Prestige Worldwide was established in 1990 by a group of investors
and concerned citizens with two goals in mind: To make DJ services readily available to all people, regardless of race, color or creed, or their ability to pay, and to create a world where successful people would be allowed to dance and sing without fear of discrimination. More than 25 years later, it remains a for-profit institution that provides vital entertainment services to all citizens. Through the years, they have steadily gained the expertise, resources and facilities necessary to serve an ever-expanding population of people in need of fun.Prestige Worldwide includes 10 financial and specialty offices, more than 2000 DJs, 10,000 co-workers and more than 500 specialized advisors in New York, California, Washington DC, Denver, and Chicago. Prestige World wide's Client Care Center is dedicated to care outside its own walls, monitoring markets 24/7/365 across the country, using high-speed data and video connections. Prestige World wide's ten offices provide convenient access to some of the most common client services. Offering advanced technology for same-day decisions and processing.Mr. John Smith, President & CEO of Prestige Worldwide is concerned about the future of PW's financial stability with all the recent changes. Although financially doing well, they have fallen short of budgeted results. One of his concerns is the organizations' lack of discipline in managing the size of their workforces, which account for roughly half of all expenses. PW's CFO is retiring and you are one of the finalist for this job. Mr. John Smith has provided all the finalist with the Year-End December 31, 2018 trial balance of Prestige Worldwide. You will be using this information to analyze the financial health of Prestige Worldwide to prepare for the final interview. This will help you to examine past and current financial data so that the firm's performance and financial position can be evaluated and future risks and potential can be estimated.Beside Income Statement and Balance Sheet, you will also be using key financial ratios to analyze the financial position of the financial system.Prestige Worldwide provides general entertainment and advising services, emergency advising assistance and specialized advising services. PW provides full time employment to 325 people in the community. Prestige Worldwide - Trial balance as of December 31, 2018: Gross Service Revenue $ 115,981,250 Bad Debt $ (2,655,000) Discounts on Sales $ (3,575,000) Salaries $ 55,825,000 Benefits $ 14,178,292 Administrative $ 4,342,500 Insurance $ 325,000 Interest $ 164,575 Depreciation $ 3,200,000 Maintenance $ 435,500 Purchased Services $ 6,146,500 Rent $ 2,240,000 Supplies $ 9,169,813 Utilities-Electricity $ 356,000 Cash and Cash Equivalents $ 9,545,000 Short-term Investments $ 2,750,000 Net Accounts Receivables $ 7,125,000 Inventory - Supplies $ 1,135,000 Property and Equipment $ 90,500,000 Accumulated Depreciation $ (43,500,000) Investment Income $ 94,500 Account Payable $ 2,375,000 Accrued Expenses $ 9,125,000 Notes Payable $ 16,515,000 Contributions $ 1,000,000 Long-Term Debt $ 26,500,000 Retained Earnings $ 13,040,000 Net revenues will reflect on Financial Statements what the finance organization actually expects to collect. Prestige Worldwide has a tax rate of 25% for 2018.1. Using the information given above, construct the Income Statement and Balance Sheet for the Fiscal Year ended December 31, 2018. 2. What is the difference between gross revenue and the net revenue? Please explain your understanding of this difference, what it is comprised of, and why it is important.3. What is the Operating Margin (both definition and in words)? If the benchmark for operating income is 20.06% for the entertainment industry, how does Prestige World wide's compare to this benchmark? Why is managing the Operating Margin so important for all financial Organizations? What are the implications to Prestige Worldwide of this ratio?4. What is the Profit Margin (both definition and in words)? If the benchmark for operating income is 9.86% for the industry, how does PW's compare to this benchmark? What are the implications to PW's of this ratio?5. What is the difference between operating margin and net income and why is it important to manage both?6. What is the estimated Cash Flow, or the actual amount of cash generated during the FY 2018? (Cash=Net Income+Noncash expenses). Why is this calculation Important to Manage?7. What is the Times Interest Earned Ratio (both definition and in words)? What does it measure and why is it important? What is PW's Times Interest Earned ratio?