PROF WASHINGTON only please

SEC 10K Fixed Assets and Intangibles

Report the required ratios or dollar amounts for items 1, 2, and 3 in a table and answer the remainder of

the questions in narrative form (single-space with section headings, extra space between sections).

1. Report the dollar amount of PPE, net for the most recent and previous fiscal year. Calculate PP&E as a

percentage of total assets for your company ($PPE/$Total Assets) for the most recent and previous fiscal

year.

2. Calculate the Asset Turnover Ratio (net sales divided by average total assets) for the most recent year

and the previous year. What does the asset turnover ratio attempt to measure? (see our online text or

search the internet for a proper interpretation of the asset turnover ratio). Interpret the ratio for your

company and indicate whether it improved or declined.

3. Has your company acquired or sold long-term assets during the past year? Indicate the amount of

cash received or paid for transactions. Look over the footnotes to the financial statements or the

investing section of the statement of cash flows to answer the question. Indicate where you found the

information. See example for Shoe Carnival below.

4. What depreciation method (or methods) does your company use? Where did you find this

information?

5. What intangibles assets does your company include in the balance sheet? What method of

amortization does the company use for intangibles? (the straight-line method is typical, but not the only

option). Are all of the reported intangibles amortized? If no, why not? What intangible assets might

your company have that are not reported (e.g. trademarks, patents, copyrights)? Remember, accounting

rules require immediate expensing of internally developed intangibles instead of capitalizing so many

companies’ balance sheets do not report these sometimes very valuable assets.

As an example, Shoe Carnival’s Balance Sheet does not report a separate line item for intangibles and

does not indicate that intangibles are included in ‘Other assets’ on the balance sheet, yet in an overview

of the company’s business, management lists multiple trademarks (brand names) that the company

owns and describes them as ‘valuable’.

The following text appeared in the Management Discussion and Analysis Section of Shoe Carnival’s

annual report: