8 (Ignoring all previous problem's assumptions!) Now assume you are an analyst looking at forecasting Disney's...

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8 (Ignoring all previous problem's assumptions!) Now assume you are an analyst looking at forecasting Disney's 2020 FYE. Your forecasting strategy includes current and non-current assets and costs vary directly with sales. However, current liabilities have a grow at a rate that's half of projected sales growth and long-term liabilities do not vary with sales at all. Assuming Net Margin, D/E, and Dividend Payout Ratio remain constant, what would the discretionary financing needed be if you project sales will increase by 8%? 11,138M 5,606M 14,265M 4,352M 9 Now suppose the previous problem's assumptions hold. Disney currently has 32 million shares outstanding. You just got wind that Disney will issue 4 million new common shares at its current stock price ($85.98). Consequently, the dividend payout ratio will grow by the percentage growth of number of shares outstanding. Assume this stock issuance will not affect current assets. How will this new stock issuance change DFN (from previous problem)? 0 0 0 DFN will decrease by 47M DFN will decrease by 344M DFN will increase by 47M DFN will increase by 344M The Walt Disney Company's (DIS) income statement and balance sheet should be used for the next 5 questions: The WALT DISNEY Company CONSOLIDATED STATEMENTS OF INCOME Excluding discont. operations (in millions) CONSOLIDATED BALANCE SHEETS (in millions) 2019 2019 2019 ASSETS LIABILITIES AND EQUITY Revenues: Current assets Current Liabilities Services 60,542 Cash and cash equivalents 5,418 Accounts payable and other accrued liabilities 17,762 Products 9,028 Receivables 15,481 Current portion of borrowings 8,857 Total revenues Costs and expenses: 69,570 Inventories 1,649 Deferred revenue and other 4,722 Television costs and advances 4,597 Total Current Liabilities 31,341 Cost of services 36,450 Other current assets 979 Cost of products 5,568 Total Current Assets 28,124 Non-Current Liabilities Selling, General, Administrative 11,541 Long-Term Debt 38,129 Depreciation and amortization 4,160 Non-Current Assets Deferred income taxes 7,902 Total costs and expenses 57,719 Film and Television 22,810 Other long-term liabilities 13,760 Restructuring and impairment charges 1,183 Film Investments 3,224 Other income, net 4,357 Redeemable noncontrolling interests 8,963 EBIT 15,025 Interest expense, net 978 Parks, Attractions, Resorts, and Equipment, Net 26,174 Projects in progress Equity 4,264 Common stock 53,907 Equity in the loss of investees, net 103 Land 1,165 Retained earnings 42,494 Earnings Before Taxes 13,944 Accumulated other comprehensive loss -6,617 Income taxes 3,031 Intangible assets, net 23,215 Treasury stock -907 Net Income 10,913 Goodwill 80,293 Total Disney Shareholders' equity 88,877 Other assets 4,715 Noncontrolling interests 5,012 Dividends, Net 2,895 Total Non-Current Assets (Fixed Assets) 165,860 Total Equity 93,889 Addition to RE 8,018 Total Assets 193,984 Total Liabilities and Owners Equity 193,984 8 (Ignoring all previous problem's assumptions!) Now assume you are an analyst looking at forecasting Disney's 2020 FYE. Your forecasting strategy includes current and non-current assets and costs vary directly with sales. However, current liabilities have a grow at a rate that's half of projected sales growth and long-term liabilities do not vary with sales at all. Assuming Net Margin, D/E, and Dividend Payout Ratio remain constant, what would the discretionary financing needed be if you project sales will increase by 8%? 11,138M 5,606M 14,265M 4,352M 9 Now suppose the previous problem's assumptions hold. Disney currently has 32 million shares outstanding. You just got wind that Disney will issue 4 million new common shares at its current stock price ($85.98). Consequently, the dividend payout ratio will grow by the percentage growth of number of shares outstanding. Assume this stock issuance will not affect current assets. How will this new stock issuance change DFN (from previous problem)? 0 0 0 DFN will decrease by 47M DFN will decrease by 344M DFN will increase by 47M DFN will increase by 344M The Walt Disney Company's (DIS) income statement and balance sheet should be used for the next 5 questions: The WALT DISNEY Company CONSOLIDATED STATEMENTS OF INCOME Excluding discont. operations (in millions) CONSOLIDATED BALANCE SHEETS (in millions) 2019 2019 2019 ASSETS LIABILITIES AND EQUITY Revenues: Current assets Current Liabilities Services 60,542 Cash and cash equivalents 5,418 Accounts payable and other accrued liabilities 17,762 Products 9,028 Receivables 15,481 Current portion of borrowings 8,857 Total revenues Costs and expenses: 69,570 Inventories 1,649 Deferred revenue and other 4,722 Television costs and advances 4,597 Total Current Liabilities 31,341 Cost of services 36,450 Other current assets 979 Cost of products 5,568 Total Current Assets 28,124 Non-Current Liabilities Selling, General, Administrative 11,541 Long-Term Debt 38,129 Depreciation and amortization 4,160 Non-Current Assets Deferred income taxes 7,902 Total costs and expenses 57,719 Film and Television 22,810 Other long-term liabilities 13,760 Restructuring and impairment charges 1,183 Film Investments 3,224 Other income, net 4,357 Redeemable noncontrolling interests 8,963 EBIT 15,025 Interest expense, net 978 Parks, Attractions, Resorts, and Equipment, Net 26,174 Projects in progress Equity 4,264 Common stock 53,907 Equity in the loss of investees, net 103 Land 1,165 Retained earnings 42,494 Earnings Before Taxes 13,944 Accumulated other comprehensive loss -6,617 Income taxes 3,031 Intangible assets, net 23,215 Treasury stock -907 Net Income 10,913 Goodwill 80,293 Total Disney Shareholders' equity 88,877 Other assets 4,715 Noncontrolling interests 5,012 Dividends, Net 2,895 Total Non-Current Assets (Fixed Assets) 165,860 Total Equity 93,889 Addition to RE 8,018 Total Assets 193,984 Total Liabilities and Owners Equity 193,984