Deciphering Financial Statements - the Walt Disney Co.

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CASE #6-20
DECIPHERING FINANCIAL STATEMENTS
(THE WALT DISNEY COMPANY)

In this case they show you that it is important to disclose information in a company’s financial statments that assist in the explanation of specific changes in accounting methods, stock prices, etc. The financial statements are one of a large number of vehicles used by the managers of a company to communicate information about the company to the public. Financial reporting is a key part of a company’s general public relations effort.

The Walt Disney Company tells us in this case that they had a significant change in their Earnings per Share (EPS) as of December 29, 2007 the diluted EPS for the quarter was $0.63 and in the prior-year quarter they were $0.79. They also share that the prior-year quarter EPS included a major gain on the sales of Disney’s interests in both E! Entertainment and Us Weekly. Based on this information it is clear that The Walt Disney Company was forthcoming in disclosing these changes and their subsequent causes.

It is vital that we recognize the importance in that Financial Relations involve communication not only with a company’s stockholders, but also with the wider community of financial analysts and potential investors. An effective investor relations plan can increase the value of a company’s stock and make it easier to raise additional capital. In some cases special meetings with financial analysts have become necessary to overcome adverse publicity, negative perceptions about a company or investor indifference. These meetings can take the form of full-day briefings, formal presentations or luncheon meetings. A tour of a company’s facilities is one way to help generate interest among the financial community. Mailings and ongoing communications can help a company achieve visibility among potential investors and financial analysts.

Annual reports and stockholder meetings are the two most important public relations tools for maintaining good...
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