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Accounting and Financial Analysis Report: Fox and CBS Corporation

Evaluating the SWOT analysis from the annual reports of 21st century Fox and CBS Corporation.

 

Answer:

Abstract

The report was presented by evaluating the SWOT analysis from the annual reports of 21st century Fox and CBS Corporation. The financial measurement of the companies in terms of return on Assets were expressed here. The reports from the auditors were explained here if any of the concerned issues were demonstrated by the concerned auditors.

SWOT analysis of 21st Century Fox

SWOT analysis of 21st Century is as follows:

Strength

Weakness

Number one cable n


ews network

Strong management team

Weak $ against the EURO had generated high revenue at the time of FIFA World cup

Globally present

Strengthening of US $ against the local currency had reduced the revenue in overseas business

Financially weak

Opportunity

Threat

Strengthening the intellectual property rights

Strong law against the piracy and to protect the intellectual property

Change of privacy laws in Asia and South America

Risk of weak domestic and global economy

Table 1: SWOT of 21st Century

Source: (https://www.21cf.com/Investor_Relations/, 2015)

From the above table, we could see the SWOT analysis of 21st Century FOX where the main strength of the company is associated with its product and business diversification. Further, the stable management team had provided the company to gain momentum in its business (Cadle et al., 2014). However, the weaknesses of the company was seen in financial segment and the threat of the business was associated with the economic slowdown in the global as well as domestic perspective. 21st Century had the option of strengthening the intellectual property rights for maximising the intangible assets. The regulatory changes in the Asian and Latin American countries are the threat to the business of the company as uncertainties are associated with the changes in the laws (Cherif, 2014). The data protection law in the foreign countries could make the cost of operation high as those countries’ do not have much potential of high purchasing power from their viewers.

 

SWOT analysis of CBS Corporation

SWOT analysis of CBS Corporation is as follows:

Strength

Weakness

Thursday Night football and Super Bowl 50 are the strongest program in the network

Operating income margin from the operation

Have niche market due to the target of 18-34 years old

Strengthening of US $ against the local currency had reduced the revenue from the overseas business

Financially loss was $21 million due to foreign currency translation towards adverse direction

Global presence was limited

Opportunity

Threat

Expanding in foreign market

Live shows streaming through internet and networking programing

Financially weak due to low net profit

Risk of weak domestic and global economy

Threat from the internet to the broadcasters of the programmes in television


Table 2: SWOT of CBS

Source: (Investors.cbscorporation.com, 2015)

CBS had the opportunity of making expansion of its business in the foreign soil. The company had taken initiative of steaming the live shows through internet on company’s official platform. However, the threat from other internet streamlines were still present for the company. The weak economy was another threat to the business. High income and operating margin from some of the selective programmes were the main strength for CBS while it had some niche product to draw attention of the adult of 18-34 aged. The main weaknesses were consisted with the limited global presence of doing the business. The recent financial loss due to foreign currency translation was the major weakness to the business of CBS Corporation. The company had limited foreign exposure of its business, which had made the business environment risky due to its low geographic segmentation.

 

Accounting standards used

21st Century Fox had applied the US GAAP and FASB standards in preparing the final accounts. Standards of Public Company Accounting Oversight Board was maintained in this report.

CBS Corporation had applied the US GAAP and non-GAAP measurement for showing the segmented results on basis of operational point of view and maintaining the FASB guidelines. The accounting standard was followed as provided with Public Company Accounting Oversight Board.

Date of the most recent fiscal year-end

Until date, the recent fiscal year end annual report of 2014 was available in the official website of 21st Century Fox and CBS Corporation. 

The company had published the unaudited results up to 2014, December.

Determine the relative proportion of short-term and long-term assets

The relative proportion of short-term assets to long-term assets is 0.532 for the case of 21st Century FOX.

The proportion of current to non-current assets of CBS is 0.302.

 

21st century

(In million $)

CBS

(In million $)

current assets

17376

5589

non-current assets

32675

18483

proportion

0.532

0.302


Table 3: Current assets to non-current assets

 

Determine the proportion of liabilities and equity

21st Century FOX had the proportion of liabilities to equity of 1.75.

CBS had the proportion of 2.45 liabilities to assets.

 

21st century

(In million $)

CBS

(In million $)

liabilities

31865

17102

equity

18186

6970

proportion

1.75

2.45


Table 4: Liabilities to assets

Return on assets of 2014

ROAFOX = 0.1584

ROACBS = 0.016

 

21st century

CBS

ROA

0.158

0.016


Table 5: ROA measurement

 

Disaggregation of ROA into two components

The return on asset ratio can be segregated into two parts = net profit margin * asset turnover ratio

From the point of view of that net profit margin = .287 and asset turnover ratio = 0.553 for 21st Century Fox

Net profit margin of CBS Corporation is 0.112 while asset turnover ratio is 0.144.

 

21st century

CBS

Net Profit Margin

0.287

0.112

Asset turnover

0.580

0.144

Aggregate ROA

0.166

0.016


Table 6: Disaggregation of ROA

Auditors and reports from them

The auditor’s report was presented from the auditing firm Ernst & young for 21st Century Fox where the concerned was raised about the limitation of the internal control over providing the accounting information. The auditing firm had expressed its concern over the misstatements and incorrect future projection of such particulars due to change in the economy. However, the conducted audit could not find any real concerned matter from the statement provided to them (Leung, 2011).   

The present report in the official website of CBS Corporation was unaudited.   

Difference with the audit report of Berkshire Hathaway

There was no difference between auditor’s report of 21st Century and Berkshire Hathaway literally except the auditing firms were different for the two companies.

 

References

Cherif, E. (2014). Real estate services structure evolution with internet and SWOT analysis.IJECRM, 8(4), 200. https://dx.doi.org/10.1504/ijecrm.2014.067510

https://www.21cf.com/Investor_Relations/,. (2015). Investors relation. Retrieved 23 January 2016, from https://tcfeuspstrgektron.blob.core.windows.net/uploadedfiles/pages/investor_relations/21cf%202015ar%20web.pdf

Investors.cbscorporation.com,. (2015). CBS Corporation | Investor Relations | News Release. Retrieved 23 January 2016, from https://investors.cbscorporation.com/phoenix.zhtml?c=99462&p=irol-newsArticle_print&ID=2016405

Leung, D. (2011). Inside Accounting. Farnham, Surrey, England: Gower.

Maneenetr, T. (2014). SWOT Analysis of a Ladyboy Cabaret Show Market in Phuket province, Thailand. MJSS. https://dx.doi.org/10.5901/mjss.2014.v5n23p653

ReferencesCadle, J., Eva, M., Hindle, K., Paul, D., Rollason, C., & Turner, P. et al. (2014). Business Analysis. Swindon: BCS Learning & Development Limited.

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