Ethics and Compliance for Disney

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Financial Ratios and Ethics of Disney

Finance for Business

August 30, 2010

Financial Ratios and Ethics of Disney

The Walt Disney Company is known far and wide as a major source of entertainment and the embodiment of family values. Throughout the years, Walt Disney studios have supplied millions with wholesome, child oriented entertainment with iconic characters such as Mickey Mouse, Snow White, and of course Alice in Wonderland. From humble beginnings, the Disney Company grew with leaps and bounds throughout the years to include numerous theme and amusement parks, movies, and production studios and the Disney stores. While the general management of the company has changes over the years; the core values of the company
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72). One ratio used determines the liquidity of a company. Liquidity is the ease with which a company can convert its assets to cash.

The ratio used is the Current Ratio and divides the current assets by the current liabilities. The calculations for Disney are as follows:

|2008 |2009 |
|11,666 M / 11,591 M = 1.01 times |11,889 M / 8,934 M = 1.33 times |

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Acid Test (Assets-Inventories/Current Liabilities) Another ratio used to determine liquidity is the Acid Test Ratio. This ratio subtracts inventories from the current assets then divides the sum by current liabilities. The calculations for Disney are as follows:
|2008 |2009 |
|11,666 M – 1,124 M / 11,591 M = .91 times |11,889 M – 1,271 M / 8,934 M = 1.12 times |

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These calculations show that for 2009 Disney had $1.33 in current assets for every $1.00 in current liabilities. This was a 37% increase over 2008. Disney also had $1.12 in current assets minus inventories per

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