In comparing the percentage changes, all margins improved for . The increasing m

Question

In comparing the percentage changes, all margins improved for . The increasing margins were attributable to Vcost of goods sold and Voperating expenses per dollar of sales. (Select from the drop-down menus.) b. Compare the profit margins between Time Warner and Disney. Which of the following statements is not true? (Select the best choice below.) O A. The operating profit margins are much closer, but are higher for Walt Disney 0 C, Walt Disney has an advantage since its net profit margin is higher c. OD. A comparison of proft margins between the two companies is not very insightful without looking at the percentage changes in margins. c. What differences do you notice in the common-sized balance sheets that might indicate that one of the firms is doing better than the other? (Select all that apply.) A. Time Wamer has sold over $150 billion in common stock, compared to less than $34 billion by Walt Disney B. Since Time Wamer produces about $0.39 of sales per dollar of assets compared to Walt Disney generating about $0.55 of sales per dollar of assets, Walt Disney is clearly using its assets more efficiently than Time Wamer ? C. Time Warner relies more heavily on debt financing with a debt ratio of about 56 percent compared to approximately 44 percent for Walt Disney. D Based on retained earnings, we see that Time Warmer has about $86 billion in accumulated profits over the life of the business, while Wait Disney has accumulated profits of cose to $47 billion. ? E Walt Disney has a larger size when it comes to total assets. Furthermore, the relative makeup of the assets is fairly similar.

Explanation / Answer

a In Comparing the percentage change All Margins improved for Time Warner Inc The Increasing margin was attributable to 1% Cost of Goods Sold (55.5-54.5) (22+0.9+1-21.7-0.8-0.8)=0.6% Operating expense per dollar of sales b Operating margin for Time warner Inc in 2013 22.20% Operating margin for Time warner Inc in 2012 20.60% Change in Operating margin of Time warner 1.60% Operating margin for Walt Disneyin 2013 20.40% Operating margin for Walt Disneyin 2012 20.60% Change in Operating margin of Walt Disney -0.20% Gross Profit margin for Time warner Inc in 2013 45.50% Gross profit margin for Time warner Inc in 2012 44.50% Change in Gross Profitmargin of Time warner 1.00% Gross Profit margin for Walt Disneyin 2013 21.00% Gross Profit margin for Walt Disneyin 2012 21.00% Change in Gross Profitmargin of Walt disney 0.00% Net Profit margin for Time warner Inc in 2013 12.40% Net Profit margin for Time warner Inc in 2012 10.20% Change in NetProfitmargin of Time warner 2.20% Net Profit margin for Walt Disneyin 2013 14.70% Net Profit margin for Walt Disneyin 2012 14.60% Change in NetProfitmargin of Walt Disney 0.10% Answer :A A is incorrect since : Operating margin for Time warner Inc in 2013 22.20% Operating margin for Walt Disneyin 2013 20.40% Operating profit margin is higher for Time Warner Inc c Better performance means better return on asset /equity or more efficient use of resources Answer B Sales per dollar of asset of Time Warner Inc 0.394078889 (26795/67994) Sales per dollar of asset of Walt Disney 0.554412181 (45041/81241) Answer B

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