1. Assess Time Warner utilization of long-term assets.

Required:
a. Comment on Time Warner asset-replacement policy
b. How is Time Warner asset-replacement policy impacting its return on assets ratio?
c. Compare Time Warner asset utilization ratio with that of its two competitors.
d. What method of depreciation does your company use?
e. What depreciation method do Time Warner two competitors use?

2. Disclosure of investments and intangibles.

Required:
a. Review the financial statements for Time Warner 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 Time Warner two competitor companies.

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 Time Warner relative solvency and use of leverage
c. Review Item 7a in Time Warner and its two competitors’ 10-K reports and summarize the companies’ disclosure of information on market risk.
d. Comment on Time Warner comparative use of derivatives.