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Vertical Analysis of Income Statement The following comparative income statement

ID: 2570531 • Letter: V

Question

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.

a. Prepare a comparative income statement for these two years in vertical form, stating each item as a percent of revenues. Enter all amounts as positive numbers. (Note: Due to rounding, amounts may not total 100%).

Round your percentages to one decimal place.

b. Overall revenue (Increased/Decreased) some between the two years, accompanied by a slight change in the overall mix of revenue sources. The NASCAR broadcasting revenue (I/D) by 1.0% of total revenue, while event-related revenue (I/D) by 0.7% of total revenue. NASCAR event management fees, (I/D) by 0.4%of total revenue. General and administrative expenses, however, (I/D) by over 4% of total revenue. It appears that (aggressive cost cuttting/ a large increase in total revenue) has helped the company significantly improve its income from continuing operations.

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

Explanation / Answer

Speedway Motorsports, Inc.

Comparative Income Statement (in thousands of dollars)

For the Years Ended December 31

Current Year Amount

Current Year Percent

Prior Year Amount

Prior Year Percent

Revenues:

Admissions

$1,00,694

20.3%

$1,00,798

20.8%

Event-related revenue

$1,46,980

29.6%

$1,46,849

30.3%

NASCAR broadcasting revenue

$2,17,469

43.8%

$2,07,369

42.8%

Other operating revenue

$31,320

6.3%

$29,293

6.1%

Total revenues

$4,96,463

100.00%

$4,84,309

100.00%

Expenses and other:

Direct expense of events

$1,04,303

21.0%

$1,02,196

21.1%

NASCAR event management fees

$1,33,682

26.9%

$1,28,254

26.5%

Other direct expenses

$19,541

3.9%

$18,513

3.8%

General and administrative

$1,77,926

35.8%

$1,94,120

40.1%

Total expenses and other

$4,35,452

87.7%

$4,43,083

91.5%

Income from continuing operations

$61,011

12.3%

$41,226

8.5%

b. Overall revenue Increased some between the two years, accompanied by a slight change in the overall mix of revenue sources. The NASCAR broadcasting revenue Increase by 1.0% of total revenue, while event-related revenue Decrease by 0.7% of total revenue. NASCAR event management fees, Increase by 0.4%of total revenue. General and administrative expenses, however, Decrease by over 4% of total revenue. It appears that a large increase in total revenue has helped the company significantly improve its income from continuing operations.

Speedway Motorsports, Inc.

Comparative Income Statement (in thousands of dollars)

For the Years Ended December 31

Current Year Amount

Current Year Percent

Prior Year Amount

Prior Year Percent

Revenues:

Admissions

$1,00,694

20.3%

$1,00,798

20.8%

Event-related revenue

$1,46,980

29.6%

$1,46,849

30.3%

NASCAR broadcasting revenue

$2,17,469

43.8%

$2,07,369

42.8%

Other operating revenue

$31,320

6.3%

$29,293

6.1%

Total revenues

$4,96,463

100.00%

$4,84,309

100.00%

Expenses and other:

Direct expense of events

$1,04,303

21.0%

$1,02,196

21.1%

NASCAR event management fees

$1,33,682

26.9%

$1,28,254

26.5%

Other direct expenses

$19,541

3.9%

$18,513

3.8%

General and administrative

$1,77,926

35.8%

$1,94,120

40.1%

Total expenses and other

$4,35,452

87.7%

$4,43,083

91.5%

Income from continuing operations

$61,011

12.3%

$41,226

8.5%

b. Overall revenue Increased some between the two years, accompanied by a slight change in the overall mix of revenue sources. The NASCAR broadcasting revenue Increase by 1.0% of total revenue, while event-related revenue Decrease by 0.7% of total revenue. NASCAR event management fees, Increase by 0.4%of total revenue. General and administrative expenses, however, Decrease by over 4% of total revenue. It appears that a large increase in total revenue has helped the company significantly improve its income from continuing operations.