There are many faces of accounting, such as Broadway, NFL teams, Universities, and even Apple. However, the one I decided to learn about is movie productions. The movie production I decided to expand on is Lionsgate. Lionsgate is an American/Canadian entertainment company, formed on July 10, 1997, in Vancouver, Canada. It is currently being headquartered in Santa Monica, California. They have made very well known movies, such as “The Hunger Games” series and the “Twilight” series. And now I’m going to show you some of their accounting information. Lionsgate is a publicly owned company, meaning that there are shareholders that own shares of the company. The number one shareholder is Dr. Mark Rachesky who is the fund manager of Mhr Fund Management …show more content…
LLC (a New York based investment firm that takes a private equity approach to investing). He is also conveniently the co-chairman of Lionsgate. It says on the website “Morningstar,” that the Mhr Fund Management LLC has a total of 15,105,523 shares (Morningstar). This is the highest amount of shares for the Lionsgate company. There are some possible users that are a part of Lionsgate’s accounting reports.
One that was presented in the previous paragraph is a shareholder. A shareholder is a person, institution, or company that owns at least one share of a company’s stock. A shareholder is a very important part of a business especially for a public company like Lionsgate. Another user that’s a part of it’s accounting reports is an external auditor. An external auditor conducts an audit while following specific laws or rules of the financial statements of the company. One last user is the Chief Financial Officer (CFO). The CFO is the senior executive responsible for managing the financial actions of the …show more content…
company. The revenue and expenses of a company is very important to keep track of.
If you don’t keep track it can have bad repercussions. Revenue is the inflow of net assets from providing products and services to customers. In Lionsgate, the revenue is from the distribution of films, sale of DVDs and Blu-ray discs, television or digital licensing, etc. There are many other revenues, for instance, subscriber fees, advertising sales, and licensing intellectual property rights for the use of their material in interactive games, and consumer products (Annual Reports). It was stated by March 31, 2017, Lionsgate reported $3,201.5 million in revenues (Annual Reports). Expenses is the outflow of net assets in helping generate revenues. Some expenses that’s a part of Lionsgate’s financial reports are direct operating, distribution and marketing, general and administration, depreciation and amortization, etc. (Annual Reports). The main thing that’s being expensed is advertising and marketing. The costs of film prints are exploited as prepaid expenses and expensed upon theatrical release and is included in distribution and marketing expenses (Annual Reports). Advertising expenses for the year ended March 31, 2017 were $588.8 million which were recorded as distribution and marketing expenses (Annual Reports). Imagine Lionsgate having higher expenses and lower revenues. That would take them straight out of
business. Assets and Liabilities are also very important to keep track of. They are some of the main essentials of accounting. An asset is a resource, that has expected future benefits, owned or controlled by a company. Some assets that are a part of Lionsgate is investment in films and television programs, investment in program rights, property and equipment, restricted cash, accounts receivable, program rights, etc. (Annual Reports). Lionsgate reported $9,196.9 million in assets by March 31, 2017 (Annual Reports). The liabilities of a company are obligations to transfer assets or provide products or services to other. A few of Lionsgate’s liabilities are participations and residuals, film obligations and production loans, accounts payable, debt, dissenting shareholders’ liability, etc. (Annual Reports). By March 31, 2017, Lionsgate reported $6,682.5 million in liabilities (Annual Reports). Based off of all that I learned about Lionsgate’s accounting records they seem to be well off financially. You can easily see this with any company/business by examining their revenues, expenses, assets, and liabilities. Even seeing who the users in control of the accounting reports and if the company is publicly or privately owned is a good way to learn about any institutions financial status.
The 3 percent decline in sales causing a 21 percent decline in profits can be attributed to the identification of the accounting concept of operating leverage. Operating leverage is what business managers apply to boost small changes in revenue into sizable changes in profitability. Fixed cost is the force managers use to attain disproportionate changes between revenue and profitability. Therefore, when all costs are fixed every sales dollar contributes one dollar toward the potential profitability of a project. Once sales dollars cover fixed costs, each additional sales dollar represents pure profit. A small change in sales volume can significantly affect profitability (Edmonds, Tsay, & Olds, 2011). So, therefore, if sales volume increases,
Financial records are very important aspects to any corporation and making sure the records are accurate is essential. Determining how a corporation is going to do is a guess but it is based on previous year's financial statements and that is a reason finical records are so important. Making a profit is a goal for any corporation.
As can be seen in exhibit to solution 2, we have estimated the per-film value of each production company. MCA Universal, Warner Brothers and Walt Disney Co are the only production companies that provide a positive per film value, with values of 9.89, 1.92, 12.56 million respectively. This value is calculated by dividing the net present value of all the movies by the total number of movies. We also calculated the average value of each production company based upon their share of the total number of movies produced. The companies with positive values were MCA Universal, Warner Brothers and Walt Disney Co is also the only production companies that provide a positive per film value, with values of 1.40, 0.37, 1.40 million respectively. These values are based on the average value per film multiplied by the company's average share of the industry.
