Composition of Noncurrent Assets
The following schedule summarizes the noncurrent assets reported in the yearend balance sheets of Packard Computers, a company that designs and manufactures electronic data and communications systems, and Nazareth Steel, a major steel fabricator:
|
Packard Computers |
Nazareth Steel |
|
|
(Dollars in millions) |
||
|
Current assets (total) |
$10,236 |
$1,591 |
|
Noncurrent assets |
||
|
Property, plant, and equipment (at cost) |
7,527 |
6,741 |
|
Less: Accumulated depreciation |
(3,347) |
(4,107) |
|
Net |
4,180 |
2,634 |
|
Other long term receivables and other |
2,320 |
1,652 |
|
Total noncurrent assets |
6,500 |
4,286 |
|
Total assets |
$16,736 |
$5,877 |
Required
a. Identify the major differences between these two firms in the composition of noncurrent assets. Try to explain these differences based on the types of products that each company produces.
b. Based solely on the information provided here, which company appears to have the older assets? Calculate the asset management ratios. Evaluate the results.