Income Statement, Earnings Quality and Profitability Analysis

Case : Molson Coors Brewing Company

Find the Molson Coor Brewing Company's 10-K file for the year ended December 31, 2013. Make sure you read Item 1 and Item 7 to get familiar with the business condition of the company. https://www.sec.gov/Archives/edgar/data/24545/000002454514000004/tap2013123110-k.htm

Then answer the following questions:

1. Referring to Molson Coor's Income Statement: (1) What are the major classifications of the income statement? (2) What are sales and net sales and why does Molson Coors report them separately? (3) What are the major costs and operating income? (4) What are other incomes (expenses)?

2. Referring to Molson Coor's Statement of Comprehensive Income: What is the amount of comprehensive income and net income of Molson Coor in 2013? What accounts for the difference between them? In your own words, how are the items included in Molson Coor's comprehensive income related?

3. Calculate Molson Coor's persistent income, assuming the effective tax rate is 12.8%.

4. Review "special items, net"from Molson Coor's Income Statement and Note 1 and 8, and then explain: (1) What types of items are included in this line item? (2) Why does the company include them in this line rather than including them with another expense? (3) Do you think it is proper to classify these special items as operating expense?

5. Compute ROE (and ROCE), ROA (and adjusted ROA), Profit Margins (gross profit margin and net profit margin) for 2012 and 2013. Apply DuPont Analysis to disaggregate ROE in both years and explain the change of ROE.

6. Compute RNOA and discuss how ROA is decided by net operating assets and net non-operating assets.