Ross Ltd and Yang Ltd, two entities of roughly the same size, are both involved in the

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Ross Ltd and Yang Ltd, two entities of roughly the same size, are both involved in the manufacture of dancing shoes. Each entity depreciates its PPE assets using the straight-line approach. An investigation of their financial statements reveals this information: 


Required

(a) For each entity, calculate these values:

1. average age of PPE assets.

2. average useful life.

3. asset turnover.

(b) Based on your calculations in part (a), comment on the relative effectiveness of the two entities in using their assets to generate sales. What factors complicate your ability to compare the two entities?

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Financial Accounting Reporting Analysis And Decision Making

ISBN: 9780730313748

5th Edition

Authors: Shirley Carlon, Rosina Mladenovic Mcalpine, Chrisann Palm, Lorena Mitrione, Ngaire Kirk, Lily Wong

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