Question

The Walt Disney Company has four major sectors, described as follows:

• Media Networks: The ABC television and radio network, Disney channel, ESPN, A&E, E!, and Disney.com.
• Parks and Resorts: Walt Disney World Resort, Disneyland, Disney Cruise Line, and other resort properties.
• Studio Entertainment: Walt Disney Pictures, Touchstone Pictures, Hollywood Pictures, Miramax Films, and Buena Vista Theatrical Productions.
• Consumer Products: Character merchandising, Disney stores, books, and magazines.

Disney recently reported sector operating income, revenue, and invested assets (in millions) as follows:

	Operating     Income		Revenue		Invested     Assets
Media Networks	$118,422		$464,400		$774,000
Parks and Resorts	53,286		449,400		642,000
Studio Entertainment	5,175		276,000		345,000
Consumer Products	112,800		507,600		282,000

a. Use the DuPont formula to determine the return on investment for the four Disney sectors. Round profit margin and return on investment to one decimal place and investment turnover to two decimal places.

	Profit Margin	Investment Turnover	ROI
Media Networks:	%		%
Parks and Resorts:	%		%
Studio Entertainment:	%		%
Consumer Products:	%		%

b. Which two sectors are the most similar in their profit margin, investment turnover, and return on investment?
The four sectors are different from each other

Answer 1

(a)
		Profit Margin	Investment Turnover	ROI
	Media Networks:	25.50%	0.60	15.30%
	Parks and Resorts:	11.86%	0.70	8.30%
	Studio Entertainment:	1.88%	0.80	1.50%
	Consumer Products:	22.22%	1.80	40.00%
	Profit Margin = Operating Income/Revenue
	Investment Turnover = Revenue/Invested Assets
	ROI = Profit margin x Investment turnover
(b)	The four sectors are different from each other