Disney World Industry Review

Introduction

Walt Disney is a global entertainment company. Co.'s Media Networks operates the ABC Television Network and ten owned television stations, the ESPN Radio Network, the Radio Disney Network as well as 46 owned radio stations. Co.'s Parks and Resorts segment owns and operates the Walt Disney World Resort in Florida and the Disneyland Resort in California. Co.'s Studio Entertainment segment produces and acquires live-action and animated motion pictures for global distribution. Co.'s Consumer Products segment licenses the name Walt Disney, as well as its characters and visual and literary properties, to various manufacturers, retailers, show promoters, and publishers.

Financial Highlights (2008)

Total Revenue

37,843,000,000

EBITDA

8,872,000,000

Operating Income

7,404,000,000

Net Income

4,427,000,000

Total Assets

62,497,000,000

Current Assets

11,666,000,000

Total Liabilities

30,174,000,000

Current Liabilities

11,591,000,000

Long Term Debt

11,351,000,000

Stockholders' Equity

32,323,000,000

Financial Performance

In the current situation of Disney World, ratio analysis possess a very important role in determining the past, present and future outlook of the company. Ratio analysis is the most extensively used form of financial analysis. In this section, ratio analysis is aimed at characterizing the firm in a few basic dimensions considered fundamental to assess the financial health of Disney World. We will compare the ratios of 2007 and 2008 in order to determine the financial health of Disney World

Profitability Ratios

Profitability ratios are the projection of how successfully the firm is managing its assets and debts. Actually, profitability ratios measure the ability of the firm to generate earnings or how successfully the firm has generated earnings over a period of time. Profitability ratios are the indicators of the success or failure of the firms' activities.

ROA = Net Income + Interest Expenses/Total Assets

ROA 2008 = (4,397,648+22,969) / 11,817,756

= 37.4%

ROA 2007 = (1,667,985 + 71,943) / 6,592,536

= 26.4%

The return on assets ratio shows that how effectively the assets of Disney World are working to generate profit. According to the situation of the above calculated figures, we can say that the return on assets has increased. This is a positive sign for the company as its earnings are increasing in accordance with the assets.

ROE = Net Income + Interest / Common Equity

ROE 2008 = (4,397,648+22,969) / 7,615,512

= 58%

ROE 2007 = (1,667,985 + 71,943) / 3,217,864

= 54%

Return on equity ratio is a comparison of the amount of earnings and the shareholders' equity. This ratio shows the investors that how much the company has earned in contrast to the amount of shareholder' equity. The trend in the return on equity is positive. This means that the earnings are increasing in comparison to the shareholders' equity.

Sales Margin = (Sales - Operating Expenses) / Sales

Sales Margin 2008 = (34,937,800 -9,293,962) / 34,937,800 = 73.4%

Sales Margin 2007 = (17,785,896 -5,162,044) / 17,785,896

= 70.9%

Liquidity Ratios

Liquidity ratios determine the firms' ability to pay back her debt in time. This is a major influencing factor in the performance of any firm. The basic premise of the liquidity ratios is to determine the liquidity of the firm. In this section, we will focus on the current ratio only as it is the main determinant of a firms' liquidity.

Current Ratio = current assets / current ...