Vertical Analysis of Income Statement

The following comparative income statement (in thousands of dollars) for two recent fiscal years was adapted from the annual report of Calvin Motorsports, Inc., owner and operator of several major motor speedways, such as the Atlanta, Texas, and Las Vegas Motor Speedways.

				Current Year		Previous Year
Revenues:
	Admissions	$111,065			$124,500
	Event-related revenue	139,195			152,500
	NASCAR broadcasting revenue	188,665			179,500
	Other operating revenue	46,075			43,500
		Total revenue	$485,000			$500,000
Expenses and other:
	Direct expense of events	$95,545			$101,000
	NASCAR event management fees	122,705			128,500
	Other direct operating expenses	15,520			16,500
	General and administrative	195,940			221,500
		Total expenses and other	$429,710			$467,500
Income from continuing operations	$55,290			$32,500

Question Content Area

a. Prepare a comparative income statement for these two years in vertical form, stating each item as a percent of revenues. Round to one decimal place. Enter all amounts as positive numbers.

	Current Year Amount	Current Year Percent	Prior Year Amount	Prior Year Percent
Revenues:
Admissions	$111,065	fill in the blank _%	$124,500	fill in the blank _%
Event-related revenue	139,195	fill in the blank _%	152,500	fill in the blank _%
NASCAR broadcasting revenue	188,665	fill in the blank _%	179,500	fill in the blank _%
Other operating revenue	46,075	fill in the blank _%	43,500	fill in the blank _%
Total revenue	$485,000	fill in the blank _%	$500,000	fill in the blank _%
Expenses and other:
Direct expense of events	$95,545	fill in the blank _%	$101,000	fill in the blank _%
NASCAR event management fees	122,705	fill in the blank _%	128,500	fill in the blank _%
Other direct operating expenses	15,520	fill in the blank _%	16,500	fill in the blank _%
General and administrative	195,940	fill in the blank _%	221,500	fill in the blank __%
Total expenses and other	$429,710	fill in the blank _%	$467,500	fill in the blank _%
Income from continuing operations	$55,290	fill in the blank _%	$32,500	fill in the blank _%

Question Content Area

b. While overall revenue

increased or decreased

some between the two years, the overall mix of revenue sources did change somewhat. The NASCAR broadcasting revenue

increased or decreased

as a percent of total revenue by 3 percentage points, while the percent of admissions revenue to total revenue

increased or decreased

by 2 percentage points. Overall, it appears that income from continuing operations has significantly improved because of

aggressive cost cutting/ a large increase in total revenue