Final Project - Financial Analysis Report - MD

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Southern New Hampshire University *

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Jan 9, 2024

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Mariana Ducharme Southern New Hampshire University FIN 320 – Principles of Finance Lori Lothringer August 2023 FIN 320 – Principles of Finance Project Two Financial Analysis Report Financial Analysis and Financial Evaluation 1. Financial Analysis A. Financial Calculations i. Working capital Currently, as of July 2023, the company has a positive working capital of $1,940,000.00, which means that the company can repay debt and have easy liquidity. In July 2022, the company had a working capital of $718,000.00, the current working capital (2023) shows an increase of 170% from the previous year (2022). For the company, it means that the corporation has sufficient funds to pay for its operations, debts, or expansion plans, (Tuovila, 2006). ii. Current ratio The third quarter of 2023 shows that Walt Disney World Co. has a current ratio of 1.069 or 1.1. The company’s current ratio demonstrates that the company has more assets than liabilities, technically, the company could pay its liabilities 1.1 times over, (Girardin, 2022). In July 2022, the company obtained a current ratio of 1.023 or 1.0, like the current ratio for the most current quarter fiscal year. In this case, Walt Disney World Co. demonstrated to have enough liquidity to cover its short-term debts in the past two years. iii. Debt ratio 1
As indicated in the most recent quarter, Disney has a debt ratio of 0.52, while in July 2022, the company indicated a debt ratio of 0.55, which shows that the company obtained a small decrease in debt ratio and maintained stability by having more assets than debts during both quarterly periods. iv. Earnings per share Disney’s EPS significantly decreased from $0.79 (July 2022) to -$0.26 (July 2023). The company is experiencing a loss of -$0.26 for every share of outstanding stock, which at this moment means that the company is not generating profitability or positive growth from its shares. v. Price/earnings ratio On July 2023, Disney obtained a P/E ratio of -345.67, which was a decrease from 121.52 from the previous year. These ratios show that the company’s ratio is very low at this moment and perhaps not valuable for investments because a negative P/E ratio means that a business has negative earnings or is losing money, which could be only an unprofitable period, (Berger, 2023). vi. Total asset turnover ratio In July 2023, Disney obtained a total asset turnover ratio of 0.11, equal to 0.11 in July 2022. A total asset turnover ratio below one means a low efficiency, (Hayes, 2003). The company’s ratio is lower than one, but the company has large assets bases, so it is expected that assets will turn into sales/revenue slowly. vii. Financial leverage 2
In July 2023, Disney obtained a financial leverage ratio of 2.09, and in July 2022, a ratio of 2.21, these numbers are not so high, which means that the company has not taken a lot of debt to obtain financial growth. viii. Net profit margin In July 2023, Disney obtained a net profit margin of -0.0206 or -2%, and in July 2022, a net profit margin of 0.0655 or 7%. These numbers indicate a significant decrease; the current negative number, -2%, is considered a very low net profit margin, meaning that the company is not generating enough sales to be profitable at this moment. Cash flow should be analyzed. ix. Return on Assets In July 2023, Disney obtained a ROA ratio of -0.0023 or 0%, and in July 2022, a ratio of 0.0069 or 1%. In this case, the company obtained a decrease in the return of assets, however, these numbers could be very low due to the type and amount of assets that this company has such as properties/parks; however, at this moment, seems like the company is not generating profit for the money invested on assets. x. Return on Equity In July 2023, the Walt Disney Company obtained an ROE of -0.0047 or 0%, and in July 2022, an ROE of 0.0152 or 2%. A significant difference between the periods, and the ratio considered very low, this means that the company is being efficient in generating income from its equity. The higher the ROE, the better the company is obtaining profit from its equity, (Fernando, 2003). At this moment, the company is not obtaining positive profit from its equities. B. Working Capital Management Working capital is the financial metric that represents operating liquidity available for the company. Working capital represents the company’s available funds to pay for its operations, 3
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