Molson Coors Case Study

A. Major classifications of an income statement are Income from proceed operations before tax Discontinued operations ( crystallize of tax) assoil income from continue operations sepa esteem revenues and outlays operate income Extraordinary items ( earnings of tax) Net income before tremendous items Net income Cumulative effect of change in accounting dominion ( lettuce of tax) B. Companies various activities and transactions differ in stability and risks thereby indicating a need for breeding about various components of earnings.The requirement to provide classified income statements help users better assess the persistence of earnings and the risk colligate to various components of net income. Income statements may include non recurring items which should be considered in determining hereafter earnings and or cash flows, moreover generally accepted accounting principles require separate disclosure of a number of these items, for instance lay off operations, thereby giv ing a better picture of financial statements. C. In accounting, current income statements do not reflect future expectations.Part of the roles of accounting information is for evaluation and valuation. Persistent income of a follow will affect the assumptions of future earnings and or cash flows, which will help to better send a companys valuation. D. (INSERT make HERE) E. (INSERT ANSWER HERE) F. (INSERT ANSWER HERE) G. (INSERT ANSWER HERE) H. (INSERT ANSWER HERE) I. (INSERT ANSWER HERE) J. i. Non-operating items are the following come to expense-it is related to non-operating liabilities and Interest income- it is related to long-term loans. Debt extinguishment costs.nonage interest the part of the net income destined to the minority owners is considered as non-operating. Discontinued operations. ii. 20072006 Interest expense(126462)(143070) Interest income2658716289 Debt extinguishment costs (24478) 0 new(prenominal) income1766217736 Non-operating items (106691)(109045) Tax 28%(29873)(30533) Non-operating items after tax (76818)(78512) Discontinued operations (17682)(12525) Minority interest (15318)(16089) Total non-operating items (109818)(107126) iii. 20072006 Net income497192361031 Net expense 109818107126 NOPAT607010468157 K.Non-operating pluss current notes due Notes receivable Noncurrent assets of discontinued operations Non-operating liabilities short term borrowing Current portion long-term debt Current liabilities of discontinued operations long debt Derivative hedging instruments Long-term liabilities of discontinued operations k. ii. 20072006 Total assets 1345156611603413 Non-operating assets -194503229290 Operating assets 1325706311374123 Total liabilities 62854245739275 Non-operating liabilities -2907976-2523472 Operating liabilities33504483215803 Net operating assets 99066158158320L. (2007) 607010/9906615 = 6. 13% (2006) 468157/8158320 = 5. 75% RNOA has change magnitude from 2006 to 2007 but is is low compared to industry. m. Operat ing reach margin (2007) 607010/ 6190592= 9. 81% (2006) 468157/ 5844985 = 8. 01% Net operating asset turnover components (2007) 6190592/ 9906615 = 0. 625 (2006) 5844985/ 8158320 = 0. 716 The operating internet margin =9. 81 % that means that the company realized 9. 8 cents of operating profit this indicant have increased from 2006 to 2007even if the operating asset turnover has decreased. n. Non- inflexible itemsDebt extinguishment costs Other income (expenses) Loss from discontinued operations Cumulative effect of change in accounting principle o- i The effective tax rate is 0. 8% = 4186/534378 p. The following income statement shows persistent earnings. 2007 as report Presistent Net gross revenue $6,190,592 $6,190,592 Cost of goods sold (3,702,921) (3,702,921) Gross profit 2,487,671 2,487,671 Marketing, general and admin. (1,734,408) (1,734,408) Special items, net (112,194) (111,663) Operating income 641,069 641,600 Interest expense (126,462) (126,462)Interest income 26,587 26,5 87 Debt extinguishment costs (24,478) 0 Other income (expense), net 17,662 7,384 Total other expense (106,691) (92,491) Income before tax 534,378 549,109 Income tax expense (4,186) (153,751) Minority interests (15,318) (15,318) Income from continuing operations 514,874 380,040 Loss from discontinued operations (17,682) 0 Net income $497,192 $380,040 q. Persistent Interest expense $(126,462) Interest income 26,587 Other income / (expense) 7,384 Nonoperating items reported on a before-tax basis (92,491) Tax at marginal rate of 28% (25,897)Minority interest (15,316) Total nonoperating items $ (81,912) Persistent Net operating profit after tax $461,952 Net income Persistent income Return on net operating assets 6. 13% 4. 66%1 Net operating profit margin 9. 81% 7. 46%2 Net operating asset turnover 0. 625 0. 625 These numbers are mainly informative about the companys future profitability. To use the numbers to evaluate managements performance, we may include these one-time charges. But to use the number to value the firm, the persistent numbers are better predictors of future, expected profits.