Disney vs Time Warner

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From an investors view we have seen a glimpse into what Disney is like from a financial standpoint and have a better understanding of how Disney allocates its resources and where its strengths and weaknesses are. We will now see how its financial position compares to a competitor in the industry, Time Warner. Disney’s net income was $4.427 billion in 2008 compared to Time Warner’s net loss of $14.648 billion (T, 62). We see the greatest disparity in net income between the two companies between 2008 and 2009 as the net income for Disney decreased by 25.3% to $3.307 billion in 2009, while Time Warner’s net income increased by 582% to $2.468 billion (T, 62). If we were to solely examine the percentage increase in net income for each company, Time Warner would clearly be the winner. However, the percentage growth over the two years is deceiving unless you recognize the enormous loss that Time Warner had in 2008. Now that we have looked at the difference between the companies on their net income we will look at what liabilities and how liquid the two companies are. Disney’s current ratio was 1.01 at 12/31/08 with current assets and current liabilities totaling $11.666 billion and $11.591 billion respectively, while Time Warner’s current ratio was 1.18 at 12/31/08 with current assets totaling $16.622 billion and current liabilities totaling $14.139 billion (D, 64; T, 61). The following year, Disney’s current ratio increased by 31.7% to 1.33 with current assets totaling $11.899 billion and current liabilities totaling $8.934 billion, while Time Warner’s current ratio increased by 25.4% to 1.48 with $13.007 billion in current assets and $8.765 billion in current liabilities (D, 64; T, 61). Although Disney had a larger increase in its current ratio, Time Warner shows to be much more liquid as its current ratio was still larger at 12/31/09. Another factor to consider is the trend in borrowings for each company. Disney had relatively stable borrowing activities of $1.706...
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