Disney Financial Statements and Financial Ratios Analysis

Brief Summary: Walt Disney INC. (DIS)

Walt Disney Inc., headquartered in Burbank, California, operates in the entertainment industry within the communication services sector. With approximately 200,000 employees, Walt Disney is a global leader in the entertainment and media space. The company's iconic brand and diverse portfolio of businesses contribute to its success.

Walt Disney generates revenues from multiple sources, including theme park admissions, movie sales, merchandise sales related to their themed products, and monthly subscription fees from digital streaming services such as Disney+. These revenue streams highlight the company's ability to capitalize on various aspects of the entertainment industry and engage consumers across different platforms.

Among its various business segments, the media segment plays a significant role in Walt Disney's revenue generation. This segment encompasses the company's cable networks, broadcast television, and streaming services. With popular franchises, iconic characters, and a vast library of content, Walt Disney's media business has a broad global reach and continues to resonate with audiences of all ages. Overall, Walt Disney Inc. remains dominant in the entertainment industry, leveraging its brand strength and diversified revenue streams to drive financial performance and captivate audiences worldwide.

Walt Disney Financial Report Sources

The financial report titled "Disney 2020 Company Report: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years" was authored by Paul Borosky, MBA., the owner of Quality Business Plan. The report incorporates information from Disney's 2016, 2017, 2018, 2019, and 2020 10k annual reports. These reports serve as the primary sources of information for the analysis and discussion conducted in the financial report. By examining and analyzing the financial statements and financial ratios presented in these annual reports, the report provides a comprehensive and detailed understanding of Disney's financial performance over a period of five years. The utilization of these reliable and authoritative sources ensures the accuracy and credibility of the financial analysis presented in the report.

Section 1: Disney Income Statement Analyzed

In this section, I comprehensively explain an income statement and emphasize its significance in financial analysis. I delve into the detailed definition and discussion of various income statement line items, including revenues, gross profits, etc. Each line item is carefully examined and analyzed. I summarize Disney's crucial income statement line item trends from 2016 to 2020, highlighting the key insights and patterns observed during this period. By exploring these trends, readers can better understand Disney's financial performance and identify significant factors that have influenced its revenue generation, profitability, and overall financial health over the five-year period.

Importance of Disney's Income Statement for Financial Analysis

The income statement of The Walt Disney Company, or Disney, holds significant importance in financial analysis. It provides a comprehensive overview of the company's financial performance, specifically its revenues, expenses, and profitability, over a specific period.

Analyzing Disney's income statement allows investors and analysts to assess the company's ability to generate revenue, manage expenses, and achieve profitability. By examining the revenue growth trends, one can identify the success of Disney's various business segments, such as media networks, parks and resorts, and studio entertainment. Comparing the operating expenses to revenues provides insights into the company's cost structure and efficiency. Additionally, the analysis of net income and earnings per share helps evaluate Disney's profitability and ability to generate shareholder returns.

Moreover, the income statement allows for trend analysis, enabling stakeholders to understand the company's financial performance over time. Analysts can identify patterns, growth rates, and potential risks or challenges the company faces by comparing income statement figures across multiple periods. A thorough analysis of Disney's income statement is crucial for investors and analysts to make informed decisions and understand the company's financial health and performance.

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, the organization's revenues would climb substantially in the next two years, ending 2019 at $69.5 billion.  However, in 2020, the company's revenues would fall to $65.3 billion.  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 it can continuously generate revenues based on its product and service offerings.  However, due to the fluctuation in revenue growth and contraction, the company's revenue streams seem 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

Analyzing Disney's balance sheet, I thoroughly examined each significant line item. By providing clear definitions of balance sheet elements such as cash, property, plant and equipment, and liabilities, I aim to enhance understanding. Furthermore, the analysis covers the period from 2015 to 2020, offering insights into the trends and changes in Disney's key balance sheet items. This assessment allows for a summary analysis of the company's critical financial positions, providing valuable information about its liquidity, asset management, and debt obligations. By scrutinizing the balance sheet line items, stakeholders gain a comprehensive view of Disney's financial health. They can make informed decisions based on the company's stability, asset structure, and financial performance over the specified period.

Importance of Disney's Balance Sheet for Financial Analysis

The balance sheet is a fundamental financial statement that provides crucial insights into a company's financial position. In the case of Disney, its balance sheet is of significant importance for financial analysis. Stakeholders can evaluate the company's liquidity, asset composition, and financial stability by examining key line items such as cash, property, plant and equipment, and liabilities.

The balance sheet allows for assessing Disney's financial health and the ability to meet its short-term and long-term obligations. It provides information on the company's cash reserves, which indicate its ability to cover immediate expenses and invest in growth opportunities. Additionally, the balance sheet reveals the value of Disney's tangible assets, such as theme parks, production facilities, and intellectual property rights. Analyzing Disney's liabilities, including debt and other obligations, helps determine the company's leverage and financial risk. This information assists investors, creditors, and analysts assess Disney's ability to manage its financial obligations effectively.

Moreover, comparing balance sheets over multiple periods allows for trend analysis, identifying changes in financial positions, asset growth, and debt management. The balance sheet is crucial for understanding Disney's financial standing, making informed investment decisions, and evaluating the company's overall financial performance.

Cash

In 2016, Disney had a cash position of $4.6 billion.  The organization's cash would fall to $4.1 billion in 2018 in the next two years.  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 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

In this section, we delve into the analysis of various financial ratios for Disney from 2016 to 2020. Each financial ratio is defined, and its specific calculation formula is provided. We then offer a concise analysis of Disney's significant financial ratios. These ratios include liquidity ratios, profitability ratios, solvency ratios, and efficiency ratios, among others. By examining these financial ratios, stakeholders can gain valuable insights into Disney's financial performance and efficiency in utilizing its resources. They provide a snapshot of the company's profitability, ability to meet its financial obligations and effectiveness in managing its assets and liabilities.

Analyzing financial ratios helps benchmark Disney's performance against industry standards, identifying areas of strength and areas that require improvement. These ratios also aid investors, creditors, and analysts in making informed decisions about the company's financial health and prospects. Through a comprehensive evaluation of Disney's financial ratios, this section facilitates a deeper understanding of the company's financial position and performance over the years.

Importance of Disney's Financial Ratios for Financial Analysis

Disney's financial ratios play a crucial role in financial analysis, providing valuable insights into the company's performance, profitability, and overall financial health. These ratios help analysts, investors, and stakeholders make informed decisions and assess Disney's ability to generate profits, manage risks, and meet its financial obligations. Key financial ratios include liquidity ratios (such as current and quick ratios) that assess Disney's short-term solvency and ability to cover immediate obligations. Profitability ratios (such as return on assets and equity) measure the company's ability to generate profits from its assets and shareholders' investments.

Solvency ratios (such as debt-to-equity and interest coverage ratios) evaluate Disney's long-term financial stability and capacity to repay debts. Efficiency ratios (such as asset and inventory turnover) assess the company's operational efficiency and the utilization of its resources. By analyzing these ratios over time, trends and patterns can be identified, helping to evaluate Disney's financial performance and track its progress. Comparisons can also be made with industry benchmarks and competitors, providing a broader context for the company's financial standing. Overall, the analysis of Disney's financial ratios aids in understanding the company's financial strengths, weaknesses, and potential risks, enabling better decision-making and financial planning.

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.