Walt Disney Company’s Yen Financing Case Essay

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Introduction: The Walt Disney Company is the largest media conglomerate in the world and is headquartered in Burbank, California, USA. It was established by Walt and Roy Disney in 1923. Since its inception, Disney has grown vastly so that operational areas now include theme parks, motion pictures, television dramas and consumer products.
In 1955, the most charming place in the world was ‘Disneyland’ was open for the public. The idea was to create a magical place for the whole family. Ever since then, Disneyland theme parks have been growing and today Walt Disney Company owns 14 theme parks in the world.

In Film Industry, Disney mainly focused on children; however the films produced by Disney under touchstone label were focused
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And the ratio of debt to total capitalization jumped from 20% to 43%.
Japanese Royalties Situation With the opening of Tokyo Disneyland in April 1983 and the inflow of yen royalty receipts, the Walt Disney want to increase the assets and decrease debt, they realized they had an opportunity to use the yen royalties from Japan to pay down some of their debt: * In 1984 the average exchange rate is 347.30 JPY/US$ * The royalties of Disneyland Tokyo of JPY 8 billion was equivalent to US $ 33,712,600 * This represents 11.58% (=33,712,600 / 291,033,000) of 1984 operating income before corporate expenses, a percentage which is more common to grow, since Disney itself will probably not grow as rapidly as its JPY royalties * In Figure 5, only 21.47% of all debts has a maturity greater than 2 years * The JPY has also depreciated to disrupt Disney’s financial plan for its large, long-term construction, expansion, production, and development. * Disney transferred Yen to USD from the 2nd quarter of 1984 through the first quarter of 1985, because the JPY receipts are a huge amount of money. * However, it has appreciated in the quarter since then.

Issues:
The

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