,154,000 to \$305,974,000. Note that these amounts are stated in thousands, so it is important to add 3 zeros to each amount. Requirement 3 The most common term for the leases is ten years. The future minimum rental commitments under operating leases at January 30, 2010 are \$303,956,000 (about \$304

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Unformatted text preview: million). Problem 7-9B Requirement 1 Nike Net Income Average Total Assets = Return on Assets \$1,486.7 (\$12,442.7 + \$13,249.6)/2 = 11.6% Net Income Sales = Profit Margin \$1,486.7 \$19,176.1 = 7.8% Sales Average Total Assets = Asset Turnover \$19,176.1 (\$12,442.7 + \$13,249.6)/2 = 1.5 times Requirement 2 Under Armour Net Income Average Total Assets = Return on Assets \$38.2 (\$390.6 + \$487.6)/2 = 8.7% Net Income Sales = Profit Margin \$38.2 \$725.2 = 5.3% Sales Average Total Assets = Asset Turnover \$725.2 (\$390.6 + \$487.6)/2 = 1.7 times Requirement 3 Nike has a higher profit margin than Under Armour (7.8% vs. 5.3%), while Under Armour has a slightly higher asset turnover (1.7 times vs. 1.5 times). Overall, Nike has a return on assets of 11.6% compared to 8.7% for Under Armour....
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This note was uploaded on 02/27/2012 for the course MGMT 200 taught by Professor Greigg during the Spring '08 term at Purdue University-West Lafayette.

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Mgmt 200 Assignment Soln 3-11-11 - million). Problem 7-9B...

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