Common-Size Income Statement
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Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The financial data reveals several notable trends in the company's operational efficiency, profitability, and expense management over the five-year period ending December 31, 2022.
- Operating Costs and Gross Profit
- Operating costs and expenses as a percentage of revenues fluctuated modestly but increased notably in the final year, rising to -65.81%, the highest in the period analyzed. Correspondingly, gross profit margin declined from a peak of 40.71% in 2020 to 34.19% in 2022, indicating growing pressure on cost control or changes in revenue mix adversely affecting profitability.
- Selling, General, and Administrative Expenses
- Selling, general, and administrative (SG&A) expenses consistently increased as a share of revenues, moving from -15.27% in 2018 to -23.32% in 2022. This upward trend reflects rising operational expenses relative to revenues, which likely contributed to the compression of gross and operating margins.
- Depreciation, Amortization, and Other Corporate Costs
- Depreciation and amortization remained relatively stable, with a slight decline in recent years. Restructuring and other corporate matters showed volatility, peaking at -2.79% in 2019 before a low of -0.35% in 2021 and rising again in 2022 to -1.94%. These fluctuations suggest episodic restructuring or corporate activity impacting expenses.
- Net Gain on Dispositions
- The net gain on dispositions was significant in 2021 at 8.2%, contributing positively to operating income. However, it fell sharply to 0.19% in 2022, reflecting reduced gains from asset sales or divestitures in the most recent year.
- Operating Income
- Operating income displayed variability, decreasing from 19.07% in 2018 to 15.36% in 2019, then increasing to a high of 22.03% in 2021 before declining sharply to 7.77% in 2022. This sharp decline in the final year indicates diminished operating profitability, likely impacted by higher expenses and lower gains from dispositions.
- Interest and Investment Income/Expenses
- Interest expense remained relatively steady around -3.22% to -3.46%, decreasing slightly to -3.09% in 2022. Interest income was modest and declined somewhat until a slight recovery in 2022. Net gains from investments were positive until 2021 but turned slightly negative in 2022, indicating a weakening return on investments.
- Other Financial Components
- The loss on extinguishment of debt was recorded from 2020 through 2022 with marginal negative impact. Pension and postretirement benefit costs decreased gradually but experienced a minor increase in 2022. Foreign exchange losses increased slightly in the final years but remained relatively low overall. Other items and miscellaneous charges maintained a minor negative role.
- Earnings Before Taxes and Net Earnings
- Earnings before income taxes and equity in losses showed a downward trend, especially in 2022, falling to 4.2% from highs above 15% in earlier years. Income tax provisions reduced significantly in 2019 with a slight rebound afterward. Equity in loss of investee companies increased negatively in 2022, exerting additional pressure on income.
- Net Earnings and Components
- Net earnings from continuing operations dropped substantially from 15.63% in 2021 to 2.77% in 2022. Net earnings attributable to Paramount common stock mirrored this decline, falling to 3.47% in 2022 from 15.74% in 2021. Earnings from discontinued operations showed consistent but small positive contributions.
- Overall Trends
- The company's profitability, measured relative to revenues, peaked around 2020-2021 but deteriorated sharply in 2022 across most metrics, including operating income and net earnings. Increasing operating costs, higher SG&A expenses, and lower gains from asset dispositions contributed to this decline. Despite steady interest expense and minor fluctuations in other costs, the combined effect was a marked reduction in financial performance in 2022.