Case Discussion Questions
1. Provide a concise company profile. (I.e., what does your client do to stay in business? What industry is your client in?)
Martha Stewart Living Omnimedia, Inc. creates original how-to content and related products for homemakers and other consumers. The Company markets its brand name across a broad range of media and retail outlets. Martha Stewart provides information on a variety of subjects including home, cooking and entertaining, gardening, crafts, holidays, household maintenance, and weddings (Bloomberg.com, 9/28/11). Martha Stewart Omnimedia utilizes the television to communicate its products, which include a variety of shows, for example a living show and a cooking show. The Company’s business segments are publishing, broadcasting and merchandising. Also, the company merchandises some of its brand logo to be sold in retailers around the world. The company operates in the Multimedia industry.
2. Identify the risks that face your client.
From an income statement perspective, the company faces a consistently reducing top line revenue number from years 2008 to 2010. This reduction in revenue has required the company to reduce some of its expenses, which are critical to running an efficient, operational business. Also, the company faces an accumulated deficit number that continues to grow larger as the company continues to run net losses year on year. Accounts receivable continues to grow larger as the company’s revenue decreases indicating the customers of the company are postponing their payments of the invoices for as long as possible, this could create a cash shortage problem.
3. From a businessperson’s perspective, what trends are apparent based on an analysis of the financial statements?
As a businessperson, some trends that are apparent are the continued decrease in top line revenue, which has encouraged management to cut costs to keep the net losses at a...