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Summary Business Valuation Report of
Walt Disney.
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Financial Analysis
Financial Analysis Overview
A comprehensive financial statement analysis of Walt Disney Company has been conducted. The
balance sheet, cash flow statements, as well as the income statement of the company, have been
examined in order to get an insight into its financial health and viability. Some of the key elements
in each of the financial statements have been identified to capture the movement during the specific
time period. Performing financial analysis is a highly vital activity in the business context since it
can help in ascertaining, forecasting and evaluating the optimum economic conditions and
organizational performance in the future (Romadlon, 2020).
Balance Sheet
The balance sheet of Walt Disney has been analyzed by focusing on several key elements such as
the current assets, current liabilities, shareholder equity, etc. The liquidity ratio of the business is
one of the key metrics that has been examined to ascertain whether it can fulfill its short-term
financial obligations. Both current, as well as quick ratios have been computed. It has been observed
that there is a gradual decline in its liquidity ratio. For instance, in the year 2013, its current ratio
was 2.85. However, in the year 2017, it declined to 0.75 %. Similarly, the quick ratio of Walt
Disney in 2013 was 2.39, but on 2017 it declined to 0.64. A higher liquidity ratio is considered to be
better for a company. In the case of Walt Disney, it can be observed that its financial health has
declined as compared to the past. The continuous decline of the liquidity ratio is a matter of concern
for the business since it affects its ability to take care of its short-term financial obligations.
The debt-to-equity (D/E) ratio has also been examined in order to examine its financial leverage.
This ratio has helped to identify the extent to which the shareholder’s equity of the concern can aid
in fulfilling the final obligations towards the creditors in case the business falters. The D/E ratio of
the firm in 2013 was 0.52. However, in 2017, the ratio is 1.25. During the years, there has been a
consistent increase in the D/E ratio indicating that with the passage of time the company has been
increasing its reliance on debt or borrowed money. Thus, there is a higher risk of bankruptcy in case
any contingency arises.
Assets
The horizontal analysis of the balance sheet of the company has shed light on a number of key
elements in the Asset category. For instance, during the period, there has been a significant
increase in the value of the ‘property, plant and equipment’ asset of the firm. While in 2013, the
value of the specific asset was USD 18,733, in 2017, its value increased to USD
3
25,006. The
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change in the value of ‘cash and cash equivalents’ is not that perceptible during the period since
in 2013, it stood at USD 3931, and in 2017, it stood at USD 4017. The total assets of the
company in 2013 was USD 82,385, but it has increased to USD 1,20,483. There has been a
consistent rise in the asset value of Walt Disney (Disney cash flow statement 2009-2022: DIS.
Macrotrends, 2021).
Liabilities
There has been a significant rise in the accounts payable component of the firm. While in 2013,
the accounts payable was USD 4561, it increased to 19,595 in 2017. This implies that the firm
has these financial obligations that it needs to fulfill in the short run. During the period, there has
been a significant surge in Walt Disney’s long-term liability since, in 2013, it was USD 12,776,
whereas in 2017, it stands at USD 25,562. The firm must strategically manage its financial
obligations so that its rising liability will not affect its business operations.
Stockholder’s Equity
The stockholder’s equity refers to the assets that remain in the business after the fulfillment of all
the liabilities. The total stakeholder equity of Walt Disney in 2013 was USD 82,385. But in
2017, it stands at 1,20,483, which indicates that there has been an increase by almost 46.2 %.
With the passage of time, the amount of funds that owners have been investing has been
increasing.
Some of the major competitors of Walt Disney include Warner, Sony Inc., etc. The emphasis is
on Sony since it has been showcasing exceptional performance in recent times (Disney cash flow
statement 2009-2022: DIS. Macrotrends, 2021).
the ‘Return on Total Assets’ of Walt Disney stands at merely 0.1 %, Sony’s position seems to be
better at around 2.61 % (as of January 04, 2018) there is an opportunity for Walt Disney to
increase its ‘Return on Total Assets’ by expanding its market presence in prosing geographical
regions like China.
Income Statements
The income statement of Walt Disney has been investigated to evaluate its profitability. It has
been observed that in 2013, its gross profit was USD 20,007 whereas in the year 2017, it has
increased to USD 24,831. There has been a considerable increase in its profitability However,
while comparing the profit position with the previous year, a slight decline can be observed
since, in 2016, the gross profit was USD 25,639. The return on equity (ROE) is one of the main
profitability ratios that has been computed to analyze its performance in terms of profits. In
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2013
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its ROE was 0.1 %, and in 2017, it is 0.2 %. The change is negligible. However, it
can be inferred that the company is in a slightly better position to generate profits as compared
to the past.
The cash flow of Walt Disney from operating activities in 2017 is USD 12,343, whereas in 2013
was USD 13,136. When comparing the figure with the previous year's figure, there is a decline in
the cash flow. However, when it is considered with several years, the cash flow seems to be
consistent and stable. Throughout the period, the cash flow from investing activities is negative.
In 2017 it stood at USD - 4111 and in 2016 it was USD -5758. Even though there has been a
slight improvement in this regard, it implies the business has incurred substantial cash due to its
involvement in investment activities. The cash flow from financial activities in 2017 was USD -
8959 while in the previous year it stood at USD – 7220. Based on projections, it is assumed that
the net cash flow of Walt Disney will increase over the years. The main assumption that are
made includes a discount rate of 13.1 %.
