A.
Segment Analysis
Business can be classified by regions, products or services, types of customers and more; each classification is treated as one segment of the business. Revenues earned from different segments individually are called segment revenue. Segment revenues are determined from the invoiced data entered into the accounting system. Segment analysis is done to analyze the contribution of different segments to the total operating performance of the company. It is done with the help of horizontal and vertical comparisons.
Horizontal Analysis
This analysis is done to show the trend of various components in financial statements over a period of time. The earliest period is used as the base period and components of financial statements of later periods are compared with the components of the base period.
Vertical analysis
Vertical analysis is the method of financial statement analysis, and it is useful for evaluating company’s performance and financial condition. Vertical analysis is helpful for analyzing the changes in the financial statements over the time, and comparing each item on a financial statement with a total amount from the same statement.
To prepare: A vertical analysis of the sales as a percent of total sales for the five segments.
B.
To interpret: The vertical analysis of five segment of Company WD.
C.
To prepare: A horizontal analysis of the sales as a percent of total sales for the five segments.
D.
To interpret: The horizontal segment sales analysis.
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Chapter 20 Solutions
Financial & Managerial Accounting
- Commodore Entertainment has four profitable business segments, described as follows: • Media Networks: Television and radio • Parks and Resorts: Resorts, including Commodore land • Studio Entertainment: Motion pictures, musical recordings, and stage plays • Consumer Products: Character merchandising, Commodore stores, books, and magazines Commodore Entertainment recently reported sector income from operations, revenue, and invested assets as follows: Income from Operations Revenue Invested Assets Media Networks $146,640 $624,000 $780,000 Parks and Resorts 41,756 343,200 572,000 Studio Entertainment 13,392 260,400 372,000 Consumer Products 94,163 324,700 191,000 a. Use the DuPont formula to determine the return on investment for the four Commodore Entertainment sectors. Round Profit Margin and ROI to one decimal place and Investment Turnover to two decimal places. Profit Margin Investment Turnover ROI Media Networks fill…arrow_forwardAnalyze Comcast Corporation by segment Comcast Corporation (CMCSA) is a global media and entertainment company with operations divided into five major segments: Cable Communications (XFINITY) Cable Networks (USA Network, Syfy, E!, CNBC, others) Broadcast Television (NBC) Filmed Entertainment (Universal Pictures) Theme Parks (Universal) Revenue, operating income, and depreciation and amortization information for these segments for a recent year are as follows (in millions): Segment Revenue OperatingIncome Depreciationand Amortization Cable Communications $50,048 $12,439 $7,670 Cable Networks 10,464 2,964 745 Broadcast Television 10,147 1,195 125 Filmed Entertainment 6,360 650 47 Theme Parks 4,946 1,678 512 Total $81,965 $18,926 $9,099 a. Prepare a vertical analysis of the segment revenues to total revenues. Round to nearest whole percent. Enter amounts in millions.…arrow_forwardSegment Contribution Margin Analysis The Walt Disney Company (DIS) is a global entertainment company that is organized into four business segments as follows: Media Networks:Television production and distribution, including ABC television network, ESPN, National Geographic. Parks, Experiences, and Products:Theme parks and resorts, including Walt Disney World and Disneyland; Experiences, including Disney Cruise Line and Disney Vacation Club; Products, including Disney and Pixar characters, comic books, and magazines. Studio Entertainment:Music and motion picture production and distribution, including Twentieth Century Studios, Marvel, and Lucasfilm. Direct-to-Consumer & International:Streaming services, including Disney+, ESPN+, and Hulu. For a recent year, Disney reported the following segment results (in millions): Line Item Description SegmentMediaNetworks SegmentParks, Experiences,and Products SegmentEntertainment Direct-to-Consumer& International Revenues $28,393…arrow_forward
- Return on investment Commodore Entertainment has four profitable business segments, described as follows: • Media Networks: Television and radio• Parks and Resorts: Resorts, including Commodore land• Studio Entertainment: Motion pictures, musical recordings, and stage plays• Consumer Products: Character merchandising, Commodore stores, books, and magazines Commodore Entertainment recently reported sector income from operations, revenue, and invested assets as follows: Income from Operations Revenue Invested Assets Media Networks $193,644 $586,800 $978,000 Parks and Resorts 63,954 392,700 561,000 Studio Entertainment 12,927 333,600 417,000 Consumer Products 118,233 469,800 261,000 a. Use the DuPont formula to determine the return on investment for the four Commodore Entertainment sectors. Round Profit Margin and ROI to one decimal place and Investment Turnover to two decimal places. Profit Margin Investment Turnover ROI…arrow_forwardReturn on investment Commodore Entertainment has four profitable business segments, described as follows: • Media Networks: Television and radio• Parks and Resorts: Resorts, including Commodore land• Studio Entertainment: Motion pictures, musical recordings, and stage plays• Consumer Products: Character merchandising, Commodore stores, books, and magazines Commodore Entertainment recently reported sector income from operations, revenue, and invested assets as