Section R: 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? Time Warner, Inc. Annual Income Statement and Common-Sized Income Statement for Years Ending December 31, 2012 and December 31, 2013 $ millions except earnings per share Sales Cast of goods sol Grass profits Selling Dellars $2729 15.534 1177 www 2012 Percentage of Sales 100.0% Boar Percentage of Sales M % 100.0% 55 QLPA 12:28 PM