Disney has been particularly visible during the COVID-19 crisis because of its park shutdowns, the launch...

 
 

 

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Disney has been particularly visible during the COVID-19 crisis because of its park shutdowns, the launch of Disney+, etc. Take some time to read their recent earnings report to get an idea of how management believes they have (and have not) been impacted by this crisis. Then, use the financial statements located on pages 15 through 17 of that earnings report to perform the following analyses: 1. Calculate the 13 significant financial ratios for both 2019 and 2020. Interpret your results, including changes between the two years. (Where applicable, use "quarter ended" numbers instead of "nine months ended".) 2. Calculate and interpret the BV Per Share, the PE Ratio, and the PB Ratio for 2020. Interpret your results. (1.8 billion common shares outstanding, no preferred stock, translate your Book Value to millions before you do your BV Per Share calculation.) (You can use the quote.lookup for your stock price.) 3. Calculate and interpret the Degree of Financial Leverage for 2019 and 2020 (DFL). 4. Review the Statement of Cash flows. What sticks out to you as the largest sources and uses of cash in 2019 and 2020? 5. Based on your analyses from parts 1 through 4, would you recommend that a client purchase this stock? Back up your recommendation with specific results from your analyses. Additionally, comment on how you believe Disney has fared with the COVID-19 crisis. Do you agree or disagree with the views that management gave in the earnings report (back up your views with specific results from your analyses)? Assumptions: . When financial statements say there are "in millions", you can multiply that number by 1,000,000 to get the real $ amount (and if they are "in thousands", you can multiply by 1,000). • Assume lease costs are 10% of the "costs and expenses" line of the Income Statement. . EBIT (or operating profit) is not spelled out on these statements. Use "income from continuing operations before income taxes" and add back interest expense. For example, for 2019 EBIT would be 4,840+412=5,252. • For EPS, use Basic EPS Attributable to Disney. . To find total liabilities, you will need to use the Total Liabilities and Equity line, then back out the equity subtotal For example, 2020 total liabilities would be 207,649-90,463=117,186. . For Net Income, use Net Income Attributable to Walt Disney Company, • Sales Revenues Credit Sales . Fixed Assets = use the "Parks, resorts, and other property" total. For example, 2020 would be 31,891. THE WALT DISNEY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited; in millions, except per share data) Revenues Costs and expenses Restructuring and impairment charges Other income (expense), net Interest expense, net Equity in the income (loss) of investees Income (loss) from continuing operations before income taxes Income taxes on continuing operations Net income (loss) from continuing operations Income (loss) from discontinued operations, net of income tax benefit (expense) of $1, ($102), S11 and ($107), respectively Net income (loss) Net income from continuing operations attributable to noncontrolling interests Net income from discontinued operations attributable to. noncontrolling interests Net income attributable to The Walt Disney Company (Disney) Earnings per share attributable to Disney Diluted Continuing operations Discontinued operations $ S June 27, 2020 Quarter Ended 11,779 (11,728) (5,047) 382 (412) 186 (4,840) 331 (4.509) (3) (4,512) (209) (4.721) (261) (2.61) S S June 29, 2019 20,262 (17,511) (207) (123) (411) (1) 2,009 (393) 1,616 366 1,982 (186) (36) 1,760 0.79 0.18 0.97 5 $ Nine Months Ended June 27, 2020 50,681 (46,434) (5,342) 382 (995) 545 (1,163) (650) (1,813) (32) (1,845) (309) (2.154) (1.17) (0.02) (1.19) S S June 29, 2019 50,489 (40,933) (869) 4,840 (617) (234) 12,676 (2,685) 9,991 388 10,379 (343) (36) 10,000 