This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter...

 

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This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter 1. Refer to the introductory story in Chapter1 (see page 43) for additional background. (The components of the Caesars serial case can be com- pleted in any arder.) What follows are the income ntatements for Caesars Entertainment Corporation for the three years ending December 31, 2012 through 2014. Caesars Entertainment Corporation Consolidated Statements of Operations (Condensed and adapted) In millions, except per share date Years ended December 31, 2014 2013 2012 Revenues Casino revenue $ 5,418 $ 5.529 S 5,916 Food and beverage revenue 1,522 1,451 1,438 Rooms revenue 1,207 1,167 1,147 Other revenues 369 73 (315) Net revenues $8,516 $ 8,220 $ 8,186 Operating Expenses Direct casino expenses $ 3,253 $ 3,112 $ 3,368 Direct food and beverage experses 694 639 634 Direct rooms expenses 315 296 289 Miscellaneous expenses 4.706 6.199 $ 10.246 $ 2,026 3,761 $ 8.968 $ (452) Total operating expenses $8,052 Income/(loss) from operations $134 Requirements: Note: To answer these questions, calculate a segment margin for each of the depart- ments. For the purpose of this case only, calculate segment margin as revenues less di- rect expenses. (We are modifying the concept of segment margin slightly here, given the information that is publicly available. We are essentially assuming that the direct expenses are the variable expenses.) Using the statements of operations (income statements) given, answer the following questions. 1. Calculate the segment margin for the three departments: Casinos, Food and Bever- age, and Rooms. 2. Given the segment margins that you calculated, should Caesars discontinue any of the three departments? Why or why not? 3. What expenses are likely to be included in "Miscellaneous expenses"? Should these expenses be allocated to the three departments if Caesars is evaluating whether it should discontinue any departments? Why or why not? This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter 1. Refer to the introductory story in Chapter1 (see page 43) for additional background. (The components of the Caesars serial case can be com- pleted in any arder.) What follows are the income ntatements for Caesars Entertainment Corporation for the three years ending December 31, 2012 through 2014. Caesars Entertainment Corporation Consolidated Statements of Operations (Condensed and adapted) In millions, except per share date Years ended December 31, 2014 2013 2012 Revenues Casino revenue $ 5,418 $ 5.529 S 5,916 Food and beverage revenue 1,522 1,451 1,438 Rooms revenue 1,207 1,167 1,147 Other revenues 369 73 (315) Net revenues $8,516 $ 8,220 $ 8,186 Operating Expenses Direct casino expenses $ 3,253 $ 3,112 $ 3,368 Direct food and beverage experses 694 639 634 Direct rooms expenses 315 296 289 Miscellaneous expenses 4.706 6.199 $ 10.246 $ 2,026 3,761 $ 8.968 $ (452) Total operating expenses $8,052 Income/(loss) from operations $134 Requirements: Note: To answer these questions, calculate a segment margin for each of the depart- ments. For the purpose of this case only, calculate segment margin as revenues less di- rect expenses. (We are modifying the concept of segment margin slightly here, given the information that is publicly available. We are essentially assuming that the direct expenses are the variable expenses.) Using the statements of operations (income statements) given, answer the following questions. 1. Calculate the segment margin for the three departments: Casinos, Food and Bever- age, and Rooms. 2. Given the segment margins that you calculated, should Caesars discontinue any of the three departments? Why or why not? 3. What expenses are likely to be included in "Miscellaneous expenses"? Should these expenses be allocated to the three departments if Caesars is evaluating whether it should discontinue any departments? Why or why not?

Answer rating: 100% (QA)

1 2 As per the sagment margin statement Caesars should not discontinue any of the three dep... View the full answer