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Disney Finance Report

In: Business and Management

Submitted By wsjohnson21
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Disney Financial Performance
Current Ratio
The current ration concludes the liquidity of the company. A company’s current assets mainly consist of cash, accounts receivable, and etc. Current liabilities are primarily account payable, accumulated income taxes, existing maturities of long-term debt, and other accumulated expenses payable within one year. When the current ratio is greater than the industry normal, this concludes the presence of redundant assets. Whereas, on the other hand, lower than the industry concludes that there is a lack of liquidity ("Ratios And Formulas In Customer Financial Analysis", 1999). The current ratio formula consists of:
Current Assets/ Current Liabilities = Current Ratio
(In millions) 2011 | 2012 | 13,757/ 12,088 = 1.1x | 13,709/ 12,813 = 1.0x |

Based on the current ratio for the past two years, Disney current ratio has been lower than the industry normal. This can conclude their assets lack liquidity and may have some issues meeting their short-term financial obligations.
Debt Ratio The debt ration formula assists with the comparison of a company’s total debt from its total assets. This formula is primarily used to develop a general idea on the leverage of the company. Typically, a greater percentage is stating that the company is more dependent on their creditor, while a lower percentage states the opposite; the company relies less on their creditors and has a strong equity position ("Debt Ratio Formula", n.d.). The debt ratio formula consists of:
Total Liabilities/ Total Assets = Debt Ratio 2011 | 2012 | 32,671/ 72,124 = .4529 | 32,940/ 74, 898 = .4397 |

Based on the debt ratio for the past two years, Disney debt ratio is fairly high. This is stating that the company has more debt that equity in the company. This is also stating that they have more claims on their assets to their debtors.
Return on Equity (ROE) The...

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