Finacial Analysis of Walt Disney

Financial Statement Analysis:

Balance Sheet

The Balance Sheet “is a financial snapshot, taken at a point in time, of all the assets the company owns and all the claims against those assets.” (Higgins 2007) There are a few important facts that can come from Disney’s Balance Sheet such as the book value, working capital, debt, financial leverage, growth, increasing or decreasing debt, and the worth of the company. The Book Value is equal to the number of shares out standing multiplied by the book value per share which is:

Book Value = Book Value per share * Total number of shares outstanding

Book Value = $16.125 * 23,537,000

Book Value = $379,534,125

“Working capital measures how much in liquid assets a company has available to build its business. The number can be positive or negative, depending on how much debt the company is carrying. In general, companies that have a lot of working capital will be more successful since they can expand and improve their operations. Companies with negative working capital may lack the funds necessary for growth.” (“Working Capital” 2007)

Working Capital = Current Assets – Current Liabilities

Working Capital = $9,562 - $10,210

Working Capital = ($648)

The debt that the company has can also be found on Disney’s Balance Sheet. The debt is the total liabilities.

Debt = Total Liabilities = $28,178

Financial leverage is how the company utilizes their money from debt. There are three rations to analyze from the balance sheet. First, the asset-to-equity ratio is a number that represents the capitalization of the company. A low asset-to-equity ratio, about 1 to 3, implies high capitalization, while a high ratio implies low capitalization. Disney’s financial leverage comes out to be 2.681, which is low, but it can be accounted for by the type of industry it is, capital intensive. Disney’s capital intensity is involved in the length of time movies take to create, props and computers for the movies, and theme...