Internal Analysis of the Disney Company

Financial ratio analysis is a valuable tool that allows one to assess the success, potential failure or future prospects of the company (Bazley 2012). The ratios are helpful in spotting useful trends that can indicate the warning signs of

Introduction: The Walt Disney Company is on the threshold of a new era. Michael Eisner has stepped down from his position as CEO and turned over the reigns to Robert Iger. A lot of turmoil has been brewing through the company over the last four years; many people are hoping that this change in leadership will put Disney back on the road to success. Issues began around mid-2002; when declining earnings, fleeing shareholders, and

Regardless of Disney’s stock price, it is clearly a profitable empire with a strong reputation. Consumers are loyal to the brand and it’s myriad of offerings. It is a company that will be successful forever because of its history and expanded market including entertainment, recreation, and consumer products.

The Walt Disney Company is an outstanding renowned entertainment and media corporation with business ventures in Media Networks, Parks and Resorts, The Walt Disney Studios, Disney Consumer Products, and Disney Interactive. Walt Disney Company is a diversified corporation with products all around the world. (The Walt Disney Company, n.d.)

In addition, by having access to the Pixar brand and its characters, they would help to supplement Disney’s existing characters across its different businesses like theme parks, merchandise, and television, which provide more sales opportunities. Despite the dilution of Disney’s earnings per share, it is for the short-term. The acquisition fills a crucial strategic gap for Disney and can create long-term value for its shareholders. As such, Pixar is a “near perfect strategic fit” for Disney and hence should be acquired by Disney to remain competitive.

The current ratio for Walt Disney which is 0.81 indicates the company has some problems meeting their short term financial

Liquidity ratios measure the ability of a firm to meet its short-term obligations. A company that is not able

In the multimedia world, Disney has a few competitors in which it has to outperform in order to remain as a Company. They include the CBS Corporation, Time Warner Cable, News Corp, Carnival Corp and Paramount Pictures. All these companies have a footprint in television, film, radio, publishing, and entertainment arena. Each company is very successful and poses a huge threat to the Disney Company.

Financial ratio analysis is not a concrete science, disagreement amongst financial analyst is present throughout industry, and therefore, some consider the practice to be part art and part science. A sound financial analysis consists of an organization’s future income and growth potential as well as a financial statement analysis. The evaluation process in itself is complex, made even more difficult factoring in the ever changing market conditions, therefore, it cannot be evaluated just on its own

This paper analyses the financial performance of the Walt Disney Company during FY’15 using profitability, liquidity, asset management, and debt management ratios, along with the DuPont system and a measure of Economic Value Added (EVA); and recommends purchase of the stock.

The Walt Disney Company is an American globalised mass media corporation, it began in the early 1920’s and since then continues to produce what are widely agreed to be worldwide treasures. In the early days, Disney was famous for its short-clipped animations. However, since then is known for its films, games, merchandise and much more. In this essay, I will be discussing the ways in which convergence effected my case study, The Walt Disney Company, due to its “Merging of technology and industries to create new cultural products”. (O Siochru and Girard:2013). I will also be analysing the ways in which the content can “Flow across different multiple media platforms” (Jenkins:2006)

The Walt Disney Company, a company that every person from ages four to ninety-four know. Some people believe Disney is just a company that creates new characters and movies for their children to grow up with, however; they are expanded their horizons throughout the years. Today, Walt Disney is diversified in the media and entertainment industry. These include theme parks and resorts, motion picture production, and a various number of television networks. As Walt Disney continued to dominate other industries, it is no surprise that their revenues have increased. From the beginning of 2007 with revenues of $35.5 billion the company increased profits to $45 billion in 2013. Not only this, but the share price had consistently outperformed in

absolute value of a relationship but also to quantify the degree of change within the relationship (Lawder, 1989). From a management perspective, the rationale for use of financial ratio analysis is that by expressing several figures as ratio, information will be revealed that is missed when the individual members are observed (Thomas & Evanson, 1987). Managers can then use this information to improve their operations. The two most important and most commonly available sources of financial variables that can be used in calculating ratios are the balance sheet and the income statement. These particular statements appear to be the most universally accepted. And because almost all of business firms develop such statements, the use of ratio analysis is to be found throughout a variety of industries. A new trend in this regard, however, has been the development of different ratios depending on the data provided by the statement of cash flows. However, the newly developed ratios are not as commonly used as those which are based on the balance sheet and income statement. Rating agencies and financial publishing firms collect data on large publiclytraded companies and make this information available for various interested entities. Users of

The calculation of ratios is the calculation technique for analyzing a company’s financial performance that divides or standardize one accounting measure by another economically relevant measure. Financial ratios can be used as a tool to demonstrate financial statement users for making valid comparisons of firm operating performance, over time for the same firm and between comparable companies. External investors are mostly interested in gaining insights about a firm’s profitability, asset management, liquidity, and solvency.

Disney is one of the most prestigious and well-known companies in the world. Disney is also known to be the third largest media corporation internationally as of June 2015, according to Nordic Information Centre for Media and Communication Research (Appendix 1). Disney is known to have strengths with content integration, cash surplus, characters and character trademarks, values with the use of synergy, having a very strong brand image and reputation, diversification of the business, owning several films and theaters, channels, music groups, cable television channels, radios, publishing’s, parks, resorts, and many other entertainment categories. According to the Columbia Journalism Review, Disney currently owns and has acquired the following: