Title: Financial Analysis in Film: Forrest Gump 

1. Was Forrest Gump an ‘accounting’ hit in terms of net income, as computed by Paramount?

2. Using the information available about the costs of making the film, did Forrest Gump have a positive contribution margin? Assume that all costs not specifically identified as variable are fixed.

3. If Hanks and Zemeckis had demanded their original fees up front instead of taking a percentage of gross box office receipts, would Forrest Gump have made money in 1994?

4. Based on your calculations above, how much did these two individuals receive from their share of the film’s net profits? How much in gross box office receipts will the studio have to receive from theaters before Groom and Roth receive any money under their net profit participation contract?

5. Based on what you now know about contracts in the movie industry, which type of contract would a studio prefer actors, directors, and others associated with a film to have? Why? Which type of contract would the actors, directors and others prefer to have? Why?

 Word count: 624 (2.08 pages)

Key and only source:

Zemeckis, R. (Director). (1994). Forrest gump [Motion picture]. United States: Paramount Pictures.