(Ross, W.

Westerfield, & Jordan)

Master of Business Administration

Assignment Cover Sheet
Full Name Zin Thet Nyo Lwin Grade / Marks

Email address Zinthet.danielle@gmail.com

Module Information

Module Name FIN501 Financial Management

Lecturer Name U Win Thu Aung

Assignment Title Mid-term Assignment

Submission Date 13th July 2020

Intake GMBA Intake-15

Word Count 1,287

1
Note:
 Assignment should be typed: (Times New Roman, Size 12, Double Spaced, Justify both
sides, Line Spacing 1.5)
 You are required to acknowledge any use of the published and unpublished works of others.
Use proper referencing system by providing in-text citations and reference list.
 SBS Plagiarism Policy is STRICTLY ENFORCED (maximum 9%)
 Your assignment should be checked with plagiarism-checking application. And submit the
results along with your assignment.
 Submit your assignment on time of deadline.
Mid-term Assignment Question
Go to www.yahoo.com/finance. Find a company you want to present such as Cisco, Toyota,
Facebook, Apple, Sony, Nike and etc. Search their latest annual financial statements for the year
ending 2019 (i.e. income statement, balance sheet, cash flow statement). Then, calculate the
following ratio analysis.
a) 1) Quick Ratio
2) Current Ratio
3) Debt to Equity Ratio
4) Days Receivables
5) Inventory Turnover
6) Return on Assets
7) Return on Equity
8) P/E ratio
9) Earnings per Share
10) Dividend payout ratio
b) By reading the cash flow statement of the above company of your choice and explain your
decision whether to invest in this company using your analysis on all three activities (operating
activities, investing activities and financing activities).
(Note: You just need to do it for just ONE company of your choice)
End of Assignment Question

2
Financial Management Assignment

FIN501 Financial Management

Zin Thet Nyo Lwin

3
No. Contents Pages

1. Introduction…………………………………………………… 5

2. Appendices…………………………………………………… 6-8

3. Question (A)…………………………………………………. 9-14

4. Question (B)…………………………………………………. 14-15

5. References…………………………………………………… 16

4
1. Introduction

The company which I will be presenting for this assignment is The Walt Disney Company. I

will be working on the ratio analyses based from their cash flow statement, income statement

and the balance sheet.

The financial statements of The Walt Disney Company are extracted from the Yahoo Finance

with the current market value of USD 114.33 (The Walt Disney (DIS), 2020) on 1st July

2020.

The financial statements of year 2019 that I will be referring to are presented as appendix (1),

(2) and (3) of this assignment.

In reason of my interest in choosing The Walt Disney Company is due to their number of years

in the entertainment industry as well as their innovating ideas throughout the years.

5
Appendix (1) – Balance Sheet (The Walt Disney Company (DIS) Balance Sheet, 2020)

The Walt Disney Company's Balance Sheet as at 29th September 2019

As at 29th Sept 2019
Current Assets
Cash 5,418,000,000
Net Receivables 12,882,000,000
Inventory 1,649,000,000
Other Current Assets 979,000,000
Total Current Assets 28,124,000,000
Non-current Assets
Property Plant & Equipment 31,603,000,000
Equity & Other Investment 3,224,000,000
Goodwill 80,293,000,000
Intangible Assets 23,215,000,000
Other Long-term Assets 4,715,000,000
Total Non-Current Assets 165,860,000,000
Total Assets 193,984,000,000

Liabilities
Current Debt 8,857,000,000
Accounts Payable 13,778,000,000
Accured Liabilities 3,984,000,000
Deferred revenues 4,722,000,000
Total Current Liabilities 31,341,000,000
Non-Current Liabilities
Long-term debt 38,129,000,000
Deferred tax liabilities 7,902,000,000
Other long term liabilities 8,977,000,000
Total Non-Current Liabilities 68,754,000,000
Total Liabilities 100,095,000,000
Stock holders' Equity
Common Stock 53,907,000,000
Retained Earnings 42,494,000,000
Accumlated other comprehensive income -6,617,000,000
Total stock holders' Equity 88,877,000,000
Total Liabilities & stocholders' equity 193,984,000,000

