CHAPTER 3 Understanding Financial Statemer 3-18. (Computing income taxes) Sandersen, Inc. sells minicomputers. During the past vear, the company's sales were $3 million. The cost of its merchandise sold came to s2 million, and cash operating expenses were $400,000; depreciation expense was 5100,000, and the firm paid $150,000 in interest on its bank loans. Also, the corpora- tion paid $25,000 in the form of dividends to its own common stockholders. Calculate the corporation's tax liability. Mini Case This Mini Case is available in MyFinanceLab. Below are the financial statements for two firms, Time Warner and Walt Disney, for 2012 and 2013. How did Time Warner's profit margins change from 2012 to 2013? To what b. Compare the profit margins between Time Warner and Disney. How are they c. What differences do you notice in the common-sized balance sheets that might d. Conduct an Internet search on the two firms to gain additional insights as to would you attribute the differences? Answer the same question for Disney different? How would you explain these differences? indicate that one of the firms is doing better than the other? causes of the financial differences between the firms in 2012 and continuing into 2013 e. How are the two companies doing financially today? 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 Percentage of SalesDollars $29,795 Dollars $28,729 Sales Cost of goods sold Gross profits Selling, general, and administrative expenses Depreciation and amortization Other operating expenses Operating income 100.0% (55.5% 44.5% (22.0%) (0.9%) 16 $12,795 (6,333) (248) 296 5,918 (1,253) $13,565 (6,46 (25 6,6 20.6% (44%)