The CFO of the company you are working for Entertainment Today has been tasked to assess two companies Time Warner Inc.
Posted: Sun Jun 05, 2022 7:43 am
The CFO of the company you are working for Entertainment Today
has been tasked to assess two companies Time Warner Inc. and Walt
Disney Co. to assess which one Entertainment Today should acquire.
The CFO has tasked you to review the income statements and balance
sheets of both companies and answer the following questions. [25
points]
1. By how much did Time Warner’s profit margins change from 2012
to 2013? To what would you attribute this change? Answer the same
question for Disney.
2. Compare the profit margins between Time Warner and Disney.
How are they different? What are the main drivers of profit for
each of the firms?
3. What are the main differences in the common size balance
sheets of both firms? Look at the liabilities, assets and
equity.
4. Which company would you recommend to the CFO for
purchase.
!!!!! Q The CFO of the comp X C Get Homework Help X Assignment 1: Interna X PDF Assignment 1.pdf C:/Users/User/Downloads/Assignment%201.pdf Set as default CD Page view A Read aloud T Add textDraw 3. What are the main differences in the common size balance sheets of both firms? Look at the liabilities, assets and equity. 4. Which company would you recommend to the CFO for purchase? Time Warner, Inc. Annual Income Statement and Common-Sized Income Statement for Years Ending December 31, 2012 and December 31, 2013 (in $ millions except earnings per share) 2012 2013 Dollars Percentage of Sales Dollars Percentage of Sales Sales $28,729 100.0% $29,795 100.0% Cost of goods sold (15,934) (55.5%) (16,230) (54.5%) Gross profits $12,795 44.5% $13,565 45.5% Selling, general, and administrative expenses (22.0%) (6,465) (21.7%) Depreciation and amortization (0.9%) (251) (0.8%) Other operating expenses (1.0%) (244) (0.8%) Operating income 20.6% $ 6,605 22.2% Interest expense (4.4%) (1,190) (4.0%) Nonoperating income (loss) (-0.8%) (112) (-0.4%) Earnings before taxes 15.5% $5,303 17.8% Income taxes (5,3%) (1,612) (5.4%) Net income 10.2% $3,691 12.4% Common shares outstanding 942,00 Earnings per share $ 3.92 (9) Best of Bollyw X File Set Microsoft Edge as the default application for reading PDF files? 2 of 4 Q + (6,333) (248) (296) $5,918 (1,253) (217) $4,448 (1,526) C Section B: The CFO Of X Highlight $ 2,922 932.00 $ 3.14 C Type Here To Search Erase X + J 50 6L ●● ⠀ X
ill Assignment 1: Interna X PDF Assignment 1.pdf File | C:/Users/User/Downloads/Assignment%201.pdf Set as default (9) Best of Bollyw X Set Microsoft Edge as the default application for reading PDF files? 3 of 4 Q + C Get Homework Help X [T) Add text Other current assets 1.5% Total current assets 19.5% Gross fixed assets 84.6% Accumulated depreciation (7.1%) Net fixed assets 77.5% Other assets 3.0% TOTAL ASSETS 100.0% LIABILITIES Accounts payable and accruals 11.8% Short-term notes payable 1.1% Other current liabilities 1.5% Total current liabilities 14.4% Long-term debt 28.1% Deferred taxes 3.1% Other liabilities 10.6% TOTAL LIABILITIES 56.2% EQUITY Common Par value 0.0% Capital surplus 227.0% Total common stock sold 227.0% Less: Treasury stock-(accumulated deficit) (51.5%) Total common stock 175.5% Retained earnings (131.8%) Total common equity 43.8% $ 29,796 $68,088 TOTAL LIABILITIES AND EQUITY (100,0%) Walt Disney Co. Annual Income Statement for Years Ending September 28, 2012 and September 29, 2013 (in $ millions except earnings per share) 2012 Percentage of Sales Sales 100% Dollars $42,278 (33,415) $ 8,863 Dollars $45,041 (35,591) Cost of goods sold (79%) Gross profits 21% $ 9,450 Selling, general, admin, and depreciation expense (139) (0%) (283) Operating income $ 8,724 21% $ 9,167 Interest expense (369) (1%) (235) Non-operating income (loss) 905 2% 688 Earnings before taxes $9,260 22% $ 9,620 Income taxes (7%) Net income (loss) 15% Common shares outstanding Earnings per share X Q The CFO of the comp x A Read aloud 1,002 $ 13,264 $ 57,607 (4,828) $ 52,779 2,046 $68,089 $ 8.039 749 1,011 $ 9,799 19,122 2.127 7,244 $ 38,292 17 154,577 $154,594 (35,077) $119,517 CD Page view (3,087) $6,173 1,800 $ 3.43 (89,721) (2,984) $6,636 1,800 $ 3.69 C Section B: The CFO Of X C Type Here To Search x Draw Highlight Erase 1,086 $12.844 $57,849 (5,189) $52,660 2,490 $67,994 $7,322 66 995 $8,383 20,099 2,642 6.966 $38,090 17 153,410 $153,427 (37,630) $115,797 (85,893) $ 29,904 $67,994 100.0% 10.8% 0.1% 1.5% 12.3% 29.6% 3.9% 10.2% 56.0 % 0.0% 225.6% 225.6% (55.3%) 170.3% (126.3%) 44.0% 100.0% Percentage of Sales 100% (79%) 21% 2013 (1%) 20% 1.6% 18.9% 85.1% (7.6%) 77.4% 3.7% (1%) 2% 21% (7%) 15% A + I ا الى 0 of X : X
(9) Best of Bollywood X Set Microsoft Edge as the default application for reading PDF files? 3 of 4 Q + Assignment 1: Interna X PDF Assignment 1.pdf Ⓒ File | C:/Users/User/Downloads/Assignment%201.pdf Set as default Q The CFO of the comp x C Get Homework Help X C Section B: The CFO Of X CD Page view A Read aloud TAdd textDraw Highlight Time Warner, Inc. Balance Sheet and Common-Sized Balance Sheet for Years Ending December 31, 2012 and December 31, 2013 ($ millions) December 31, 2012 December 31, 2013 Percentage of Assets Dollars $ 2,841 Dollars $ 1,862 Cash and short-term investments 4.2% 10.8 % Percentage of Assets 2.7% 11.6% Receivables 7,385 Inventories. 2,036 3.0% 7,868 2,028 1,086 3.0% Other current assets. 1,002 1.5% 1.6% Total current assets $ 13,264 19.5% $12,844 18.9% Gross fixed assets $ 57,607 84.6% $57,849 85.1% Accumulated depreciation (4,828) (7.1%) (5,189) (7.6%) Net fixed assets $ 52,779 77.5% $52,660 77.4% Other assets 2,046 3.0% 2,490 3.7% TOTAL ASSETS $68,089 100.0% $67,994 100.0% LIABILITIES Accounts payable and accruals $8,039 11.8% $7,322 10.8% Short-term notes payable 1.1% 66 0.1% 749 1,011 1.5% 995 1.5% Other current liabilities Total current liabilities. $ 9,799 14.4% $ 8,383 12.3% Long-term debt 19,122 28.1% 20.099 29.6% Deferred taxes 2,127 3.1% 2,642 3.9% Other liabilities 7,244 10.6% 6.966 10.2% TOTAL LIABILITIES $ 38,292 56.2% $38,090 56.0% EQUITY Common stock: Par value $ 17 0.0% $ 17 0.0% Capital surplus 154,577 227.0% 153,410 225.6% Total common stock sold $154,594 227.0% $153,427 225.6% Less: Treasury stock-(accumulated deficit) (35,077) (51.5%) (37,630) Total common stock $119.517 175.5% $115,797 (55.3%) 170.3% (126.3%) Retained earnings (89,721) (131.8%) (85,893) Total common equity 43.8% $ 29,904 44.0% TOTAL LIABILITIES AND EQUITY (100.0%) $67,994 100.0% @ X $ 29,796 $68,088 C Type Here To Search Erase A x + I ا الى 0 of X : X
