Current year Previous year
Revenues:
Admissions $139,125 $163,087
Event-related revenue 156,691 178,805
NASCAR broadcasting revenue 178,722 173,803
Other operating revenue 27,705 34,827
Total revenue $502,243 $550,522
Expenses and other:
Direct expense of events $100,843 $100,922
NASCAR purse and sanction fees 120,273 123,078
Other direct expenses 21,846 26,208
General and administrative 188,196 266,252
Total expenses and other $431,158 $516,460
Income from continuing operations $ 71,085 $ 34,062
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.
b. Comment on the significant changes.
Answer:
a. SPEEDWAY MOTORSPORTS, INC.
Comparative Income Statement (in thousands of dollars)
For the Years Ended December 31
Current Year Prior Year
Amount Percent Amount Percent
Revenues:
Admissions $139,125 27.7% $163,087 29.6%
Event-related revenue 156,691 31.2% 178,805 32.5%
NASCAR broadcasting
revenue 178,722 35.6% 173,803 31.6%
Other operating revenue 27,705 5.5% 34,827 6.3%
Total revenue $502,243 100.0% $550,522 100.0%
Expenses and other:
Direct expense of events $100,843 20.1% $100,922 18.3%
NASCAR purse and
sanction fees 120,273 23.9% 123,078 22.4%
Other direct expenses 21,846 4.3% 26,208 4.8%
General and administrative 188,196 37.5% 266,252 48.3%
Total expenses and other $431,158 85.8% $516,460 93.8%
Income from continuing
operations $ 71,085 14.2% $ 34,062 6.2%
SPEEDWAY MOTORSPORTS, INC.
Comparative Income Statement (in thousands of dollars)
For the Years Ended December 31
Current Year Prior Year
Amount Percent Amount Percent
Revenues:
Admissions $139,125 27.7% $163,087 29.6%
Event-related revenue 156,691 31.2% 178,805 32.5%
NASCAR broadcasting
revenue 178,722 35.6% 173,803 31.6%
Other operating revenue 27,705 5.5% 34,827 6.3%
Total revenue $502,243 100.0% $550,522 100.0%
Expenses and other:
Direct expense of events $100,843 20.1% $100,922 18.3%
NASCAR purse and
sanction fees 120,273 23.9% 123,078 22.4%
Other direct expenses 21,846 4.3% 26,208 4.8%
General and administrative 188,196 37.5% 266,252 48.3%
Total expenses and other $431,158 85.8% $516,460 93.8%
Income from continuing
operations $ 71,085 14.2% $ 34,062 6.2%
b. While overall revenue decreased some between the two years, the overall mix of
revenue sources did change somewhat. The NASCAR broadcasting revenue
increased as a percent of total revenue by 4 percentage points, while the percent
of admissions revenue to total revenue decreased by almost 2%. Two of the major
expense categories (direct expense of events and NASCAR purse and sanction fees)
as a percent of total revenue increased by approximately 4%. Other direct expenses,
however, decreased by 0.5%, and general and administrative expenses decreased
by about 11%. Overall, the income from continuing operations increased by 8% of total
revenue between the two years, which is a favorable trend. The income from continuing
operations as a percent of sales exceeds 14% in the current year, which is excellent.
Apparently, owning and operating motor speedways is a business that produces high
operating profit margins.
b. While overall revenue decreased some between the two years, the overall mix of
revenue sources did change somewhat. The NASCAR broadcasting revenue
increased as a percent of total revenue by 4 percentage points, while the percent
of admissions revenue to total revenue decreased by almost 2%. Two of the major
expense categories (direct expense of events and NASCAR purse and sanction fees)
as a percent of total revenue increased by approximately 4%. Other direct expenses,
however, decreased by 0.5%, and general and administrative expenses decreased
by about 11%. Overall, the income from continuing operations increased by 8% of total
revenue between the two years, which is a favorable trend. The income from continuing
operations as a percent of sales exceeds 14% in the current year, which is excellent.
Apparently, owning and operating motor speedways is a business that produces high
operating profit margins.