The financial statements for 2012 and 2013 for Time Warner Inc. are shown below 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 2013 Dollar value Percentage of sales Dollar value Percentage of sales $28,729 100.0% Sales Cost of goods sold Gross profits Selling general, and administrative expenses Depreciation and 100.0% $26,795 15,934 $12,795 55.5% 44.5% 16,230 $13.565 54.5%; 45.5%; 6,333 22.0% 6.465 21.7%; 248 0.9% 251 0.8%; Other operating expenses Operating income Interest expense 296 1.0% 244 0.8%; $5,918 20.6%; $6,605 22.2%; 1.253 4.4% 1.190 4.0%; income (217) -0.8% (112) -0.4%; Earnings before tax $4,448 1,526 15.5% 5.3% $5,303 1,612 17.8%; 5.4%; Income taxes Net income (loss) Common shares outstanding Earnings per share $2,922 10.2% $3,691 12.4%; 932.0 942.0 $3.14 $2.28 Time Warner Inc. Balance Sheet and Common-Sized Balance Sheet for Years Ending December 31, 2012 and December 31, 2013 (5 millions) CEMBER 3 of ASSETS Dolar value total assets Dollar valueotal assets short-term investment 841 385 038 1,002 $13.284 7,888 2028 11.6% Other current assets Total current assets Gross fixed assets $12,844 | | 18.0% $57,849 Net fixed assets Other assets TOTAL ASSETS LIABILITIES 4.828) 552779; 2,046 588,089 $52,68 2,490 567.00 100.0% i 100.0% nts payable and accruals Short-term notes payable Other current Fabilities Total current liabilities 59,799 19,122 2,127 7,244 14.4% 2,842 8,68 : 10.2% Deferred taxes Other liabilities TOTAL LIABILITIES EQUITY 10 50.2% equity: Common stock: Par value Capital surplus Total common stock sold 0.0% | 225.6% 270% 227,0% -515% | : (37.630 | |-56.3 175.5%2 | 15115,79 154. 153.410 $154,504| Treasury stock-total dollar (35,077)51 $119,517 89,721 $29,796 Total common stock Retained earnings Total common equity TOTAL LIABILITIES AND STOCKHOLDERS EQUITY 85,893 | | 128.3% 529,04 587 43 588,088 100.0% 100.0 Walt Disney statements are shown below: Walt Disney Co. Annual Income Statement and Common-Sized Income Statement for Years September 28, 2012 and September 29, 2013 (in $ millions except earnings per share 2012 2013 age of sales r value lar value $42,27 $45,041 100.0% Cost of goods Gross profits general, and 33,4 $8,88 70.0%; 21.0% 35,591 59.4 21.0% 0.3 20.6%) 0.0% (1 283 0.6%; $8,72 59.18 0.5% 905 2.1%) 1.5%) 21.4% before tax Income taxes Net income 21.9% 2,984 $8,173 14.6%) $6.63 14.7% 1,800 1,800 Eamings per 53.43 3.69 l-alt Disney. Co. Balance Sheet and Common-Sized Balance sheet for Years Ending September 28, 2012 and September 29, 2013 (S millions) September 28, 2012 Percentage of of ASSETS Dollar value total assets Dollar value total assets Cash and cash equivalents 4.5% 931 4.8% 6,5403 6,967 1,724 -$41,192 (22,459): 1.537 2.1% 2.1 17.4%)-- Other current assets Total current assets Gross fixed assets Accumulated depreciation and amortization Net fixed assets Other assets TOTAL ASSETS LIABILITIES Accounts payable and accruals Short-term notes payable Other current Fabilities Total current liabilities Long-term debt Deferred taxes Other liabilities TOTAL LIABILITIES EQUITY Common equity Total common stock sold Less: Treasury stock-total dollar $13,709 538,582 T8N'--:--T$14.100,--+ 51.5%; (20687) |-27.6% -27.6% 23.9% 57. $18,733 43.294 48,300 | | 50.8%i $74,898 $4,619, | | 8.2% 3,814 4,580 $4,899 1,512 5,293| | | 0.5%) $12.813--17.1% 10,9--+ r-T$11-70-T--:-14.4% +--+--13,060--+--1-1 14.7% 3,050 4,050 7,008| | | 85 16.1% 2.251, 9,094 | 1 - 12.1% 535.13r--r--+-48.9%.---r--r$35,812-T--+-44.1% - 531.731| | | 42.4%| | | $33,440 | | 41.2% (31,671){ | |-42.3%) | | (34,582): | :-42.6% Total common stock Retained earnings Other equity Total common equity TOTAL LIABILITIES AND STOCKHOLDERS EQUITY i 57.4% 47,750 | i 58.8%) 42.085 (3,288) -539,750 -4.4%) 53.1%) 100.0% -$45,429,-- 55.0%-- 574,898 $81,241 100.0% a. How did Time Warner's profit margins change from 2012 to 2013? To what would you attribute the differences? Answer the same question for Disney. b. Compare the profit margins between Time Warner and Disney. How are they different? How would you explain these differences? c. What differences do you notice in the common-sized balance sheets that might indicate that one of the firms is doing better than the other? How did Time Warner's operating profit margin change from 2012 to 2013? % (Round to one decimal place.)