Locate the 2007 financial statements for The Walt Disney Company on the Internet.
1. Did Disney have any below-the-line items in 2007? Explain.
2. Disney’s net income increased from $3,374 million in 2006 to $4,687 million in 2007. Identify the major reasons for the increase.
3. Imagine that you are a financial analyst asked to generate a forecast of Disney’s net income for 2008. You know that generally the best place to start in forecasting next year’s net income is this year’s net income. Given this starting point, look at the items in Disney’s 2007 income statement and make a forecast of 2008 net income.
4. What was Disney’s comprehensive income for 2007?
5. Of Disney’s four major segments—media networks, parks and resorts, studio entertainment, and consumer products—which generated the most revenue in 2007? The most operating income? Which had the highest operating profit margin (operating income/revenue)?
6. What percent of total revenue does Disney generate within the United States and Canada?
7. How does Disney recognize revenue from broadcast advertising? From advance theme park ticket sales?
8. Does Disney expense its film and television costs using direct matching, systematic and rational allocation, or immediate recognition?
9. How does Disney expense its parks, resorts, and other properties?