Corporate Financial Accounting
15th Edition
ISBN: 9781337398169
Author: Carl Warren, Jeff Jones
Publisher: Cengage Learning
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Textbook Question
Chapter 3, Problem 3.3MAD
Analyze World Wrestling Entertainment
World Wrestling Entertainment, Inc. (WWE) is a sports media and entertainment company primarily focused on professional wrestling. WWE’s income statements through operating income for two recent years are as follows (in thousands):
| World Wrestling Entertainment. Inc. Income Statements For the Years Ended December 31 (in thousands) | Year 2 | Year 1 |
| Revenues | $ 729,216 | $ 658,768 |
| Expenses: | ||
| Cost of revenues | $ (430,032) | $(379,316) |
| Selling, general, and administrative expenses | (219,132) | (192,773) |
| (24,411) | (29,885)* | |
| Total expenses | $ (673,575) | $ (619,974) |
| Operating income (loss) | $ 55.641 | $ 38,794 |
*$7,125 is related to expenses of abandoning a media protect in Year 1.
a. Prepare a vertical analysis of the income statements for both years.
b. 
Interpret the vertical analysis.
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Vertical Analysis of Income Statement
The following comparative income statement (in thousands of dollars) for two recent years was adapted from the annual report of Speedway Motorsports, Inc. (TRK), owner and operator of several major motor speedways, such as the Atlanta, Bristol, Charlotte, Texas, and Las Vegas Motor Speedways.
Year 2
Year 1
Revenues:
Admissions
$100,798
$106,050
Event-related revenue
146,849
145,749
NASCAR broadcasting revenue
207,369
199,014
Other operating revenue
29,293
29,836
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$484,309
$480,649
Expenses and other:
Direct expense of events
$(102,196)
$(99,500)
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(128,254)
(125,003)
Other direct expenses
(18,513)
(18,640)
General and administrative
(194,120)
(286,069)
Total expenses
$(443,083)
$(529,212)
Income (loss) from continuing operations
$ 41,226
$ 48,563…
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
$116,034
$130,239
Event-related revenue
151,562
163,621
NASCAR broadcasting revenue
192,662
185,394
Other operating revenue
29,902
26,951
Total revenues
$490,160
$506,205
Expenses and other:
Direct expense of events
$101,402
$106,204
NASCAR purse and sanction fees
122,950
120,146
Other direct expenses
18,908
20,352
General and administrative
183,215
241,223
Total expenses and other
$426,475
$487,925
Income from continuing operations
$63,685
$18,280
a. Prepare a…
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 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…
Chapter 3 Solutions
Corporate Financial Accounting
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