Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
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Textbook Question
Chapter 3, Problem 3.2MAD
Analyze Pandora Media
Pandora Media, Inc. (P) provides Internet music platform services in North America. Pandora’s income statements through operating income for two recent years are as follows (in thousands):
| Pandora Media. Inc. Income Statements For the Years Ended January 31 (in thousands) | Year 2 | Year 1 | ||
| Revenues: | ||||
| Advertising | $ 1,072,490 | $ 933,305 | ||
| Subscription | 225,786 | 220,571 | ||
| Ticketing service | 86,550 | 10,167 | ||
| Total revenues | $ 1,384,826 | $ 1,164,043 | ||
| Expenses: | ||||
| Cost of revenues | $ (894,922) | $ (697,341) | ||
| Sales and marketing | (491,4SS) (175,572) (141,636) $(1,703,585) |
(398,169) (153,943) |
||
| General and administrative | ||||
| Product development | (84,581) $(1334,034) |
|||
| Total expenses | ||||
| Operating income (loss) | $ (318,759) | $ (169,991) | ||
a. Prepare a vertical analysis of the two income statements.
b. 
Interpret the vertical analysis.
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CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:
Sales
$ 2,280,000
Net operating income
$ 250,800
Average operating assets
$ 760,000
The following questions are to be considered independently.
3. The Chief Financial Officer of the company believes a more realistic scenario would be a $1,050,000 increase in sales, requiring a $572,000 increase in average operating assets, with a resulting $165,450 increase in net operating income. What would be the company’s ROI in this scenario? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:
Sales
$
4,300,000
Net operating income
$
301,000
Average operating assets
$
860,000
The following questions are to be considered independently.
3. The Chief Financial Officer of the company believes a more realistic scenario would be a $1,550,000 increase in sales, requiring a $310,000 increase in average operating assets, with a resulting $444,875 increase in net operating income. What would be the company’s ROI in this scenario? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
CommercialServices.com Corporation provides business-to-business services on the Internet. Data concerning the most recent year appear below:Sales .................................................................................. $3,000,000Net operating income ......................................................... $150,000Average operating assets .................................................. $750,000Required:Consider each question below independently. Carry out all computations to two decimal places.1. Compute the company’s return on investment (ROI).2. The entrepreneur who founded the company is convinced that sales will increase next year by 50%and that net operating income will increase by 200%, with no increase in average operating assets.What would be the company’s ROI?3. The chief financial officer of the company believes a more realistic scenario would be a $1,000,000increase in sales, requiring a $250,000 increase in average operating assets, with a resulting…
Chapter 3 Solutions
Corporate Financial Accounting
Ch. 3 - How are revenues and expenses reported on the...Ch. 3 - Is the matching concept related to (A) the cash...Ch. 3 - Why are adjusting entries needed at the end of an...Ch. 3 - What is the difference between adjusting entries...Ch. 3 - Identify the four different categories of...Ch. 3 - If the effect of the debit portion of an adjusting...Ch. 3 - If the effect of the credit portion of an...Ch. 3 - Prob. 8DQCh. 3 - Prob. 9DQCh. 3 - (A) Explain the purpose of the two accounts:...
Ch. 3 - Account requiring adjustment Indicate with a Yes...Ch. 3 - Type of adjustment Classify the following items as...Ch. 3 - Adjustment for accrued revenues At the end of the...Ch. 3 - Adjustment for accrued expense Prospect Realty Co....Ch. 3 - Adjustment for unearned revenue On June 1, 20Y2,...Ch. 3 - Adjustment for prepaid expense The prepaid...Ch. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Effect of omitting adjustments For the year ending...Ch. 3 - Effect of errors on adjusted trial balance For...Ch. 3 - Vertical analysis Two income statements for Cornea...Ch. 3 - Prob. 3.1EXCh. 3 - Classifying adjusting entries The following...Ch. 3 - Adjusting entry for accrued fees At the end of the...Ch. 3 - Effect of omitting adjusting entry The adjusting...Ch. 3 - Adjusting entries for accrued salaries Paradise...Ch. 3 - Determining wages paid The wages payable and wages...Ch. 3 - Effect of omitting adjusting entry Accrued...Ch. 3 - Effect of omitting adjusting entry When preparing...Ch. 3 - Adjusting entries for unearned fees The balance in...Ch. 3 - Effect of omitting adjusting entry At the end of...Ch. 3 - Adjusting entry for supplies The balance in the...Ch. 3 - Determining supplies purchased The supplies and...Ch. 3 - Effect of omitting adjusting entry At March 31,...Ch. 3 - Adjusting entries for prepaid insurance The...Ch. 3 - Adjusting entries for prepaid insurance The...Ch. 3 - Adjusting entries for unearned and accrued fees...Ch. 3 - Prob. 3.17EXCh. 3 - Adjustment for depreciation The estimated amount...Ch. 3 - Determining fixed assets book value The balance in...Ch. 3 - Prob. 3.20EXCh. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements For a...Ch. 3 - Effects of errors on financial statements The...Ch. 3 - Effects of errors on financial statements If the...Ch. 3 - Prob. 3.25EXCh. 3 - Adjusting entries from trial balances The...Ch. 3 - Corrected trial balance totals, 369,000 Adjusting...Ch. 3 - Adjusting entries On March 31, the following data...Ch. 3 - Prob. 3.2APRCh. 3 - Adjusting entries Trident Repairs Service, an...Ch. 3 - Adjusting entries Good Note Company specializes in...Ch. 3 - Adjusting entries and adjusted trial balances...Ch. 3 - Adjusting entries and errors At the end of April,...Ch. 3 - Adjusting entries On May 31, the following data...Ch. 3 - Adjusting entries Selected account balances before...Ch. 3 - Adjusting entries Crazy Mountain Outfitters Co.,...Ch. 3 - Adjusting entries The Signage Company specializes...Ch. 3 - Adjusting entries and adjusted trial balances...Ch. 3 - Adjusting entries and errors At the end of August,...Ch. 3 - Continuing Problem 3. Total of Debit column:...Ch. 3 - Prob. 3.1MADCh. 3 - Analyze Pandora Media Pandora Media, Inc. (P)...Ch. 3 - Analyze World Wrestling Entertainment World...Ch. 3 - Prob. 3.4MADCh. 3 - Prob. 3.5MADCh. 3 - Analyze and Compare ATT and Verizon Communications...Ch. 3 - Prob. 3.1TIFCh. 3 - Loan application Daryl Kirby opened Squid Realty...Ch. 3 - Prob. 3.4TIFCh. 3 - Prob. 3.5TIF
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