!!!!! (9) Best of Bollywood X Set Microsoft Edge as the default application for reading PDF files? 2 of 4 Q + Assignment 1: Interna X PDF Assignment 1.pdf Q The CFO of the comp X C Get Homework Help X File C:/Users/User/Downloads/Assignment%201.pdf Set as default T Add textDraw Page view | A Read aloud What are the main drivers of profit for each of the firms? 3. What are the main differences in the common size balance sheets of both firms? Look at the liabilities, assets and equity. 4. Which company would you recommend to the CFO for purchase? Time Warner, Inc. Annual Income Statement and Common-Sized Income Statement for Years Ending December 31, 2012 and December 31, 2013 (in $ millions except earnings per share) 2012 2013 Dollars Percentage of Sales Dollars Percentage of Sales Sales $28,729 100.0% $29,795 100.0% Cost of goods sold (15,934) (55.5%) (16,230) (54.5%) Gross profits $12,795 44.5% $13,565 45.5% Selling, general, and administrative expenses (6,333) (22.0%) (21.7%) Depreciation and amortization (248) (0.9%) (0.8%) Other operating expenses (296) (1.0%) (0.8%) Operating income $ 5,918 20.6% 22,2% Interest expense (1,253) (4.4%) Nonoperating income (loss) (217) (-0.8%) Earnings before taxes $ 4,448 15.5% Income taxes (1,526) (5,3%) Net income $2,922 10.2% Common shares outstanding 932.00 Earnings per share $ 3.14 (6,465) (251) (244) $ 6,605 (1,190) (112) $ 5,303 (1,612) C Section B: The CFO Of X Highlight $3,691 942.00 $ 3.92 (4.0%) (-0.4%) 17.8% (5.4%) 12.4% C Type Here To Search X Erase + {9 น J 50 6L ●● ⠀ X
Assignment 1: Interna X PDF Assignment 1.pdf X File | C:/Users/User/Downloads/Assignment%201.pdf Set as default (9) Best of Bollyw X Set Microsoft Edge as the default application for reading PDF files? 4 of 4 Q + Q The CFO of the comp X A Read aloud 2,251 9,094 $35,139 $31,731 (31,671) $ 60 42,965 (3,266) CD Page view C Get Homework Help X [T] Add textDraw 4,050 7,008 $35,812 $33,440 (34,582) ($1,142) 47,758 (1,187) C Section B: The CFO Of X Highlight 3% 12% 47% 42% (42%) 0% 57% (4%) Deferred taxes 5% Other liabilities 9% TOTAL LIABILITIES 44% EQUITY Common equity Total common stock sold 41% Less: Treasury stock (43%) Total common stock (1%) Retained earnings 59% Other equity (1%) Total common equity $39,759 53% $45,429 56% TOTAL LIABILITIES AND EQUITY $74,898 100% $81,241 100% 5. You have been given the following information [5 points] Anticipated rate of inflation 30-year treasury bonds% 3-month treasury bill 5.28 30-year AAA rate of inflation% 2.29 6.29 7.28 Calculate the nominal interest rate for a company trying to issue a bond. C Type Here To Search x + Erase S 1402 G G 2 Fra 7 14 FA Snipping Tool Snip copied to clipboard Select here to mark up and share the image
has been tasked to assess two companies Time Warner Inc. and Walt
Disney Co. to assess which one Entertainment Today should acquire.
The CFO has tasked you to review the income statements and balance
sheets of both companies and answer the following questions. [25
points]
1. By how much did Time Warner’s profit margins change from 2012
to 2013? To what would you attribute this change? Answer the same
question for Disney.
2. Compare the profit margins between Time Warner and Disney.
How are they different? What are the main drivers of profit for
each of the firms?
3. What are the main differences in the common size balance
sheets of both firms? Look at the liabilities, assets and
equity.
4. Which company would you recommend to the CFO for
purchase.