follows: Income from Operations Revenue Invested Assets Media Networks $163,582 $735,200 $919,000 Parks and Resorts 73,625 353,400 589,000 Studio Entertainment 16,668 324,100 463,000 Consumer Products 80,164 352,800 196,000 a. Use the DuPont formula to determine the return on investment for the four Commodore Entertainment sectors. Round Profit Margin and ROI to one decimal place and Investment Turnover to two decimal places. Profit Margin Investment Turnover ROI…arrow_forwardSegment Analysis for a Service Company Charles Schwab Corporation is one of the more innovative brokerage and financial service companies in the United States. The company recently provided information about its major business segments as follows (in millions): Investor Advisor Services Services Revenues $7,321 $2,811 Income from operations 3,176 1,386 Depreciation 186 120 a. The ____ segment serves the retail customer, you and me. These include brokerage, Internet, and mutual fund services. The ____ segment includes the same services provided for financial institutions, such as banks, mutual fund managers, insurance companies, and pension plan administrators. b. Indicate whether the following costs are a “Variable Cost” or a “Fixed Cost” in the “Investor Services“. 1. Commissions to brokers _____2. Fees paid to exchanges for executing trades_____ 3. Depreciation on brokerage offices _______4. Transaction fees incurred by Schwab mutual funds to…arrow_forward
- Disney started inthe 1920sasan animation studio.How has the company diversified its offering since then?Analyze the companyâsmost currentâFiscalAnnual Reportâ to find out its primary revenue streams. What are the primary businesses that Disney operates today?arrow_forwardCarnarvon Ltd is a listed diversified retail company. Its stores are located mainly in Australia. It has three main types of stores: general department stores, liquor stores and specialist toy stores. Each of these stores has different products, customer types and distribution processes. In accordance with AASB 8/IFRS 8, Carnarvon Ltd has identified three operating segments: general department stores, liquor stores and specialist toy stores. All three business units earn most of their revenue from external customers. Total consolidated revenue of Carnarvon Ltd is $800 million. Business segment Segment revenue ($000) Profit or loss ($000) Segment assets ($000) General dep store 500 28 800 Liquor stores 220 9 350 Toy stores 80 6 150 All segments 800 43 1300 Required: Determine which segments of Carnarvon Ltd are reportable in accordance with the guidelines provided in AASB 8/IFRS 8. Show your calculations.arrow_forwardEffect of Industry Characteristics on Financial Statement Relations: A Global Perspective. Effective financial statement analysis requires an understanding of a firms economic characteristics. The relations between various financial statement items provide evidence of many of these economic characteristics. Exhibit 1.24 (pages 6667) presents common-size condensed balance sheets and income statements for 12 firms in different industries. These common-size balance sheets and income statements express various items as a percentage of operating revenues. (That is, the statement divides all amounts by operating revenues for the year.) A dash for a particular financial statement item does not necessarily mean the amount is zero. It merely indicates that the amount is not sufficiently large for the firm to disclose it. A list of the 12 companies, the country of their headquarters, and a brief description of their activities follow. A. Accor (France): Worlds largest hotel group, operating hotels under the names of Sofitel, Novotel, Motel 6, and others. Accor has grown in recent years by acquiring established hotel chains. B. Carrefour (France): Operates grocery supermarkets and hypermarkets in Europe, Latin America, and Asia. C. Deutsche Telekom (Germany): Europes largest provider of wired and wireless telecommunication services. The telecommunications industry has experienced increased deregulation in recent years. D. E.ON AG (Germany): One of the major public utility companies in Europe and the worlds largest privately owned energy service provider. E. Fortis (Netherlands): Offers insurance and banking services. Operating revenues include insurance premiums received, investment income, and interest revenue on loans. Operating expenses include amounts actually paid or amounts it expects to pay in the future on insurance coverage outstanding during the year. F. Interpublic Group (U.S.): Creates advertising copy for clients. Interpublic purchases advertising time and space from various media and sells it to clients. Operating revenues represent the commissions or fees earned for creating advertising copy and selling media time and space. Operating expenses include employee compensation. G. Marks Spencer (U.K.): Operates department stores in England and other retail stores in Europe and the United States. Offers its own credit card for customers purchases. H. Nestl (Switzerland): Worlds largest food processor, offering prepared foods, coffees, milk-based products, and mineral waters. I. Roche Holding (Switzerland): Creates, manufactures, and distributes a wide variety of prescription drugs. J. Sumitomo Metal (Japan): Manufacturer and seller of steel sheets and plates and other construction materials. K. Sun Microsystems (U.S.): Designs, manufactures, and sells workstations and servers used to maintain integrated computer networks. Sun outsources the manufacture of many of its computer components. L. Toyota Motor (Japan): Manufactures automobiles and offers financing services to its customers. REQUIRED Use the ratios to match the companies in Exhibit 1.24 with the firms listed above.arrow_forward
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