Mgm-mirage Corporation - Math Problem Example

MGM Resorts International is the industry leader in the hospitality industry. The hospitality industry generated revenues of $127.7 billion in (Plunkettresearchonline, 2011). Some of the MGM Resorts International most recognizable brands are Bellagio, MGM Grand, and The Mirage. The company has 15 hotels located in Las Vegas, Michigan, and Mississippi. The company since 2010 has been negatively impacted by the state of the general economy. Hotels also depend a lot on the increase travel of internal and external tourists.

To evaluate the financial performance of MGM Resorts International this paper will utilize trend and ratio analysis. Trend Analysis Trend analysis can be used to determine the percentage change for one account over a period of time (Cliffsnotes, 2012). A trend analysis of the income statement of the previous two fiscal years is illustrated below: MGM Resort and International Income Statement (000) 2010 2009 Change Percent change Revenues Casino 2442927 2618060 -175133 -6.69% Rooms 1300287 1370135 -69848 -5.

10% Food and beverage 1339174 1362135 -22961 -1.69% Entertainment 486319 493799 -7480 -1.51% Retail 194891 207260 -12369 -5.97% Other 529693 493324 36369 7.37% Reimbursed Costs 359470 99379 260091 261.72% 6652761 6644282 8479 0.13% Less: Promotional Allowances -633528 -665693 32165 -4.83% 6019233 5978589 40644 0.68% Expenses Casino 1385763 1459944 -74181 -5.08% Rooms 423073 427169 -4096 -0.96% Food and beverage 774443 775018 -575 -0.07% Entertainment 360383 358026 2357 0.66% Retail 120593 134851 -14258 -10.

57% Other 333817 284919 48898 17.16% Reimbursed Costs 359470 99379 260091 261.72% General and administrative 1128803 1100193 28610 2.60% Corporate Expense 124241 143764 -19523 -13.58% Pre-opening and start-up costs 4247 53013 -48766 -91.99% Property transactions, net 1451474 1328689 122785 9.24% Depreciation and amortization 633423 689273 -55850 -8.10% 7099730 6854238 245492 3.58% Income (loss) from unconsolidated affiliates -78434 -88227 9793 -11.10% Operating loss -1158931 -963876 -195055 20.

24% Non-operating income (expense) Interest expense, net -1113580 -775431 -338149 43.61% Non-operating items -108731 -47127 -61604 130.72% Other, net 165217 -226159 391376 -173.05% -1057094 -1048717 -8377 0.80% Loss before income tax -2216025 -2012593 -203432 10.11% Benefit (provision) for income taxes 778628 720911 57717 8.01% Net Loss -1437397 -10291682 885428 -86.03% The trend analysis showed several tendencies in the revenues and expenses of the company. In 2010 MGM Resort International generated total revenues of $6.

02 billion (Mgmresort, 2012). The total revenues of the company increase by 0.68% in 2010. The division that generated the most revenues was the casinos. The total expenses of the firm increase by 3.58%. In 2010 the net losses of the firm were $1.43 billion. The losses of the company went down by 86% in comparison with 2009. The illustration below shows a trend analysis of the balance sheet of MGM Resort International. MGM Resort International Balance Sheet (000) 2010 2009 Change Percent change Assets Cash 498964 2056207 -1557243 -75.

73% Account receivable, net 321984 368474 -46490 -12.62% Inventories 96392 101474 -5082 -5.01% Income tax receivable 175982 384555 -208573 -54.24% Deferred income tax 110092 38487 71605 186.05% Prepaid expenses and other] 252321 103969 148352 142.69% Total current assets 1455645 3053501 -1597856 -52.33% Property and equipment, net 14554350 15069952 -515602 -3.42% Other assets Investments 1923155 3611799 -1688644 -46.75% Goodwill 86353 86353 0 0.00% Other intangible assets, net 342804 3444253 -3101449 -90.

05% Other long term assets, net 598738 352352 246386 69.93% Total other assets 2951050 4394757 -1443707 -32.85% Total Assets 18961045 22581210 -3620165 -16.03% Liabilities and Stockholder's Equity Current liabilities Account payable 167084 173719 -6635 -3.82% Current portion of long term debt 0 1079824 -1079824 -100.00% Accrued interest on long term debt 211914 206357 5557 2.69% Other accrued liabilities 867223 923701 -56478 -6.11% Total current liabilities 1246221 2383601 -1137380 -47.72% Deferred income taxes 2469333 3031303 -561970 -18.

54% Long-term debt 12047698 12976037 -928339 -7.15% Other-long term debt obligations 199248 256837 -57589 -22.42% Stockholder's Equity Retained earnings -1066865 370532 -1437397 -387.93% Accumulated other comprehensive loss -301 -1937 1636 -84.46% Total stockholders equity 2998545 3870432 -871887 -22.53% Total liabilities and stockholders equity 18961045 22581210 -3620165 -16.03% The total assets of the company in 2010 were $18.96 billion. In comparison with the previous year the total assets of the company decreased by 16.03%. The cash account of the firm was $498 million in 2010.

The firm’s cash balance went down 75.73% since 2009. The total equity of the company in 2010 was $2.99 billion. Between 2009 and 2010 the company’s equity decreased by 22.53%. In 2010 the total debt of the company decreased by 14.68%. Ratio Analysis A ratio analysis of MGM Resort International for the fiscal years 2010 and 2009 is illustrated below: Ratio Analysis 2010 2009 Net margin -23.88% -21.61% Current ratio 1.17 1.28 Quick acid ratio 0.77 0.42 Return on assets -7.58% -5.72% Return on equity -47.94% -33.37% Debt to equity 5.32 4.83 Earnings per share (EPS) -$3.19 -$3.41 The net margin is a ratio that shows the profitability of a company.

The net margin of MGM Resort International in 2010 was -23.88%. The firm’s net margin in comparison with the previous year got worse by 2.27%. The current ratio shows the ability of a company to pay off its short term debt. A current ratio is good when it is above 1.0. The current ratio of the firm is 1.17. The company is in a good position to pay off its current debt. The quick acid ratio is another solvency ratio. The quick acid ratio is calculated similarly to the current ratio with the exception that cash is deducted from the numerator of the formula.

The quick acid ratio of the organization in 2010 was 0.77. In comparison with 2009 the quick acid ratio of the firm increased by 59.5%. Return on assets (ROA) shows how effective a company has been at generating income from its assets. The ROA of the company in 2010 was -7.58%. The return on equity (ROE) of the firm in 2010 was -47.94%. ROE provides the rate of return on equity of the company. The debt to equity ratio of MGM International in 2010 was 5.32. Debt to equity measures the amount of assets being provided by creditors for each dollar of assets being provided by stockholders (Garrison & Norreen, 2003).

The firm had an EPS of -$3.19 in 2010. References Cliffnotes.com (2012). Trend Analysis. Retrieved March 13, 2012 from http://www.cliffsnotes.com/study_guide/Trend-Analysis.topicArticleId-21248,articleId-21211.html Garrison, R., Noreen, E. (2003). Managerial Accounting (10th ed.). Boston: McGraw-Hill Irwin. Plunkettresearchonline.com (2011). Airline, Hotel & Travel Industry Overview. Retrieved March 13, 2012 from http://www.plunkettresearchonline.com/ResearchCenter/Statistics/display.aspx?Industry=17