Question

Manchester United, it's a public company believe it or not. Stock symbol is MANU.

Questions:

1. MANU has many companies, so it needs to do consolidated accounting, what is the main risk with consolidated accounting?
2. What is the largest asset on balance sheet? What is the main risk with this asset?
3. How has the pandemic effected this company?
4. After reading the annual report, what are the main risks of the company?

Answer 1

b) In the accounting world clubs buying players would earn the 'right to use' to generate revenue and this rights are considered as intangible assets.Cost of buying the players may include transfer fees intermediation fees and other related cost.So the largest asset of MANU will be the intangible player asset.The main risk with the asset is a career threatening injury.

c.) Due to COVID19 pandemic commercial revenue has decreased matchday revenue is non existent.MANU having  the biggest stadium in the premier league match day revenue is an important part of their commercial revenue.The pandemic has also brought upon a reduction in the broadcasting revenue.Therefore the pandemic has effected the earning capacity of MANU.

d.) The total liability MANU is having as on 2019 is over a billion at pound 1081 million.The financial debt as on 2019 is 511 million which is one of the highest in the premier league.MANU also owes a transfer debt of 188 million as on 2019.Thus MANU is highly leveraged which represent a huge risk.

a.) The main risk of consolidated accounting is that overall debt is increased ,Inflexible reporting