Question

1. 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			$97,412			$110,592
   	Event-related revenue			138,663			145,920
   	NASCAR broadcasting revenue			179,417			169,472
   	Other operating revenue			81,508			86,016
   		Total revenue		$497,000			$512,000
   Expenses and other:
   	Direct expense of events			$103,873			$104,960
   	NASCAR purse and sanction fees			119,777			130,560
   	Other direct expenses			25,347			23,040
   	General and administrative			188,363			218,624
   		Total expenses and other		$437,360			$477,184
   Income from continuing operations				$59,640			$34,816

   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	$97,412	%	$110,592	%
   Event-related revenue	138,663	%	145,920	%
   NASCAR broadcasting revenue	179,417	%	169,472	%
   Other operating revenue	81,508	%	86,016	%
   Total revenue	$497,000	%	$512,000	%
   Expenses and other:
   Direct expense of events	$103,873	%	$104,960	%
   NASCAR purse and sanction fees	119,777	%	130,560	%
   Other direct expenses	25,347	%	23,040	%
   General and administrative	188,363	%	218,624	%
   Total expenses and other	$437,360	%	$477,184	%
   Income from continuing operations	$59,640	%	$34,816	%

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   b. While overall revenue

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

Answer 1

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