Required:
Write a memo to Karen Brown from the perspective of the company accountant that responds to, and provides support for, the following questions. Financial analyses (including calculations for the required case questions) should be attached at the end of the memo. Again, this memo is written from the perspective of the company accountant to their client. It would be inappropriate to copy these case questions into your memo as if you were completing a homework assignment.
Summarize this year’s company performance by preparing a segmented income statement similar to the following format (If a division has negative operating income, please calculate negative income tax, i.e., an addback, for that division):
Entertainment
Streaming
Parks
Overall
Sales
COGS
Gross Margin
Allocated overhead
Selling and administrative
Operating Income
Tax expense
Divisional income
Based on the appropriate segmented income value, calculate current ROI, residual income and EVA for the three divisions. Please display ROI percentages in percentage format with two decimal places.
Calculate NPV and IRR and use them to evaluate Entertainment’s decision not to invest in the new animation studio. Was the decision appropriate and in the best interests of Riverbend Studios?
Evaluate the validity of Angela Imanah’s complaint regarding her evaluated performance. Explain why it is or is not valid.
Perform a basic differential analysis showing the effect on operating income if Parks is shut down. Explain whether Parks should be shut down. We suggest using the following format for your financial analysis:
Current
Parks Closed
Difference
Marriott Revenue
CM
Fixed COGS
Selling and Admin
Allocated Corporate
Operating Income
Grading Rubric:
