Chapter 2 Basic Accounting Concepts 93- What was the salary of the president of Wm. Wrigley Jr. Company?
- What is the annual dividend of Wrigley’s stock?
- How many current broker recommendations are strong buy, buy, hold, sell, or strong
sell? What is the average of the broker recommendations? - What is the net cash flow from operations for this year?
- What is the operating margin for this year?
In the March 30, 2005, issue of The Chicago Sun Times, there is an article by Eric Herman, enti-
tled “Wrigley Opening Facilities Here and Around the World.” Read the article and answer the
following questions:- Is the article favorable, neutral, or unfavorable regarding future prospects for Wm.
Wrigley Jr. Company? - Would you invest in Wm. Wrigley Jr. Company’s stock based only upon this article? If
not, what additional information would you want? - Would it be a prudent investment strategy to only rely upon published financial
statements in deciding to invest in a company’s stock? - What sources do you think financial analysts use in making investment decisions and
recommendations?
The following comparative income statement information was provided by AMR Corp., the par-
ent company of American Airlinesfor the years ended December 31, 2004 and 2003.Case 2-5
Analyzing financial informa-
tion
Case 2-6
Vertical analysis
December 31, December 31,
(in millions) 2004 2003
Revenues:
Passenger—American Airlines $ 15,021 $14,332
Regional affiliates 1,876 1,519
Cargo 625 558
Other revenues 1,123 1,031
Total operating revenues $ 18,645 $17,440Expenses:
Wages, salaries, and benefits $ 6,719 $ 7,264
Aircraft fuel 3,969 2,772
Depreciation and amortization 1,292 1,377
Other rentals and landing fees 1,187 1,173
Commissions, booking fees, and credit card expense 1,107 1,063
Maintenance, materials, and repairs 971 860
Aircraft rentals 609 687
Food service 558 611
Other operating expenses 2,366 2,428
Special charges 11 407
U.S. government grant — (358)
Total operating expenses $ 18,789 $18,284
Operating loss $ (144) $ (844)- Provide a vertical analysis for the comparative years.
- Interpret your results.