[1] Information was mainly taken from the Harvard Business Case Study “The Walt Disney Company: The Entertainment King”
Marshall, D.H., McManus, W.W. & Viele, D.F. (2011). Accounting: What the numbers mean (10 ed). New York, NY: The McGraw-Hill Companies, Inc.
For example even though there was a decrease in revenue from 2012 to 2013 there was still an increase in selling and general administrative expense (Boston Scientific, 2014). While at the same point you see a decrease year to year in research and development expenses (Boston Scientific, 2014). In my opinion this does not stand by what the companies mission statement suggest. If a company is truly trying to be innovative, would it not make more sense for them to keep their administrative budget the same so that it adjusted based on revenue. Rather than decreasing the very cost that should be helping the company continue to stay “on top” of the market to keep them
Establishing effective accounting control procedures early on can help create an ethical financial management culture. According to the 10-K for Starbucks, no changes were made in internal controls over financial reporting during the most recently completed fiscal quarter. Accuracy and reliability are paramount in the accounting world. Starbucks internal control over financial reporting include maintaining records that in detail accurately and fairly reflect transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of the financial statements; providing reasonable assurance that receipts and expenditures are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on the financial statements would be prevented or detected on a timely basis. Due to the inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of the financial statements would be prevented or detected. There are several categories designed to prevent fraud and identity errors before they become potential major
Financial and Managerial accounting are used for making sound financial decisions about an organization. They provide information of past quantitative financial activities and are useful in making future economic decisions. (Albrecht, Stice, Stice, & Skousen, 2002) The same financial data is used to derive reports for each accounting process yet they differ in some ways. Financial accounting primarily provides external reports for external users such as stock holders, creditors, regulating authority and others. (Garrison, Noreen, & Brewer, 2010) On the other hand Managerial accounting is concern with providing information that deals with the internal viability of the organization and is tailored to meet the needs of an individual organization. (Albrecht, Stice, Stice, & Skousen, 2002)
“The Walt Disney Company is a leading diversified international family entertainment and media enterprise with five business segments: media networks, parks and resorts, studio entertainment, consumer products and interactive media.” (The walt disney, n.d.) At year end of 2013, the company had net revenues of $45 billion, up from $42.3 billion the previous year and net income of $6.1 billion, up from $5.7 billion the previous year. ("Walt disney co," 2014)
ABC LTD COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2012 NOTE 2012 Revenue 2 828,500 Cost of sales 3 (460,000) Gross profit 368,500 Other income 4 2,500 Operating expenses 5 361000 Profit before income tax 10000 Income tax expense (30%) 3,000 Profit for the year 7000 Other comprehensive income change in revaulation surplus 38500 Other comprehensive income for the year, net of tax 38500 Total comprehensive income for the year 45500 ABC LTD STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 30 JUNE 2012 NOTES 2012 ASSETS Current assets Cash and cash equivalents 6 100500 Trade and other receivables 7 45,200 Inventories 8 87700 Other current assets 9 7000
Heisinger, K., & Hoyle, J. B.(2012). Accounting for Managers. Creative Commons by-nc-sa 3.0. Retrieved from: https://open.umn.edu/opentextbooks/BookDetail.aspx?bookId=137
The statement of profit or loss is also known as income statement and it’s equation is revenue minus expenses equals profit or loss. The statement of profit or loss summarize the revenues and expenses of a business and also shown the ability of a business to generated business. The total profit or loss that generated in an organization during an accounting period can be seen through the income statement. For example, if the expenses of the company are higher than revenues, the company will get a loss in the business. However, the company will generate a profit when the revenues are greater than the
An accounting manager is responsible for the financial health of a company, and the development of strategies and plans for long-term financial goals of their organization. They oversee the daily operations of the accounting department, forecast the financial needs of the company and assist the company manager with organization by assigning projects and directing staff. In order to successfully manage a company’s finances, the financial manager reconciles day-to-day accounting activities and establishes financial status by developing and implementing systems for collecting, analyzing, verifying and reporting financial information. A financial manager is also responsible for establishing and enforcing proper accounting methods and policies, as well as helping auditors who will verify the accuracy of the financial reports and look for any misrepresentation or fraud within the
Marshall, D., McManus, W., & Viele, D. (2004). Accounting: What the numbers mean. [University of Phoenix Custom Edition e-text]. New York, NY: McGraw-Hill Companies.
The revenue/cost period-: Revenue and the cost period in accounting that the company get income from normal business activities. It’s referred to normal business income that the company got by selling their product and service.