Market Value as on date of 01st July 2020 9:03pm: 114.33

6
Appendix (2) - Income Statement (The Walt Disney Company (DIS), Income Statement, 2020)

The Walt Disney Company

Income Statement For the quarter ended 29 September 2019

Total Revenue 69,750,000,000

Cost of Revenue 42,018,000,000

Gross Profit 27,552,000,000

Operating Expenses 15,701,000,000

Operating Income or Loss 11,851,000,000

Interest Expneses 1,246,000,000

Total Other Income/ Expenses Net 3,071,000,000
Income Before Tax 13,944,000,000
Income Tax Expense 3,031,000,000
Income from continuing operations 10,913,000,000

Net Income 11,054,000,000

Net income avilable to common shareholders 11,054,000,000
Basic EPS 6.68
Diluted EPS 6.64
Basic Average Shares 1,656,000,000
Diluted Average Shares 1,666,000,000
EBITDA (earnings before interest, tax, depreciation and amortization)
19,350,000,000

7
Appendix (3) - Cash flow Statement (The Walt Disney Company (DIS), Cash Flow, 2020)

Cash Flow Statement

The Walt Disney Company
Month Ended September 29 2019

Cash flow from operating activities 5,984,000,000

Cash flow from investing activities -4,118,000,000

Investments in property, plant and equipment -4,876,000,000
Acquisitions, net -9,901,000,000
Other investing activities -319,000,000

Cash flow from financing activities -464,000,000

Debt repayment -38,881,000,000
Common stock repurchased 0
Dividends paid -2,895,000,000
Other financing activities -1,564,000,000

Net change in cash 1,300,000,000

Cash at beginning of period 4,155,000,000
Cash at end of period 5,455,000,000
Free cash flow 1,108,000,000
Operating Cash Flow 5,984,000,000
Capital Expenditure -4,876,000,000
Free Cash Flow 1,108,000,000

8
a)

As both Quick Ratio & Current Ratio are classified under short term solvency ratio, (Ross,

W.Westerfield, & Jordan) they are typically used when short term creditors or banks are

looking for information to see the firm’s ability to pay its bills or debts over the short period.

1) The Walt Disney Company’s 2019: Quick Ratio

The Quick Ratio can reflects whether the firm can pay their current liabilities without the need

of selling inventories. (Ross, W.Westerfield, & Jordan). Higher than result of 1 or higher than

1 is consider good for Quick Ratio Analysis. As The Walt Disney Company ‘ s Quick Ratio

Analysis, it is less than 1, which may means the firm would not be able to pay off current

liabilities in the short term for the year 2019. This means, the quick ratio of 0.84 shows the

firm has $0.84 times of liquid assets available for $1 of current liabilities.

9
2) The Walt Disney Company’s 2019: Current Ratio

This ratio analysis can assist investors to know more about the firm’s ability to cover the

short term liabilities with the current assets. (Ross, W.Westerfield, & Jordan) Although the

current ratio is less than one for the year 2019 for The Walt Disney Company, it can be due

to the fact that large firms typically negotiate a longer payment terms with their suppliers

and it also means that they have also minimize their inventories therefor the current assets

is less than current liabilities which can result in a lower current ratio.

3) The Walt Disney Company’s 2019: Debt to Equity Ratio

This ratio is used for evaluating the firm’s financial leverages. (Ross, W.Westerfield, &

Jordan)It can shows whether the firm can cover the total liabilities with the shareholder

10
 equity if the firm faces downturns. From the above Debt to Equity Ratio; I can conclude

that The Walt Disney Company borrows 1.13 times for every 1 equity owns.

4) The Walt Disney Company’s 2019: Days Receivables

Days receivables ratio is one of the activity ratio which can determine how well the firm is

able to generate sales in cash. (Ross, W.Westerfield, & Jordan) Days receivables ratio is

also commonly known as average collection period and typically the lesser the number is

better. It is used for tracking effectiveness of the firm’s credit and collection efforts. From

the above ratio, I can conclude that the average number of days The Walt Disney Company

collects the accounts receivable is 67.41 days.

