Incorporated In 1938, Walt Disney Has Been A Well-Known

1181 WordsApr 22, 20175 Pages
Incorporated in 1938, Walt Disney has been a well-known name in the entertainment business. According to Global Financial Data, Disney first started offering stock to the public in 1940 with a cumulative convertible preferred and then in 1946 it offered “OTC” (over the counter) common. On November 12, 1957, the NYSE added Disney to its list. So how is the financial condition of Walt Disney today? In the next few sections, I will take a closer look at the financial records of the company including the balance sheet and income statement to perform an analysis to see how strong the company is today and if they can keep that strength moving forward. The company’s capital structure, liquidity, and profitability along with other data will be…show more content…
This will help to see how the stock will move with the market in the next few years. With a beta score of 2.0 or greater, the risk increases and the stock can double or it can be reduced to very little in minutes. A beta score of 0.5 would mean that there is little risk involved. The average beta score is 1.0. The beta score for Disney is 1.32 which means that historically, the stock has been moving closely with the market. In comparison, Time Warner has a beta score of .87, showing that it is moving a little slower than average with the market. WACC WACC or Weighted average cost of capital is found from a common stock, preferred stock, bonds and different components of debt cost. Signs of increased risk in the market can be found if the WACC increases, which also increases the beta and the rate of return. The WACC is important to know because it gives insight to future funding expenses. If the number is high, it means that the company will have more expenses to fund new projects. If the number is low, funding new projects will be less expensive and easier to complete. Walt Disney’s WACC is 9.99% and its return on invested capital is 14.60% in comparison to its competitor Time Warner who has a WACC of 6.87% and a return on invested capital at 12.34%. (Walt Disney Co, n.d.) Average Bond Yield The amount of return an investor expects on a bond is the bond yield. The average bond yield is the average that is expected from the bonds. According to
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