Analyze Pandora Media Pandora Media, Inc. (P) provides Internet music platform services in North America. Pandora's income statements through operating income for two recent years are as follows (in thousands): Pandora Media, Inc. Income Statements For the Years Ended January 31 (in thousands) Year 2 Year 1 Revenues: Advertising $1,072,490 $933,305 Subscription 225,786 220,571 Ticketing service 86,550 10,167 Total revenues $1,384,826 $1,164,043 Expenses Cost of revenues $(894,922) $(697,341) Sales and marketing (491,455) (398,169) General and administrative (175,572) (153,943) Product development (141,636) (84,581) Total expenses $(1,703,585) $(1,334,034) $(318,759) $(169,991) Operating income (loss) Required: a. Prepare a vertical analysis of the two income statements. Round percentages to one decimal place Required: a. Prepare a vertical analysis of the two income statements. Round percentages to one decimal place. Pandora Media, Inc. Income Statements For the Years Ended January 31 (in thousands) Year 2 Year 1 Amount Percent Amount Percent Revenues: Advertising $1,072,490 $933,305 % % Subscription 225,786 220,571 % Ticketing service 10,167 86,550 % $1,384,826 $1,164,043 Total revenues Expenses: $(697,341) Cost of revenues $(894,922) 9% % Sales and marketing (491,455) (398,169) % % General and administrative (175,572) (153,943) % (141,636) (84,581) Product development % Total expenses $(1,703,585) % $(1,334,034) % $(318,759) $(169,991) % Operating income (loss) b. Interpret the vertical analysis. The result is that the operating loss in Year 2, expenses also Except for general and administrative expenses, all expenses Although revenues have as a percent in Year 2, while advertising and subscription revenues of revenues in Year 2. In addition, the mix of revenues has changed in Year 2. Ticketing service revenue as a percent of revenues. Overall, Pandora appears to be changing its operating strategy and mix of products to ultimately become profitable