You can review the Disney SEC Form 10-K by searching for Disney Annual Report online. REQUIRED: a.

You can review the Disney SEC Form 10-K by searching for €œDisney Annual Report€ online.

REQUIRED:
a. Review the Disney SEC Form 10-K and analyze the financial statements by assessing Disney€™s earning power and solvency, and provide support for your assessments. Start by using the ratio framework illustrated in Figure 5€“3.

b. Based on the financial statements, make reasonable assumptions about Disney€™s sales growth, expense/ sales ratio, sales/total assets ratio, and liabilities to total asset ratio for 2015, and prepare a simplified income statement and balance sheet for Disney for 2016.
c. (Appendix 5A) Use the ROE model to analyze the financial statements. Comment on whether Disney created shareholder value and identify the primary value drivers.

Transcribed Image Text:

Asset quality Operations $ 50,000 Service revenue Sales revenue Cost of goods sold Operating expenses Interest expense Income tax expense Operating Assets $100,000 Cash = $5,000 Other = 95,000 100,000 (30,000) (66,000) (24,000) (10,000) $ 20,000 Solvency Producing Assets $400,000 Net income Return on assets: NI / Assets Expense control Invest in Debt Capital Return on equity: NI / Equity Leverage $300,000 Equity Capital $200,000 - $18,000 retained $2,000 dividends