BMG Inc Essay -- Music Industry Essays

BMG IncThe medicinal drug assiduity has experienced spectacular shocks that give ultimately read its structure. The trans coifions have been sparked by new technologies and meshing use distributing symphony as a digital good. The MP3 audio format and the wide distribution meshwork that has become available via the Internet be driving changes in the record medicinal drug market structure and, thus, be simultaneously having signifi pottyt impacts on the players in the traditional recorded music value chain. Global sell 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 readily becoming the preferred harvest-home choice of music customers. Our group will examine the internal and out-of-door factors responsible for shaping this new market and a nalyze BMGs roles in the move to distribution of digital music. monetary AnalysisBMG Entertainment, a subordinate of Bertelsmann media, is a privately held company therefore we can not adopt its market performance. However they do divulge monetary statements to the public allowing industry performance to be measured (See experience 1). To measure BMGs monetary health and make headwayability trine tests were performed. These tests were in like manner applied to the other major players in the music industry. An excellent modality to determine BMGs financial health is a degraded symmetry, in like manner known as the stinging test proportionality which was calculated and compared to it rivals. The quick ratio is calculated by taking a firms current assets minus enumeration divided by current liabilities this allows you memorize how well the firm can pay back its debts in a timely matter. BMG, with a ratio of 2.39, that trails Sony, and along with Sony they are the o nly ones to have a ratio everyplace one, meaning the other three firms have more debt than interchange and cash equivalents. This is good sign of financial health because BMG has more than twice the amount of liquid assets to cover its prompt debts unlike its competitors who find themselves rather short. The final two tests net pull ahead margin (net profits over sales) and return on assets (net profit forwards taxes over sales), measure firms profitability. pelf 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 $9,670 dismiss 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 $1,540gross revenue 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 take not available for EMI due to differences in British accounting practices. all in all figures obtained from the consolidated financial reports contained inside the parents yearly report. Table 1 monetary Results for BMG BMG Inc Essay -- Music Industry 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 statem ents to the public allowing industry performance to be measured (See Figure 1). To measure BMGs financial 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 (ne t profits over sales) and return on assets (net profit before taxes over sales), measure firms profitability. 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