- The Cfo Of The Company You Are Working For Entertainment Today Has Been Tasked To Assess Two Companies Time Warner Inc 1 (269.04 KiB) Viewed 36 times
ill Assignment 1: Interna X PDF Assignment 1.pdf File | C:/Users/User/Downloads/Assignment%201.pdf Set as default (9) Best of Bollyw X Set Microsoft Edge as the default application for reading PDF files? 3 of 4 Q + C Get Homework Help X [T) Add text Other current assets 1.5% Total current assets 19.5% Gross fixed assets 84.6% Accumulated depreciation (7.1%) Net fixed assets 77.5% Other assets 3.0% TOTAL ASSETS 100.0% LIABILITIES Accounts payable and accruals 11.8% Short-term notes payable 1.1% Other current liabilities 1.5% Total current liabilities 14.4% Long-term debt 28.1% Deferred taxes 3.1% Other liabilities 10.6% TOTAL LIABILITIES 56.2% EQUITY Common Par value 0.0% Capital surplus 227.0% Total common stock sold 227.0% Less: Treasury stock-(accumulated deficit) (51.5%) Total common stock 175.5% Retained earnings (131.8%) Total common equity 43.8% $ 29,796 $68,088 TOTAL LIABILITIES AND EQUITY (100,0%) Walt Disney Co. Annual Income Statement for Years Ending September 28, 2012 and September 29, 2013 (in $ millions except earnings per share) 2012 Percentage of Sales Sales 100% Dollars $42,278 (33,415) $ 8,863 Dollars $45,041 (35,591) Cost of goods sold (79%) Gross profits 21% $ 9,450 Selling, general, admin, and depreciation expense (139) (0%) (283) Operating income $ 8,724 21% $ 9,167 Interest expense (369) (1%) (235) Non-operating income (loss) 905 2% 688 Earnings before taxes $9,260 22% $ 9,620 Income taxes (7%) Net income (loss) 15% Common shares outstanding Earnings per share X Q The CFO of the comp x A Read aloud 1,002 $ 13,264 $ 57,607 (4,828) $ 52,779 2,046 $68,089 $ 8.039 749 1,011 $ 9,799 19,122 2.127 7,244 $ 38,292 17 154,577 $154,594 (35,077) $119,517 CD Page view (3,087) $6,173 1,800 $ 3.43 (89,721) (2,984) $6,636 1,800 $ 3.69 C Section B: The CFO Of X C Type Here To Search x Draw Highlight Erase 1,086 $12.844 $57,849 (5,189) $52,660 2,490 $67,994 $7,322 66 995 $8,383 20,099 2,642 6.966 $38,090 17 153,410 $153,427 (37,630) $115,797 (85,893) $ 29,904 $67,994 100.0% 10.8% 0.1% 1.5% 12.3% 29.6% 3.9% 10.2% 56.0 % 0.0% 225.6% 225.6% (55.3%) 170.3% (126.3%) 44.0% 100.0% Percentage of Sales 100% (79%) 21% 2013 (1%) 20% 1.6% 18.9% 85.1% (7.6%) 77.4% 3.7% (1%) 2% 21% (7%) 15% A + I ا الى 0 of X : X
(9) Best of Bollywood X Set Microsoft Edge as the default application for reading PDF files? 3 of 4 Q + Assignment 1: Interna X PDF Assignment 1.pdf Ⓒ File | C:/Users/User/Downloads/Assignment%201.pdf Set as default Q The CFO of the comp x C Get Homework Help X C Section B: The CFO Of X CD Page view A Read aloud TAdd textDraw Highlight Time Warner, Inc. Balance Sheet and Common-Sized Balance Sheet for Years Ending December 31, 2012 and December 31, 2013 ($ millions) December 31, 2012 December 31, 2013 Percentage of Assets Dollars $ 2,841 Dollars $ 1,862 Cash and short-term investments 4.2% 10.8 % Percentage of Assets 2.7% 11.6% Receivables 7,385 Inventories. 2,036 3.0% 7,868 2,028 1,086 3.0% Other current assets. 