MGM Resorts International: Vertical and horizontal analysis

Student Name

Institution Affiliation

Casino Revenue

I choose this account based on the result of the horizontal analysis that showed a significant change in casino revenue. This account increased by $764,609 and 13.3% from 2018 to 2019. Besides, the vertical analysis illustrates an increase from 48.9% to 50.5%, a 1.6% change. According to MGM’s annual report, this account increased mainly due to the following factors; additional casino revenue generated from Empire city in 2019, full-year operations of MGM Springfield that opened in August 2018, increase in revenue as a result of the ramp-up of operations at Park MGM (MGM Resorts International, 2020, p. 34)

Operation income

I selected this account, as the MGM Resorts International’s operating income increased by $2,470,729, a 168% increase from 2018 to 2019. Also, vertical analysis shows an increase from 12.5% to 30.5% of the total revenue. According to MGM’s annual report, the significant increase was impacted by the rise in net revenue and substantial reduction of preopening and start-up expense, decrease in amortization and corporate expense (MGM Resorts International, 2020, p. 34).

Accounts receivable

I selected this account because the results of the horizontal analysis indicated that it decreased by $44,489 from 2018 to 2019. The result of vertical also illustrated a decrease of this account from 2.2% to 1.8% from 2018 to 2019 respectively. According to MGM’s annual report, this account reduced due to strict control over the issuance of a marker and most aggressive debt collection efforts from their customers who failed to make timely payment of markers. Also, the company maintain an allowance for doubtful casino accounts at all company’s operating casino resorts (MGM Resorts International, 2020, p. 46)

Cash and cash equivalent

I decide to use this account since the results of the horizontal analysis showed that this account had significant changes during 2019, that is $802,842, and 52.6%. This account also increased from 5.1% to 6.9% of the total assets. This account increased primarily due to the proceeds (cash received) related to MGP BREIT Venture and receiving cash from operating partnership units (MGM Resorts International, 2020, p. 45)

Current portion of long-term debt

I chose this account since it indicated a significant change during 2019. Certainly, the horizontal analysis has shown that this account decreased by $43,411 and 100% between 2018and 2019. The primary reason for this change is because MGM Resorts International used net proceeds to settle the debt and other financial obligations (MGM Resorts International, 2020, p. 43)

Reference

MGM Resorts International. (2020). SEC Filings – Investor Relations. Retrieved 16 October 2020, from https://investors.mgmresorts.com/investors/financial-info/sec-filings/default.aspx

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