Question

Vertical Analysis of Income Statement The following comparative income statement (in thousands of dollars) for the two recent fiscal years was adapted from the annual report of Calvin 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 $94,400 $107,580 Event-related revenue 138,768 147,189 NASCAR broadcasting revenue 169,448 160,881 Other operating revenue 69,384 73,350 Total revenue $472,000 $489,000 Expenses and other: Direct expense of events $93,928 $94,377 NASCAR purse and sanction fees 118,000 126,162 Other direct expenses 27,848 23,961 General and administrative 178,416 218,583 Total expenses and other $418,192 $463,083 Income from continuing operations $53,808 $25,917 a. Prepare a comparative income statement for these two years in vertical form, stating each item as a percent of revenues. Round to one decimal place. Enter all amounts as positive numbers. Calvin 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 $94,400 % $107,580 % Event-related revenue 138,768 % 147,189 % NASCAR broadcasting revenue 169,448 % 160,881 % Other operating revenue 69,384 % 73,350 % Total revenue $472,000 % $489,000 % Expenses and other: Direct expense of events $93,928 % $94,377 % NASCAR purse and sanction fees 118,000 % 126,162 % Other direct expenses 27,848 % 23,961 % General and administrative 178,416 % 218,583 % Total expenses and other $418,192 % $463,083 % Income from continuing operations $53,808 % $25,917 % b. While overall revenue some between the two years, the overall mix of revenue sources did change somewhat. The NASCAR broadcasting revenue as a percent of total revenue by 3 percentage points, while the percent of admissions revenue to total revenue by 2 percentage points. Overall, it appears that income from continuing operations has significantly improved because of .

Answer 1

Part a)

The comparative income statement is prepared as below:

Calvin 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	$94,400	20.0% (94,400/472,000*100)	$107,580	22.0% (107,580/489,000*100)
Event Related Revenue	138,768	29.4% (138,768/472,000*100)	147,189	30.1% (147,189/489,000*100)
NASCAR Broadcasting Revenue	169,448	35.9% (169,448/472,000*100)	160,881	32.9% (160,881/489,000*100)
Other Operating Revenue	69,384	14.7% (69,384/472,000*100)	73,350	15.0% (73,350/489,000*100)
Total Revenue	$472,000	100.0%	$489,000	100.0%
Expenses and Other:
Direct Expense of Events	93,928	19.9% (93,928/472,000*100)	94,377	19.3% (94,377/489,000*100)
NASCAR Purse and Sanction Fees	118,000	25.0% (118,000/472,000*100)	126,162	25.8% (126,162/489,000*100)
Other Direct Expenses	27,848	5.9% (27,848/472,000*100)	23,961	4.9% (23,961/489,000*100)
General and Administrative	178,416	37.8% (178,416/472,000*100)	218,583	44.7% (218,583/489,000*100)
Total expenses and Other	$418,192	88.6% (418,192/472,000*100)	$463,083	94.7% (463,083/489,000*100)
Income from Continuing Operations	$53,808	11.4%	$25,917	5.3%

______

Part b)

While overall revenue decreased some between the two years, the overall mix of revenue sources did change somewhat. The NASCAR broadcasting revenue increased as a percent of total revenue by 3 percentage points, while the percent of admissions revenue to total revenue decreased by 2 percentage points. Overall, it appears that income from continuing operations has significantly improved because of aggressive cost cutting.