Chapter 3, Problem 3.3MAD

Analyze World Wrestling Entertainment

World Wrestling Entertainment, Inc. (WWE) is a sports media and entertainment company primarily focused on professional wrestling. WWE’s income statements through operating income for two recent years are as follows (in thousands):

World Wrestling Entertainment. Inc. Income Statements For the Years Ended December 31 (in thousands)	Year 2	Year 1
Revenues	$ 729,216	$ 658,768
Expenses:
Cost of revenues	$ (430,032)	$(379,316)
Selling, general, and administrative expenses	(219,132)	(192,773)
Depreciation and other expenses	(24,411)	(29,885)*
Total expenses	$ (673,575)	$ (619,974)
Operating income (loss)	$ 55.641	$ 38,794

*$7,125 is related to expenses of abandoning a media protect in Year 1.

a. Prepare a vertical analysis of the income statements for both years.

b.     Interpret the vertical analysis.