Walt Disney Financial Analyis

Only available on StudyMode
  • Download(s) : 177
  • Published : June 24, 2012
Open Document
Text Preview
Executive Summary
The Walt Disney Company (DIS) has a long and prestigious history in the entertainment business covering a period of greater than 75 years. The DIS objective is to be the world leader in production of entertainment using their diversified portfolio to differentiate its brands including Walt Disney Parks, ESPN, PIXAR, MARVEL, and ABC. The financial goals are to maximize cash flow, maximize earnings, and capital profits that will drive longer-term shareholder value (The Walt Disney Company, 2012). The DIS conglomeration offers brand recognition although DIS faces high sunk costs including updates of their parks. Although DIS is faced with a number of industry competitors, it remains the industry leader with a solid debt to equity ratio of 38.16 choosing internal trade off financing rather than issuing outside debt. Currently DIS can cover their liabilities with a current liquidity ratio of 1.11 demonstrating their ability to pay debts with short-term assets (Google Finance, 2012). DIS currently maintains an industry low total debt to equity of 38% reducing the overall risk associated with financial growth. DIS demonstrates weak returns with a three-year average of 17% (Table 4) while others in the industry such as Viacom shows a one-to-one ratio DIS shows a two percent increase in 2011 to 19% in Table 4. YET, DIS continues to show a modest three-year return on equity of 17.9%. The DIS bond weight is 11.42% while the stock weight is 88.58%. Using this information and a large number of calculations show DIS as a good investment making smart decisions to remain the industry leader. Investors should invest in DIS as it has a proven, steady, and stable profitability and returns. The Walt Disney Company

The Walt Disney Company (DIS) is a worldwide favorite conjuring up images of theme parks, Mickey Mouse, and the standard for entertainment. Beyond the public image, Walt Disney manages a vast number of assets (Year in Review, 2010); some very well know brands, and a famous culture known for creativity and a standard of excellence. Beyond the images is a company that is publically traded, widely diverse company (Year in Review, 2010) that must exercise effective financial decision making policies while positioning themselves for strong future financial growth. The author intends to examine Walt Disney’s financial dealings with a focus on the different aspects including the Board of Directors, financial information, and the competition. Furthermore, the author will research growth rates, dividends, risk, and the mix of debt versus equity. Finally, the author will provide an information-based recommendation on the viability of investing in Walt Disney. Monitoring Potential of the Board of Directors

Walt Disney uses several measures to ensure the proper system of checks and balances to ensure equality between shareholders, stakeholder equity, and The Board of Directors (The Board). The implementation of both corporate governance and a separate code of business ethics and conduct (Proxy Statement, 2012) for the board ensure a balance of goals, governance, and standards of conduct. The Chairman of the Board has a defined responsibility to oversee guidance, activities, and accountability of the management teams (Proxy Statement, 2012). Although the board’s indication demonstrates their intentions regarding oversight of the management including reviewing and sharing their ongoing views regarding corporate strategy. A separate stipulation describes the ongoing role of the board and the implementations of sub-committees that ensure equity and a uniform approach to the board and the management team ensuring a balance of shareholder and stakeholder interest. Board of Directors: Strengths and Weakness

Walt Disney’s Board of Directors strength lies in their structure and governance. The Board of Directors is comprised of 13 members (Proxy Statement, 2012) elected annually and limited to a...
tracking img