As the net income of the firm is growing consistently, it has a decent dividend paying capacity
indicating that it is on the right track to pay out dividends this year. The consistent increase could
lead to an increase in its dividend payout ratio.
Normalization Adjustments
No major normalization adjustments have been made while analyzing the balance sheet of Walt
Disney. So, the information is not ample to ascertain whether the final valuation is at a premium
or a discount. While examining the income statement of the firm, since limited information is
available, it cannot be ascertained whether there are any non-recurring or extraordinary items
that need to be removed or not. Thus no items have been eliminated while examining the
financial statements of the organization and capturing its financial health.
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Appendix:
Company WALT DISNEY
Balance Sheets (in millions)
December 31, 2014 through
2018
2013
2014
2015
2016
2017
C -size
20132014
2015
2016
2017
Assets
Current Assets
Cash and cash equivalents
$ 3,931
$ 3,421
$ 4,269
$ 4,610
$ 4,017
4.8
3.5
4.2
4.2
3.3 %
Accounts receivable, net
6,967
7,822
8,019
9,065
8,633
8.5
8.0
7.8
8.3
7.2
Inventory
1,487
1,574
1,571
1,390
1,373
1.8
1.6
1.5
1.3
1.1
Other current assets
605
794
962
693
588
0.7
0.8
0.9
0.6
0.5
Total current assets
12,990
13,611
14,821
15,758
14,611
15.8
13.9
14.4
14.4
12.1
Property, plant & equipment, net
18,733
18,541
17,901
23,421
25,006
22.7
18.9
17.5
21.5
20.8
Other assets
Intangibles
45,387
60,780
64,419
63,200
75,274
55.1
62.1
63.0
58.0
62.5
Other assets
5,275
5,000
5,064
6,620
5,592
6.4
5.1
5.0
6.1
4.6
Total other assets
50,662
65,780
69,483
69,820
80,866
61.5
67.2
68.0
64.1
67.1
Total Assets
$ b b 82,385
$ b b
97,932
$ 1,02,205
$ 1,08,999
$ 1,20,483
100.0
100.0
99.9
100.0
100.0 %
Liabilities and Stockholders' Equity
Current
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Liabilities
Accounts payable
Accrued expenses & other current liabilities
Current portion of debt and leases
Total current liabilities
Long-Term Liabilities
Long-term debt and lease
obligations Other long-term
liabilities
Total long-term liabilities
Total Liabilities
Stockholders' Equity
Common stock, less
treasury Additional paid in
capital Retained earnings
Other comprehensive income (loss)
Total
Stockholders'
Equity
$ 4,561
$ b b 13,292
$ 16,334
$ 16,842
$ 19,595
5.5
13.6
16.0
15.5
16.3 %
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,561
13,292
16,334
16,842
19,595
5.5
13.6
16.0
15.5
16.3
12,776
12,631
12,773
16,483
19,119
15.5
12.9
12.5
15.1
15.9
-
5,942
6,369
7,706
6,443
-
6.1
6.2
7.1
5.3
12,776
18,573
19,142
24,189
25,562
15.5
19.0
18.7
22.2
21.2
17,337
31,865
35,476
41,031
45,157
21.0
32.5
34.7
37.6
37.5
33,440
34,301
35,122
35,859
36,248
40.6
35.0
34.4
32.9
30.1
-
-
-
-
-
-
-
-
-
32,795
33,734
34,028
36,088
42,606
39.8
34.4
33.3
33.1
35.4
-
-
-1,187
-1,968
2,421
-3,979
3,528
(1.4)
(2.0)
(2.4)
(3.7)
(2.9)
65,048
66,067
66,729
67,968
75,326
79.0
67.4
65.3
62.3
62.6
$ b b
82,385
$ b b
97,932
$ 1,02,205
$ 1,08,999
$ 1,20,483
100.0
99.9
100.0
99.9
100.1 %
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2018
C -size
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
$ $
$ $
$ 100.0
Sales
45,041 48,813
52,465 55,632
55,137 100.0 % b b 100.0 % b b 100.0 % b b 100.0 % b b %
Cost of Sales
25,034 26,420
28,364 29,993
30,306 55.6 54.1 54.1 53.9 55.0
Gross Profit
20,007 22,393
24,101 25,639
24,831 44.4 45.9 45.9 46.1 45.0
General, administrative and
non-operating expenses
10,771 10,993
10,930 11,437
11,056 23.9 22.5 20.8 20.6 20.1
Operating Income
9,236 11,400
13,171 14,202
13,775 20.5 23.4 25.1 25.5 24.9
Other Income (Expense)
Interest (expense)
384 846
697 666
13 0.9 1.7 1.3 1.2 -
Gain (loss) on sale of
assets
- -
- -
- - - - - -
Other
- -
- -
- - - - - -
384 846
697 666
13 0.9 1.7 1.3 1.2 -
Normalization adjustments
Non-recurring items
- -
- -
- - - - - -
Legal settlements
- -
- -
- - - - - -
Other
- -
- -
- - - - - -
- -
- -
- - - - - -
$ $
$ $
$ 24.9
Net income, before tax
9,620 12,246
13,868 14,868
13,788 21.4 % b b 25.1 % b b 26.4 % b b 26.7 % b b %
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Romadlon, F. (2020). Mendefinisikan ulang pola pembelajaran daring: antara sharing knowledge dan transfer etika. COVID-19
Dalam Ragam Tinjauan Perspektif.
