Financial Accounting Project - Ratio Analysis of Current Liabilities
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sample_for_fin_project.docModule 02 -- Financial Accounting Project –
ABC Company – Ratio Analysis of Fixed Asset
Rasmussen College
Student Name
Author Note
This research is being submitted on July 22, 2014, for Professor Mark Jonas
A141/ACG1033 Section 04 Financial Accounting II - 2014 Summer Quarter
The balances of net property, plant, and equipment at ABC’s year-end for 2013 and 2012, are $16,597 million and $15,452 million, respectively. ABC’s fiscal year 2013 began October 1, 2012, ending September 30, 2013. ABC’s fiscal year 2012 began October 1, 2011, ending September 30, 2012. ( http://financials.morningstar.com/balance-sheet/bs.html?t=ABC )
The straight-line method of depreciation is used over the estimated useful lives of the tangible assets. The estimated useful lives of assets are as follows:
· Buildings – the lesser of 30 years or the remaining life of the underlying building
· Machinery and equipment, including product tooling and manufacturing process equipment – between two to five years
· Leasehold improvements – the shorter of lease terms or ten years
· ABC capitalizes eligible costs to acquire or develop internal-use software that are incurred subsequent to the preliminary project stage. These capitalized costs related to internal-use software are amortized using the straight-line method over the estimated useful lives of the assets – range from three to five years. ( http://www.stock-analysis-on.net/NASDAQ/Company/ABC-Inc/Analysis/Property-Plant-and-Equipment )
It is in the realm of intangible assets that ABC’s spectacular performance takes shape. The Intellectual Asset Management blog refers to ABC as having an ‘implied intangible value’ of $450 billion in March 2012. ( http://www.iam-magazine.com/blog/detail.aspx?g=042ff61e-8c28-4a2f-abfc-660e31f74277 ) The reasoning is that ABC’s enterprise value had risen to $500 billion, with the tangible assets required to run the business valued at $50 billion.
The intangible assets include technology intangibles such as patents and expert technical knowledge; however the brand name is clearly the source of ABC’s platinum and titanium fortunes. Brand Finance Global 500 reported the value of ABC’s intangible assets as 70.6 billion in 2012 and 87.3 billion in 2013. ( http://brandirectory.com/league_tables/table/global-500-2014 ) It is ABC’s #1 position in brand valuation that lends strategic significance to the ongoing litigation between ABC and its fiercest competitor, the Samsung Group in the #2 position. ( http://www.huffingtonpost.com/2014/05/02/ABC-samsung-ABC-patent_n_5256854.html )
Calculation of ABC’s ‘percent of net fixed assets compared to total assets’ for 2013 and 2012 produces the following results:
|
|
2013 |
2012 |
|
Net fixed assets |
16,597 million |
15,452 million |
|
Total assets |
207,000 million |
176,064 million |
|
Percent of Net fixed assets compared to Total assets |
16,597 / 207,000 = 0.080 8 % |
15,452 / 176,064 = 0.087 9 % |
( http://financials.morningstar.com/balance-sheet/bs.html?t=ABC )
References
Retrieved from URL: http://brandirectory.com/league_tables/table/global-500-2014
Retrieved from URL: http://financials.morningstar.com/balance-sheet/bs.html?t=ABC
Retrieved from URL: http://www.huffingtonpost.com/2014/05/02/ABC-samsung-ABC- patent_n_5256854.html Retrieved from URL: http://www.iam-magazine.com/blog/detail.aspx?g=042ff61e-8c28- 4a2fabfc-660e31f74277
Retrieved from URL: http://www.stock-analysis-on.net/NASDAQ/Company/ABC-Inc/Analysis/Property-Plant-and-Equipment
