BMG Inc Essay -- Music Industry Essays

BMG IncThe medicine effort has experienced dramatic shocks that will ultimately transform its structure. The transformations have been sparked by smart technologies and mesh use distributing euphony as a digital good. The MP3 audio format and the wide distribution network that has become on tap(predicate) via the Internet are driving changes in the recorded music commercialise structure and, thus, are simultaneously having significant impacts on the players in the traditional recorded music value chain. Global retail sales of recorded music dropped from $39.8Bn in 1996 to $38.5Bn in 1999 while the popularity of digital music has grown. This reflects digital musics new role as a strategic necessity of the music industry. It is obvious that the digital music format is here to stay and, indeed, is alertly becoming the favored product choice of music customers. Our group will hear the internal and external factors responsible for shaping this new groceryplace and analyze BMGs roles in the move to distribution of digital music.Financial AnalysisBMG Entertainment, a subsidiary of Bertelsmann media, is a privately held company therefore we can not study its market performance. However they do release financial statements to the public allowing industry performance to be measured (See Figure 1). To measure BMGs financial wellness and lucrativeness three tests were performed. These tests were also applied to the other major players in the music industry. An excellent way to determine BMGs financial health is a quick balance, also known as the acid test ratio which was calculated and compared to it rivals. The quick ratio is calculated by taking a firms authentic assets minus inventory divided by current liabilities this allows you see how well the firm can pay back its debts in a apropos matter. BMG, with a ratio of 2.39, simply trails Sony, and along with Sony they are the only ones to have a ratio over one, meaning the other three firms have to a grea ter extent debt than cash and cash equivalents. This is good sign of financial health because BMG has more than twice the amount of liquid assets to cover its immediate debts unlike its competitors who find themselves rather short. The final two tests net get margin (net bread over sales) and return on assets (net profit before taxes over sales), measure firms profitability. displace profit margin measures how much profit is generat... ...68 DEM 8,652 1,143 1,013 JPY 210,516 JPY 176,191 $6,971 $8,881 $8,769 $9,861Inventory DEM 1,278 DEM 1,569 JPY 16,274 JPY 12,918 $2,627 $2,555 $2,258 $2,182Current Liabilities DEM 2,317 DEM 3,100 2,255 2,098 JPY 56,749 JPY 54,361 $4,709 $8,146 $9,070 $9,670Net Profit DEM 1,122 DEM 910 210 132 JPY 36,264 JPY 31,863 $946 $686 $168 $1,960Taxes DEM 520 DEM 845 97 72 JPY 9,0 38 JPY 3,929 $702 $343 $418 $1,540Sales DEM 22,985 DEM 25,991 3,309 2,374 JPY 226,575 JPY 226,656 $9,474 $12,312 $26,244 $27,333 *note Inventory level not available for EMI due to differences in British accounting practices. All figures obtained from the consolidate financial reports contained inside the parents annual report. Table 1 Financial Results for BMG BMG Inc Essay -- Music industriousness Essays BMG IncThe music industry has experienced dramatic shocks that will ultimately transform its structure. The transformations have been sparked by new technologies and Internet use distributing music as a digital good. The MP3 audio format and the wide distribution network that has become available via the Internet are driving changes in the recorded music market structure and, thus, are simultaneously having significant impacts on the players in the traditional recorded music value chain. Global retail sales of recorded music dropped from $39.8Bn in 1996 to $38.5Bn in 1999 while the popularity of digital music has grown. This reflects digital musics new role as a strategic necessity of the music industry. It is obvious that the digital music format is here to stay and, indeed, is quickly becoming the preferred product choice of music customers. Our group will examine the internal and external factors responsible for shaping this new marketplace and analyze BMGs roles in the move to distribution of digital music.Financial AnalysisBMG Entertainment, a subsidiary of Bertelsmann media, is a privately held company therefore we can not study its market performance. However they do release financial statements to the public allowing industry performance to be measured (See Figure 1). To measure BMGs fin ancial health and profitability three tests were performed. These tests were also applied to the other major players in the music industry. An excellent way to determine BMGs financial health is a quick ratio, also known as the acid test ratio which was calculated and compared to it rivals. The quick ratio is calculated by taking a firms current assets minus inventory divided by current liabilities this allows you see how well the firm can pay back its debts in a timely matter. BMG, with a ratio of 2.39, only trails Sony, and along with Sony they are the only ones to have a ratio over one, meaning the other three firms have more debt than cash and cash equivalents. This is good sign of financial health because BMG has more than twice the amount of liquid assets to cover its immediate debts unlike its competitors who find themselves quite short. The final two tests net profit margin (net profits over sales) and return on assets (net profit before taxes over sales), measure firms prof itability. Net profit margin measures how much profit is generat... ...68 DEM 8,652 1,143 1,013 JPY 210,516 JPY 176,191 $6,971 $8,881 $8,769 $9,861Inventory DEM 1,278 DEM 1,569 JPY 16,274 JPY 12,918 $2,627 $2,555 $2,258 $2,182Current Liabilities DEM 2,317 DEM 3,100 2,255 2,098 JPY 56,749 JPY 54,361 $4,709 $8,146 $9,070 $9,670Net Profit DEM 1,122 DEM 910 210 132 JPY 36,264 JPY 31,863 $946 $686 $168 $1,960Taxes DEM 520 DEM 845 97 72 JPY 9,038 JPY 3,929 $702 $343 $418 $1,540Sales DEM 22,985 DEM 25,991 3,309 2,374 JPY 226,575 JPY 226,656 $9,474 $12,312 $26,244 $27,333 *note Inventory level not available for EMI due to differences in British accounting practices. All figures obtained from the consolidated financial reports contained inside the parents annual report. Table 1 Financial Results for BMG