Example Example with the identification of major classes of property plant and

Example example with the identification of major

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Example: Example with the identification of major classes of property, plant and equipment as well as indication that depreciation and amortization are by the straight-line method, and depletion by the units-of-activity method They should also describe depreciation and amortization methods that were used, as well as the amount of depreciation and amortization Companies will disclose either in the balance sheet or the notes of the balance sheet the balances of the major classes of assets, such as land, buildings, and equipment and accumulated depreciation by major classes or total Presentation Statement Presentation and Analysis Using ratios we can efficiently show how a company uses its assets to generate sales It tells us how many dollars of sales a company generates for each dollar invested in assets The asset turnover ration: analyzes the productivity of a company's assets The ration is computed by dividing net sales by average total assets for the period Analysis Section 4 Chapter 9 Thursday, March 28, 2013 4:38 PM Chapter 9 Page 29
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This ration varies greatly among different industries- from those that are asset-intensive (utilities) to those that are not (service) Each dollar invested in assets produced $0.60 in sales. If a company is using its assets efficiently, each dollar of assets will create a high amount of sales Example: The ration is computed by dividing net sales by average total assets for the period Chapter 9 Page 30
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