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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Vertical analysis of income statement

The following comparative income statement (in thousands of dollars) for two recent fiscal years was adapted from the annual report of Speedway Motorsports, Inc., owner and operator of several major motor speedways, such as the Atlanta, Texas, and Las Vegas Motor Speedways.

  Current Year  Previous Year
Revenues:    
Admissions $100,694 $100,798
Event-related revenue 146,980 146,849
NASCAR broadcasting revenue 217,469 207,369
Other operating revenue 31,320 29,293
Total revenues $496,463 $484,309
Expenses and other:    
Direct expense of events $104,303 $102,196
NASCAR event management fees 133,682 128,254
Other direct operating expenses 19,541 18,513
General and administrative 177,926 194,120
Total expenses and other $435,452 $443,083
Income from continuing operations $ 61,011 $ 41,226

a. Prepare a comparative income statement for these two years in vertical form, stating each item as a percent of revenues. Round percentages to one decimal place.

b. Comment on the significant changes.

1.

To determine

Vertical Analysis

Vertical analysis is prepared to analyze the relationship among various financial statements with a particular base amount.

Formula:

Vertical analysis percentage =(Specific itemBaseamount)×100

This analysis is otherwise called as common-size statement.

To prepare: Comparative income statement for the two-year period.

Given info: Income statement for the two year period.

Explanation
Vertical analysis for income statement is performed by setting the net sales as 1...

2.

To determine

To comment: Significant relationships revealed by the vertical analysis.

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