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…
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…
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
...are accountable to a board of directors and shareholders and publish annual reports that are public record so to make sure there financial standards are on the up and up.
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.
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.
[1] Information was mainly taken from the Harvard Business Case Study “The Walt Disney Company: The Entertainment King”
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 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,
“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)
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
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 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
Managerial accounting has historical antecedents that stretch back to the beginning of the 1900s. Whether it was called cost accounting, or industrial accounting, or administrative accounting it is certain that concerns regarding production cost calculation, expenses’ classification and analysis, resource consumption administration, and pre and post cost calculations, have existed since the beginning of the 90s (Cardos & Cardos, 2010).
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.