5.97 0.22 6.19 Continuing operations Discontinued operations Weighted average number of common and common equivalent shares outstanding: Diluted Basic S S Total may not equal the sum of the column due to rounding. (2.61) $ (2.61) 1,809 1,809 S 0.79 $ $ 0.18 0.98 S 1,814 1,802 (1.17) (0.02) (1.19) $ 1,807 1,807 S 6.00 0.22 6.22 1,616 1,607 ASSETS Current assets Cash and cash equivalents Receivables Inventories Licensed content costs and advances Other current assets Total current assets Produced and licensed content costs Investments Parks, resorts and other property Attractions, buildings and equipment Accumulated depreciation Projects in progress Land THE WALT DISNEY COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited; in millions, except per share data) Intangible assets, net Goodwill Other assets Total assets June 27, 2020 23,115 12,622 1,559 3,135 899 41,330 25,560 3,611 61,130 (34,639) 26,491 4,380 1,020 31,891 19,589 77,233 8,435 207,649 S September 28, 2019 5,418 15,481 1,649 4,597 979 28,124 22,810 3,224 58,589 (32,415) 26,174 4,264 1,165 31,603 23,215 80,293 4,715 193,984 LIABILITIES AND EQUITY Current liabilities Accounts payable and other accrued liabilities Current portion of borrowings - Deferred revenue and other Total current liabilities Borrowings Deferred income taxes Other long-term liabilities Commitments and contingencies Redeemable noncontrolling interests Equity Preferred stock Common stock, $0.01 par value, Authorized -4.6 billion shares, Issued-1.8 billion shares Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 19 million shares Total Disney Shareholders' equity Noncontrolling interests Total equity Total liabilities and equity S 16,986 10,224 3,707 30,917 54,197 7,055 15,855 9,162 54,386 39,004 (6,617) (907) 85,866 4,597 90,463 207,649 S $ 17,762 8,857 4,722 31,341 38,129 7,902 13,760 8,963 $3,907 42,494 (6,617) (907) 88,877 5,012 93,889 193,984 OPERATING ACTIVITIES Net income (loss) from continuing operations Depreciation and amortization Goodwill and intangible asset impairments Net gain on acquisition and investments Deferred income taxes Equity in the (income) loss of investees Cash distributions received from equity investees Net change in produced and licensed content costs and advances Net change in operating lease right of use assets/liabilities Equity-based compensation Other Changes in operating assets and liabilities, net of business acquisitions: Receivables Inventories Other assets Accounts payable and other liabilities Income taxes Cash provided by operations - continuing operations INVESTING ACTIVITIES Investments in parks, resorts and other property Acquisitions Other Cash used in investing activities- continuing operations S Nine Months Ended June 27, 2020 (1,813) 4,010 4,953 (370) (548) (545) 567 (1,483) 16 388 471 2,100 86 8 (1986) 95 5,949 (3,293) (27) (3,320) S June 29, 2019 9,991 2,866 (4,719) 1,716 234 548 59 591 83 (1,428) (96) 450 219 (6.248) 4,266 (3,567) (9.901) (317) (13,785) FINANCING ACTIVITIES Commercial paper borrowings, net Borrowings Reduction of borrowings Dividends Proceeds from exercise of stock options Contributions from / sales of noncontrolling interests Acquisition of noncontrolling and redeemable noncontrolling interests Other Cash provided by financing activities- continuing operations CASH FLOWS FROM DISCONTINUED OPERATIONS Cash provided by operations- discontinued operations Cash provided by investing activities discontinued operations Cash used in financing activities - discontinued operations Cash provided by discontinued operations Impact of exchange rates on cash, cash equivalents and restricted cash Change in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, beginning of period Cash, cash equivalents and restricted cash, end of period 17 1,373 18,030 (2,297) (1,587) 238 (838) 14,919 2 198 200 (49) 17,699 5,455 23,154 2,973 31,348 (19,039) (1,310) 278 544 (1,430) (831) 12,533 320 1111 (179) 141 3,202 4,155 7.357 Disney has been particularly visible during the COVID-19 crisis because of its park shutdowns, the launch of Disney+, etc. Take some time to read their recent earnings report to get an idea of how management believes they have (and have not) been impacted by this crisis. Then, use the financial statements located on pages 15 through 17 of that earnings report to perform the following analyses: 1. Calculate the 13 significant financial ratios for both 2019 and 2020. Interpret your results, including changes between the two years. (Where applicable, use "quarter ended" numbers instead of "nine months ended".) 