Disney Financial Statements and Financial Ratios Analysis

Brief Summary: Walt Disney INC. (DIS)

The Walt Disney Company's headquarters is located in Burbank, California.  The company competes in the communication services sector—specifically, the entertainment industry.  At present, the organization employs approximately 200,000 individuals.  Walt Disney generates revenues from multiple sources.  Important revenue-generating sources for the company would include theme park admissions, movie sales, theme products sales, and monthly subscription fees from digital streaming services.  Based on my research, Disney's main revenue generator would be there their media business segment.

Walt Disney Financial Report Sources

“Disney 2020 Company Report: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA., and owner of Quality Business Plan.  In this report, I used Disney's 2018 10k, 2017 10k annual report, 2016 10k annual report, 2020 10k annual report, and 2019 10k annual report as the basis for information gathering. 

Section 1: Disney Income Statement Analyzed

In this section, I walk through a broad definition of what an income statement is and why it is important.  From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail.  After each line item is defined and discussed, I finally offer a summary analysis of Disney's important income statement line item trends from 2016 to 2020, in most cases.

Disney Inc. Revenue Growth.

The Walt Disney Company ended 2016 with revenues of approximately $55.6 billion.  In the next year, the company's revenues would fall slightly to $55.1 billion in 2017.  Fortunately, in the next two years, the organization's revenues would climb substantially, ending 2019 at $69.5 billion.  However, in 2020, the company's revenues would fall to $65.3 billion.  On average, the organization's average growth rate for the last five years was approximately 4.5% for revenues.

The company's substantial revenue growth from 2016 to 2020 shows that the firm is able to continuously generate revenues based on its product and service offerings.  However, due to the fluctuation in revenue growth and contraction, it seems like the company's revenue streams are a bit insecure.  Again, Covid 19 has wreaked havoc on the firm's Park revenue-generating opportunities.  This shows that the company may need to diversify its revenue channels more to ensure continuous revenue growth for investors.

Disney 2022 Summary Income Statement
Column1	2022	2021	2020	2019	2018
Revenues	82,722	67,418	65,388	69,607	59,434
COGS	54,401	45,131	43,880	42,018	32,726
Gross Profit	28,321	22,287	21,508	27,552	26,708
SG&A	16,388	13,517	12,369	11,549	8,860
Depreciation	5,163	5,111	5,345	4,167	3,011
R & D	-	-	-	-	-
Other		-	-	-	-
Total Operating Expenses	75,952	63,759	61,594	57,734	44,597
EBIT	6,770	3,659	3,794	11,873	14,837
Other Income			-	-	601
Interest Expense	1,397	1,406	1,491	978	574
EBT	5,373	2,561	(1,743)	13,923	14,729
Taxes	1,732	25	699	3,026	1,663
Net Income	3,505	2,507	(2,474)	11,584	13,066

Section 2: Disney Balance Sheet Analyzed

For Disney's balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define their balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2015 to 2020.  Next, I then offer a summary analysis of their important balance sheet line items.

Cash

In 2016, Disney had a cash position of $4.6 billion.  In the next two years, the organization's cash position would fall to $4.1 billion in 2018.  Fortunately, the organization's cash position would grow substantially, ending 2020 at $17.9 billion.

The substantial cash position in 2020 may be attributed to the organization taking on significant debt due to the need for cash when combating the Covid 19 virus ramifications.  Once the virus impacts subside, investors should expect Disney to reduce their cash position back to a more moderate amount, possibly between four to $5 billion.  By keeping a low cash position, it does seem like the organization does a pretty good job of managing its liquid assets.  Further, the substantial growth in cash for the last year also indicates that the company has the ability to raise funds when needed.

Disney 2022 Summary Balance Sheet
Column1	2022	2021	2020	2019	2018
Cash	11,615	15,959	17,914	5,418	4,150
Short Term Investment				-	-
Account Receivable	12,652	13,367	12,708	15,418	9,334
Inventory	1,742	1,331	1,583	1,649	1,392
Other	-	-	-	-	-
Current Assets	29,098	33,657	35,251	28,124	16,825
Net PPE	27,642	26,972	26,594	26,174	24,474
Goodwill	77,897	78,071	77,689	80,293	31,269
Other	-	-	-	-	-
Total Assets	203,631	203,609	201,549	193,984	98,598
Accounts Payable	20,213	20,894	16,801	17,942	9,479
Accrued Expense	-	-	-	-	-
Accrued Taxes	-	-	-	-	-
Notes Payable	-	-	-	-	-
LT Debt - Current	3,070	5,866	5,711	8,857	3,790
Other	-	-	-	-	-
Total Current Liabilities	29,073	31,077	26,628	31,521	17,860
LT Debt	45,299	48,540	52,917	31,521	17,084
Other	-	-	-	-	-
Total Liabilities	104,752	110,598	113,286	100,095	45,766
Common Stock	56,398	55,471	54,497	53,907	36,779
Treasury	907	907	907	907	67,588
Retained Earnings	43,636	40,429	38,315	42,494	82,679
Other	-	-		-	-
Total Equity	98,879	93,011	88,263	93,889	52,832
Total Equity & Liability	203,631	203,609	201,549	193,984	98,598

 

Section 3: Disney Financial Ratios Analyzed

For this section, I have chosen several different financial ratios to review for Disney from 2016 to 2020.  In reviewing each of their financial ratios, I first start with defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of their important Financial ratios. 

Disney Current Ratio.

The Walt Disney Company's current ratio for 2016 was 1.01.  The next year, it slightly declined to .81 in 2017.  However, in the next three years, the current ratio for the company would substantially increase, ending 2020 at 1.3.

Disney Total Asset Turnover.

Disney's total asset turnover ended 2016 at .6.  In the next two years, Disney would maintain this total asset turnover level.  However, in 2019 and 2020, the organization's total asset turnover would fall substantially, ending 2020 at .32. 

Disney Return on Assets.

In 2016, Disney's return on assets ended at approximately 10.6%.  In the next two years, the organization's return on assets would grow moderately, ending 2018 at 13.2%.  Unfortunately, in the next two years, the organization's return on assets would fall substantially, ending 2020 at -1.2%.

Disney Debt ratio.

Disney's debt ratio ended in 2016 at 17.9%.  In 2017, the organization's debt ratio would increase moderately to 19.9%.  In the next two years, the organization's debt ratio would continue to fall, ending 2019 at 16.2%.  However, in 2020, the organization's debt ratio substantially increased, ending the year at 26.2%.  The substantial increase in the debt ratio for 2020 may have been due to Disney's need for short-term liquidity.  From this need, the organization took on substantial debt.  If this is the case, then investors should anticipate a reduction in overall debt over the next several years, which will inherently lower the risk for investment in the company.