Walt Disney Financial Analysis

Topics: The Walt Disney Company, Walt Disney, Walt Disney Parks and Resorts Pages: 11 (3966 words) Published: January 5, 2014
1.0 Introduction
The Walt Disney Company is a diversified worldwide entertainment and global mass media company in the USA. It was first discovered by the Disney Brothers called Walt and Roy. It was started as the Disney Brothers Cartoon Studio and later on to be called Walt Disney Studio. The main headquarters of Disney is located in Burbank, California, USA. This company is now of the leading animation industry in America and they are slowly broadening their horizons into live-action film production as well as in television and also travel. A cartoon name that became such a worldwide phenomenon called Mickey Mouse began in Disney as it was a well known cartoon creation of the company and it became a real pillar in company’s rise and thus later becoming the company’s mascot and the main symbol. In terms of revenue, The Walt Disney Company is one of the biggest entertainment corporations operating in five different business segments such as, Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive. Under the media network segment, the company has assets that include the ABC television network and ten broadcast stations. On top of that, Walt Disney’s range of cable networks comprises of ABC Family, Disney Channel, Toon Disney, and even ESPN (80% ownership).The Walt Disney Studios produces films through lines such as Walt Disney Pictures, Touchstone, and Pixar. The Walt Disney has also become a top comic book publisher and film producer through the acquisition of Marvel Entertainment. The company themes parks comprises of Walt Disney World Resort in Florida, Disneyland Park, the Disneyland Hotel and the Disneyland Pacific Hotel in California.

2.0 Financial Analysis
Cost is one of the major problems for the Walt Disney Company according to their financial analysis and their main cost problem is their media entertainment. It is not a very good thing for a company like Walt Disney, who is a capital intensive business to have a small drop in revenue and sales. The Net Profit of Walt Disney shows how steady the company is and their percentage has increased from 2010 to 2012. This shows that Walt Disney is able to manage their expenses much better compared to Time Warner. Unfortunately, Disney’s Gross Profit was below par. Although there were constant increase from the year 2012 to 2012, but still the percentage was much lower than their competitor which is Time Warner. This could be caused by the difficulty in managing their cash generated from their revenue to cover their expenditure and other operations for example for the movie The Lone Ranger where big money was spend to produce and direct the movie but the movie fared badly in the box office and was a failure. Based on my research, the Return on Equity (ROE) shows that there was an improvement from the year 2009 up to 2012. The Chairman and CEO of Walt Disney, Robert Iger is taking constructive and confidence steps investments and this is a very good thing. Furthermore, the Return on Capital Employed (ROCE) also shows a good improvement from the year 2009 to 2012. This indicates that Walt Disney is able generate revenue through their efficiency in capital management. Overall, the profitability has shown that Walt Disney is stable and doing well but there is still ample of improvement can be done in order to produce a better profitability analysis in the future. Disney’s current ratios show there is ups and downs and the reading is not flexible. But still it shows payables are superior to the cash value owned by the company. It is said that if there is an increase in current liability, it shows that the company is a in an excellent position. As for the company’s Acid-test Ratio, there is a constant reading from the year 2010 to 2012 and nothing momentous about. There was an increase in Disney’s Earnings per Share from 2009 to 2012 and this indicates that the market capitalisation of the company is...
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