1,002 1.5% 1.6% Total current assets $ 13,264 19.5% $12,844 18.9% Gross fixed assets $ 57,607 84.6% $57,849 85.1% Accumulated depreciation (4,828) (7.1%) (5,189) (7.6%) Net fixed assets $ 52,779 77.5% $52,660 77.4% Other assets 2,046 3.0% 2,490 3.7% TOTAL ASSETS $68,089 100.0% $67,994 100.0% LIABILITIES Accounts payable and accruals $8,039 11.8% $7,322 10.8% Short-term notes payable 1.1% 66 0.1% 749 1,011 1.5% 995 1.5% Other current liabilities Total current liabilities. $ 9,799 14.4% $ 8,383 12.3% Long-term debt 19,122 28.1% 20.099 29.6% Deferred taxes 2,127 3.1% 2,642 3.9% Other liabilities 7,244 10.6% 6.966 10.2% TOTAL LIABILITIES $ 38,292 56.2% $38,090 56.0% EQUITY Common stock: Par value $ 17 0.0% $ 17 0.0% Capital surplus 154,577 227.0% 153,410 225.6% Total common stock sold $154,594 227.0% $153,427 225.6% Less: Treasury stock-(accumulated deficit) (35,077) (51.5%) (37,630) Total common stock $119.517 175.5% $115,797 (55.3%) 170.3% (126.3%) Retained earnings (89,721) (131.8%) (85,893) Total common equity 43.8% $ 29,904 44.0% TOTAL LIABILITIES AND EQUITY (100.0%) $67,994 100.0% @ X $ 29,796 $68,088 C Type Here To Search Erase A x + I ا الى 0 of X : X
!!!!! (9) Best of Bollywood X Set Microsoft Edge as the default application for reading PDF files? 2 of 4 Q + Assignment 1: Interna X PDF Assignment 1.pdf Q The CFO of the comp X C Get Homework Help X File C:/Users/User/Downloads/Assignment%201.pdf Set as default T Add textDraw Page view | A Read aloud What are the main drivers of profit for each of the firms? 3. What are the main differences in the common size balance sheets of both firms? Look at the liabilities, assets and equity. 4. Which company would you recommend to the CFO for purchase? Time Warner, Inc. Annual Income Statement and Common-Sized Income Statement for Years Ending December 31, 2012 and December 31, 2013 (in $ millions except earnings per share) 2012 2013 Dollars Percentage of Sales Dollars Percentage of Sales Sales $28,729 100.0% $29,795 100.0% Cost of goods sold (15,934) (55.5%) (16,230) (54.5%) Gross profits $12,795 44.5% $13,565 45.5% Selling, general, and administrative expenses (6,333) (22.0%) (21.7%) Depreciation and amortization (248) (0.9%) (0.8%) Other operating expenses (296) (1.0%) (0.8%) Operating income $ 5,918 20.6% 22,2% Interest expense (1,253) (4.4%) Nonoperating income (loss) (217) (-0.8%) Earnings before taxes $ 4,448 15.5% Income taxes (1,526) (5,3%) Net income $2,922 10.2% Common shares outstanding 932.00 Earnings per share $ 3.14 (6,465) (251) (244) $ 6,605 (1,190) (112) $ 5,303 (1,612) C Section B: The CFO Of X Highlight $3,691 942.00 $ 3.92 (4.0%) (-0.4%) 17.8% (5.4%) 12.4% C Type Here To Search X Erase + {9 น J 50 6L ●● ⠀ X
Assignment 1: Interna X PDF Assignment 1.pdf X File | C:/Users/User/Downloads/Assignment%201.pdf Set as default (9) Best of Bollyw X Set Microsoft Edge as the default application for reading PDF files? 4 of 4 Q + Q The CFO of the comp X A Read aloud 2,251 9,094 $35,139 $31,731 (31,671) $ 60 42,965 (3,266) CD Page view C Get Homework Help X [T] Add textDraw 4,050 7,008 $35,812 $33,440 (34,582) ($1,142) 47,758 (1,187) C Section B: The CFO Of X Highlight 3% 12% 47% 42% (42%) 0% 57% (4%) Deferred taxes 5% Other liabilities 9% TOTAL LIABILITIES 44% EQUITY Common equity Total common stock sold 41% Less: Treasury stock (43%) Total common stock (1%) Retained earnings 59% Other equity (1%) Total common equity $39,759 53% $45,429 56% TOTAL LIABILITIES AND EQUITY $74,898 100% $81,241 100% 5. You have been given the following information [5 points] Anticipated rate of inflation 30-year treasury bonds% 3-month treasury bill 5.28 30-year AAA rate of inflation% 2.29 6.29 7.28 Calculate the nominal interest rate for a company trying to issue a bond. C Type Here To Search x + Erase S 1402 G G 2 Fra 7 14 FA Snipping Tool Snip copied to clipboard Select here to mark up and share the image