Company = Ashtead Group
Competitors = United Rentals & Herc Holdings
Part 1
1. Assess your companys utilization of long-term assets.
Required:
a. Comment on your companys asset-replacement policy
b. How is your companys asset-replacement policy impacting its return on assets ratio?
c. Compare your companys asset utilization ratio with that of its two competitors.
d. What method of depreciation does your company use?
e. What depreciation method do your companys two competitors use?
2. Disclosure of investments and intangibles.
Required:
a. Review the financial statements for your company to determine if they disclose any of the following:
i. Trading securities
ii. Available-for-sale securities
iii. Held-to-maturity securities
iv.Investments accounted for by the equity method
v. Intangibles
b. Perform a similar analysis for your two competitor companies.
Part 2
1. Evaluate the use of debt.
Required:
a. Calculate the following ratios:
i. Long-term debt-to-assets ratio
ii. Interest coverage ratio
iii. Debt service coverage ratio
b. Calculate the same ratios for your competitor companies and comment on your companys relative solvency and use of leverage
c. Review Item 7a in your companys and its two competitors 10-K reports and summarize the companies disclosure of information on market risk.
d. Comment on your companys comparative use of derivatives.
2. Analyze income tax expense and income taxes payable.
Required:
a. Analyze your companys provision for income taxes and income taxes payable including:
i. The amount of income taxes that would have been paid at the statutory rate and the amount actually paid
ii. Changes in the deferred tax asset and liability accounts
iii. Changes (if any) in the amounts of income tax carrybacks and carryforwards
b. Conduct a similar analysis for your two competitor companies and discuss any differences you find.
3. Use of leases
Required:
a. Review the financial statements of your company and its two competitors to determine if they are using leases as a part of their financing activities strategy.
b. Contrast your companys leasing strategy with those of its competitors.