2. Calculate and interpret the BV Per Share, the PE Ratio, and the PB Ratio for 2020. Interpret your results. (1.8 billion common shares outstanding, no preferred stock, translate your Book Value to millions before you do your BV Per Share calculation.) (You can use the quote.lookup for your stock price.) 3. Calculate and interpret the Degree of Financial Leverage for 2019 and 2020 (DFL). 4. Review the Statement of Cash flows. What sticks out to you as the largest sources and uses of cash in 2019 and 2020? 5. Based on your analyses from parts 1 through 4, would you recommend that a client purchase this stock? Back up your recommendation with specific results from your analyses. Additionally, comment on how you believe Disney has fared with the COVID-19 crisis. Do you agree or disagree with the views that management gave in the earnings report (back up your views with specific results from your analyses)? Assumptions: . When financial statements say there are "in millions", you can multiply that number by 1,000,000 to get the real $ amount (and if they are "in thousands", you can multiply by 1,000). • Assume lease costs are 10% of the "costs and expenses" line of the Income Statement. . EBIT (or operating profit) is not spelled out on these statements. Use "income from continuing operations before income taxes" and add back interest expense. For example, for 2019 EBIT would be 4,840+412=5,252. • For EPS, use Basic EPS Attributable to Disney. . To find total liabilities, you will need to use the Total Liabilities and Equity line, then back out the equity subtotal For example, 2020 total liabilities would be 207,649-90,463=117,186. . For Net Income, use Net Income Attributable to Walt Disney Company, • Sales Revenues Credit Sales . Fixed Assets = use the "Parks, resorts, and other property" total. For example, 2020 would be 31,891. THE WALT DISNEY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited; in millions, except per share data) Revenues Costs and expenses Restructuring and impairment charges Other income (expense), net Interest expense, net Equity in the income (loss) of investees Income (loss) from continuing operations before income taxes Income taxes on continuing operations Net income (loss) from continuing operations Income (loss) from discontinued operations, net of income tax benefit (expense) of $1, ($102), S11 and ($107), respectively Net income (loss) Net income from continuing operations attributable to noncontrolling interests Net income from discontinued operations attributable to. noncontrolling interests Net income attributable to The Walt Disney Company (Disney) Earnings per share attributable to Disney Diluted Continuing operations Discontinued operations $ S June 27, 2020 Quarter Ended 11,779 (11,728) (5,047) 382 (412) 186 (4,840) 331 (4.509) (3) (4,512) (209) (4.721) (261) (2.61) S S June 29, 2019 20,262 (17,511) (207) (123) (411) (1) 2,009 (393) 1,616 366 1,982 (186) (36) 1,760 0.79 0.18 0.97 5 $ Nine Months Ended June 27, 2020 50,681 (46,434) (5,342) 382 (995) 545 (1,163) (650) (1,813) (32) (1,845) (309) (2.154) (1.17) (0.02) (1.19) S S June 29, 2019 50,489 (40,933) (869) 4,840 (617) (234) 12,676 (2,685) 9,991 388 10,379 (343) (36) 10,000 5.97 0.22 6.19 Continuing operations Discontinued operations Weighted average number of common and common equivalent shares outstanding: Diluted Basic S S Total may not equal the sum of the column due to