Question

Problem G The Walt Disney Company operates several ranges of products from theme parks and resorts to broadcasting and other creative content. The following balance sheet and supplementary data are for The Walt Disney Company.

The Walt Disney Company
Consolidated Balance Sheet (in millions)
For Year Ended September 30
Assets
Cash and cash equivalents		$           842
Receivables		3,599
Inventories		702
Film and television costs		1,162
Other		1,258
Total current assets			$          7,563
Film and television costs, prepaid long term		5,339
Investments		2,270
Attractions, buildings, and equipment	$16,160
Accumulated depreciation	-6,742	9,418
Project in process		1,995
Land		597
Intangibles assets, net		16,117
Other assets		1,428
Total Long Term Assets			37,164
Total Assets			$        44,727
Liabilities and stockholders' equity
Accounts payable and accrued liabilities		$        5,161
Current portion of borrowing		2,502
Unearned royalties		739
Total current liabilities			$          8,402
Borrowings		6,959
Deferred income taxes		2,833
Other long-term liabilities		2,377
Minority interest		56
Total long term liabilities			12,225
Common shareholders' equity
Common shares ($.01 par value, 1,210,000 avg shares outstanding)		12,100
Retained earnings		12,767
Cumulative translation and other adjustments		(27)
Treasury shares		(740)
Total equity			24,100
Total liabilities and stockholders' equity			$        44,727

Net income, $920.

Income before interest and taxes, $3,231.

Cost of goods sold, $21,321.

Net sales, $25,402.

Calculate the following ratios and show your computations. For calculations normally involving averages, such as average stockholders' equity, average accounts receivable, and average inventory, use year-end amounts. Disney does not have preferred shareholders or preferred dividends.

Current ratio.

Accounts Receivable

Days Sales Uncollected

Inventory Turnover

Days Sales in Inventory

Debt Ratio

Profit Margin Ratio

Gross Margin Ratio

Return on common stockholder’s equity

Basic Earnings per share

Analyze each of these ratios.

Answer 1

Solution:

1)	Current Ratio
	Total Current Assets (A)	$7,563
	Total Current Liabilities (B)	$8,402
	Current Ratio (A/B)	0.90
2)	Accounts Receivable Turnover
	Net Credit Sales (A)	$25,402
	Avg Accounts Receivable (B)	$3,599
	Accounts Receivable Turnover (A/B)	7.06
3)	Days Sales Uncollected
	Number of Days in a year	365 Days (assumed)
	Accounts Receivable Turnover Ratio	7.06
	Days Sales Uncollected (365 days / 7.06)	51.70
4)	Inventory Turnover
	Cost of Goods Sold (A)	$21,321
	Average Inventories (B)	$702
	Inventory Turnover (A/B)	30.37

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