Section 7 financial analysis in this section we

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SECTION 7: FINANCIAL ANALYSIS In this section we analyzed the finances of Lionsgate Entertainment. First we look at the Operating Cash Flow of the company. 7.1 Operating Cash Flow The following table displays the Operating Cash Flow and what percent of sales does each component present. Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Revenue 187.65 270.255 264.914 375.91 838.097 945.38 5 976.74 1361.0 4 1466. 4 1489.5 1 COGS 105.057 160.733 133.922 181.298 353.79 458.99 435.934 630.42 4 711.32 752.86 9 Gross margin 82.593 109.522 130.992 194.612 484.307 486.39 5 540.80 6 730.61 5 755.0 6 736.637 S&A 59.499 108.679 116.67 249.871 433.539 469.235 495.192 754.74 6 806.1 2 649.20 1 EBT (before taxes and interest) 142.092 218.201 247.662 444.483 917.846 955.63 1036 1485.3 6 1561. 2 1385.8 4 interest expense -8.1 -10.1 -8.9 -14.2 -25.3 -18.9 -17.8 -29.9 -34.3 -47.2
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Lions Gate Entertainment EBT (before taxes ) 150.192 228.301 256.562 458.683 943.146 974.53 1053.8 1515.2 6 1595.5 1433.0 4 Taxes -2.2 0.321 1.821 0.373 8.747 -1 7.68 4.031 2.724 1.218 PAT 152.392 227.98 254.741 458.31 934.399 975.53 1046.1 2 1511.23 1592. 8 1431.8 2 Depreciation - 3.728 1.846 3.198 2.37 1.817 3.67 5.5 7.657 12.455 operating cash flow 152.392 231.708 256.587 461.508 936.769 977.347 1049.7 9 1516.7 3 1600. 4 1444.2 8 %COGS 0.55985612 0.5947457 0.505530097 0.48229 1 0.422134908 0.4855 1 0.4463 2 0.4631 9 0.485 1 0.5054 5 %Gross Margin 0.4401438 8 0.4052543 0.494469903 0.517709 0.577865092 0.5144 9 0.5536 8 0.5368 1 0.514 9 0.4945 5 % S&A 0.31707434 0.402135 0.440407076 0.66471 0.517289765 0.4963 4 0.5069 8 0.5545 4 0.549 7 0.4358 5 %EBT 0.75721823 0.8073893 0.934876979 1.18241 9 1.095154857 1.0108 4 1.0606 7 1.0913 4 1.064 7 0.9304 %EBT (before taxes) 0.8003836 9 0.8447614 0.968472787 1.22019 4 1.125342293 1.0308 3 1.0788 9 1.11331 1.088 0.9620 9 Taxes -0.011724 0.0011878 0.006873929 0.00099 2 0.010436739 -0.0011 0.0078 6 0.0029 6 0.001 9 0.0008 2 % operating cash flow 0.8121076 5 0.857368 0.968567158 1.227709 1.117733389 1.0338 1 1.0747 9 1.11439 1.091 4 0.9696 3 %depreciation 0 0.0137944 0.006968299 0.00850 7 0.002827835 0.0019 2 0.0037 6 0.0040 4 0.005 2 0.0083 6 %PAT 0.8121076 5 0.8435737 0.961598858 1.21920 1 1.114905554 1.0318 9 1.0710 3 1.11035 1.086 2 0.9612 7 We see an overall increase in the profit after tax indicating that Lionsgate Entertainment is being successful at applying its strategy. Even though there is an overall increase in the operating cash flow, revenue also increases at a greater rate. This actually indicates that Lionsgate is operating less efficiently. We see a slight gradual decrease in cost of goods sold as a percent of sales from 2001 to 2004 then the ratio remains stable. We see a slight increase in Gross margin as a percent of sales. Selling and administration expenses gradually increased as a percent of sales from 2001 to 2006 followed by a gradual decrease till 2011. 7.2 Net Cash Flow Report The following section deals with the company’s cash as to where it is spent and where it is earned. We divided the analysis into 3 sections: cash from investing activities, cash from financing activities and cash from operational activities. In each section we looked into the details behind the net cash flow over the past 5 years. At the end of this section we compared the details we found with the pacing and stage of the company’s strategy and the vehicles it has used and how its’ strategy helps it compete in the Motion Pictures and Video Production Industry. 2001 2002 2003 2004 2005 2006 2007 2008 2009 201 0 2
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Lions Gate Entertainment Net Income 5.8 (48.0) (1.4) (92.1) 20.3 6.1 27.5 (87.4) (178.5) (19.5 ) (5 Depreciatio n and Amortizati on 0 3.7 1.8 3.2 2.4 1.8 3.7 5.5 7.7 12.5 5. WC Accounts (39.89 ) (16.89 ) 16.732 (45.29) 87.391 44.028 22.21 2 170.01 8 (12.2) (120) 10 Cash from Operations (34.08 ) (60.2) 17.2 (134.2) 110 51.9 53.4 88.12 (183.10 ) (127) 57 % increase in Cash from Operations 76.6% (128.6 %) (880.2 %) (181.97 ) (52.82 %) 2.89 % 65% (307.6 %) (30.6 %) (1 7.2.1 Cash from operating 2002 During the year ended March 31, 2002, the Company entered into an agreement to settle various amounts owed between the Company and third-party investors in certain films produced by the Company. As a result, contractual obligations of $16,767,000 were offset against film costs of $16,002,000, other receivables of $723,000 and accounts payable of $42,000. In addition, accrued participation of $4,286,000, contractual obligations of $3,000,000 and film costs of $2,759,000 were offset against other receivables of $10,045,000.
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