The following comparative income statement (in thousands ofdollars) for two rece
ID: 2457815 • Letter: T
Question
The following comparative income statement (in thousands ofdollars) for two recent years was adapted from the annual report ofSpeedway Motorsports Inc., owner and operator of several majormotor speedways, such as the Atlanta, Texas and Las Vegas MotorSpeedways.
Year2 Year 1
Revenues:
Admissions 156,718 150,253
Event-relatedrevenue 137,074 127,055
NASCAR broadcastingrevenue 110,016 90,682
Other operatingrevenue 42,711 36,539
Totalrevenue 446,519 404,529
Expenses andother:
Direct expense ofevents 81,432 77,962
NASCAR purse and sanctionfees 78,473 69,691
Other directexpenses 102,053 101,408
General andadministrative 65,152 58,698
Total expenses andother 327,110 307,759
Income from continuingoperations 119,409 96,770
a. Prepare a comparative income statement for Years 1 and 2 invertical form, stating each item as a percent ofrevenues. Round to one decimal place.
b. Comment on the significant changes
(Text notes: (a) Year 2 income from continuingoperations, 26.7% of revenues)
Explanation / Answer
year2 Year1 Total Revenue 446,519.00 404,529.00 Direct Expense of events 18.23% 19.27% Nascar Purse & sanction fees 17.57% 17.23% Other Direct Expenses 22.86% 25.07% General & Administrative Expenses 14.59% 14.51% Total Expenses & others 73.26% 76.08% Income from Continuing Operations 26.74% 23.92% The proportion of direct expenses has shown a steep decline from 25.07% in Year1 to 22.86% in year2 which is a good sign. Revenues & incomes fromcontinuing operations has also gone up which is a positive sign.
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