Roe Disney

In evaluating the financial performance of the Disney Company for the past 2 years, the following ratios were used: Current Ratio, Debt Ratio, Return on Equity (ROE), and Days Receivable. These ratios were used to provide a trend analysis of the Disney Company’s current financial health and the areas in which the company is struggling.

The Current Ratio is used to provide information on a company’s current assets and current liabilities and is helpful in determining the liquidity of said company. In 2010 the Disney Co. showed $12,225 (in millions) as the total current assets. The 2010 current liabilities were listed at $11,000 (in millions). The 2009 current assets and liabilities were $11,889 and $8,934 (in millions) respectively. The current ratio for 2010 is 1.11 and for 2009 was 1.33. From this data the trend is showing that the Disney Company took on more liabilities in the current year but is still a solvent company able to pay their debts.

The Debt ratio is used in financing operations and can be helpful in determining if a company is asking for a loan, whether or not the company will be able to pay it in a timely manner. If the ratio is greater than 1.0 it normally indicates that the company is insolvent. For this ratio the Total Liabilities are divided by the Total Assets. In 2010 the Disney company had $69,206 (in millions) total assets including goodwill and intangibles and the total Liabilities totaled $29,864. In 2009 the total assets were $63,117 and the total liabilities were $27,692. The Debt ratio in 2010 was 0.4315 and in 2009 was .4387. The downward trend is slight but overall the debt has remained the same over the course of two years.

The ROE or Return on Equity measures the company’s profitability by presenting a percentage of how much profit a company has generated with the money that the shareholders have invested. It is calculated by dividing the total net income for the year (before dividends are paid to common stock but after...