Chapter 3, Problem 3.2MAD

Analyze Pandora Media

Pandora Media, Inc. (P) provides Internet music platform services in North America. Pandora’s income statements through operating income for two recent years are as follows (in thousands):

Pandora Media. Inc. Income Statements For the Years Ended January 31 (in thousands)		Year 2		Year 1
Revenues:
Advertising	$ 1,072,490		$ 933,305
Subscription	225,786		220,571
Ticketing service	86,550		10,167
Total revenues	$ 1,384,826		$ 1,164,043
Expenses:
Cost of revenues		$ (894,922)		$ (697,341)
Sales and marketing		(491,4SS) (175,572) (141,636) $(1,703,585)		(398,169) (153,943)
General and administrative
Product development				(84,581) $(1334,034)
Total expenses
Operating income (loss)		$ (318,759)		$ (169,991)

a. Prepare a vertical analysis of the two income statements.

b.     Interpret the vertical analysis.