rounding. (2.61) $ (2.61) 1,809 1,809 S 0.79 $ $ 0.18 0.98 S 1,814 1,802 (1.17) (0.02) (1.19) $ 1,807 1,807 S 6.00 0.22 6.22 1,616 1,607 ASSETS Current assets Cash and cash equivalents Receivables Inventories Licensed content costs and advances Other current assets Total current assets Produced and licensed content costs Investments Parks, resorts and other property Attractions, buildings and equipment Accumulated depreciation Projects in progress Land THE WALT DISNEY COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited; in millions, except per share data) Intangible assets, net Goodwill Other assets Total assets June 27, 2020 23,115 12,622 1,559 3,135 899 41,330 25,560 3,611 61,130 (34,639) 26,491 4,380 1,020 31,891 19,589 77,233 8,435 207,649 S September 28, 2019 5,418 15,481 1,649 4,597 979 28,124 22,810 3,224 58,589 (32,415) 26,174 4,264 1,165 31,603 23,215 80,293 4,715 193,984 LIABILITIES AND EQUITY Current liabilities Accounts payable and other accrued liabilities Current portion of borrowings - Deferred revenue and other Total current liabilities Borrowings Deferred income taxes Other long-term liabilities Commitments and contingencies Redeemable noncontrolling interests Equity Preferred stock Common stock, $0.01 par value, Authorized -4.6 billion shares, Issued-1.8 billion shares Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 19 million shares Total Disney Shareholders' equity Noncontrolling interests Total equity Total liabilities and equity S 16,986 10,224 3,707 30,917 54,197 7,055 15,855 9,162 54,386 39,004 (6,617) (907) 85,866 4,597 90,463 207,649 S $ 17,762 8,857 4,722 31,341 38,129 7,902 13,760 8,963 $3,907 42,494 (6,617) (907) 88,877 5,012 93,889 193,984 OPERATING ACTIVITIES Net income (loss) from continuing operations Depreciation and amortization Goodwill and intangible asset impairments Net gain on acquisition and investments Deferred income taxes Equity in the (income) loss of investees Cash distributions received from equity investees Net change in produced and licensed content costs and advances Net change in operating lease right of use assets/liabilities Equity-based compensation Other Changes in operating assets and liabilities, net of business acquisitions: Receivables Inventories Other assets Accounts payable and other liabilities Income taxes Cash provided by operations - continuing operations INVESTING ACTIVITIES Investments in parks, resorts and other property Acquisitions Other Cash used in investing activities- continuing operations S Nine Months Ended June 27, 2020 (1,813) 4,010 4,953 (370) (548) (545) 567 (1,483) 16 388 471 2,100 86 8 (1986) 95 5,949 (3,293) (27) (3,320) S June 29, 2019 9,991 2,866 (4,719) 1,716 234 548 59 591 83 (1,428) (96) 450 219 (6.248) 4,266 (3,567) (9.901) (317) (13,785) FINANCING ACTIVITIES Commercial paper borrowings, net Borrowings Reduction of borrowings Dividends Proceeds from exercise of stock options Contributions from / sales of noncontrolling interests Acquisition of noncontrolling and redeemable noncontrolling interests Other Cash provided by financing activities- continuing operations CASH FLOWS FROM DISCONTINUED OPERATIONS Cash provided by operations- discontinued operations Cash provided by investing activities discontinued operations Cash used in financing activities - discontinued operations Cash provided by discontinued operations Impact of exchange rates on cash, cash equivalents and restricted cash Change in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, beginning of period Cash, cash equivalents and restricted cash, end of period 17 1,373 18,030 (2,297) (1,587) 238 (838) 14,919 2 198 200 (49) 17,699 5,455 23,154 2,973 31,348 (19,039) (1,310) 278 544 (1,430) (831) 12,533 320 1111 (179) 141 3,202 4,155 7.357

Answer rating: 100% (QA)

THE WALT DISNEY COMPANY CONSOLIDATED BALANCE SHEETS 31Mar21 31Mar20 ASSETS 000000 000000 Current assets Cash and cash equivalents 5260 3768 Shortterm investments 1106 1967 Receivables net 521 461 Othe... View the full answer