5) The Walt Disney Company’s 2019: Inventory Turnover

Generally a higher turnover ratio is good, as it means good efficient in managing inventory.

(Ross, W.Westerfield, & Jordan)Firms should have adequate inventory but not overstock

11
 as well. From the above inventory turnover ratio for The Walt Disney Company, the

inventory turnover ratio is 25.48 times.

6) The Walt Disney Company’s 2019: Return on Assets (ROA)

This is one of the ratio measuring profitability ratio of the firm. It measures how a firm

uses their assets right to run their operations. (Ross, W.Westerfield, & Jordan) It helps

investors or analyst or management see how well they are using the assets to make earnings

as well. This is mostly used when comparing firms in the identical industry or comparing

the firm’s performance to previous performance. From the above ROA ratio, I can conclude

that The Walt Disney Company is doing good job in growing their profits with each of

their investment dollars.

7) The Walt Disney Company’s 2019 : Return on Equity (ROE)

12
 Return on Equity (ROE) shows how the firm’s management is making use of the firm’s

assets to create profits. (Ross, W.Westerfield, & Jordan) Whether to decide if the firm’s

ROE is good or not, it really depends on the industry the firm is in. In most cases, investors

consider less than 10% as a poor indication on how the firm’s management is handling.

8) The Walt Disney Company’s 2019: Price Earnings Ratio (P/E Ratio)

In general cases, the higher ratio for this price earnings ratio (P/E Ratio) is good for the

firm as it could mean there is good market expectation for it. (Ross, W.Westerfield, &

Jordan) This can help the firm get more opportunities in securing future projects as well as

future expansions. In P/E ratio is one of the ratios that is used to review for the firms that

are publicly traded.

13
9) The Walt Disney Company’s 2019: Earnings per Share Ratio

This ratio can show how much the firm generates for each shares of its stocks. Investors

will on general pay more for a firm that shows higher EPS as it means higher profits.

10) The Walt Disney Company’s 2019 : Dividend Payout Ratio

This is the proportion of earnings paid out to the shareholders. (Ross, W.Westerfield, &

Jordan)Most firms paid out generally all of their earnings as dividends to their

shareholders. Some firms choose to pay out some portion and another portion to reinvest

in more operations. Normally, a new startup firm tend to reinvest most or all the earnings

in the operations, therefore the payout ratio could be zero or low.

b) Just from analyzing the cash flow for the month ended 29 September 2019 for The Walt

Disney Company, I would invest in the company due to the facts from the following points.

14
i) From this cash flow statement, in the cash flow from operating activities; I can conclude

that the bulk of positive cash flow is the cash earned from their operations. It also can be

viewed that their main operations are still generating businesses and that there is enough

cash flow to purchase more inventories or to cover for future loans and expenses. As an

investor, this will be the first thing I will be reviewing for a positive sign in the company

that I will be investing in.

ii) From their cash flow statement, in the cash flow from investing activities; I can come to

a conclusion that this company is expanding its business for further advances in future. It

is from the fact that the cash flow statement in this activities show investments in more

property, plant & equipment, acquisitions and other investing activities. As an investor, I

will be willing to invest in the company that is still investing and expanding the business

which would be a good sign in the future. Base from this, I can assume that the company

is doing well in the business now and likely in the future as well.

iii) From their cash flow statement, in the cash flow from financing activities; I can see

that, the debts being paid back are the majority of the company’s cash flow, dividends

repayment are in $2,895,000,000 and other financing activities are $1,564,000,000.

Although the cash flow from financing activities is negative for the month end of

September 2019, I will view this as one of the positive things when deciding if I wish to

invest in the company or not.

15
References

Ross, S. A., W.Westerfield, R., & Jordan, B. D. (n.d.). Fundamentals of Coroperate Finance (Nine Edition

ed.). McGraw-Hill Irwin.

The Walt Disney (DIS). (2020, July 5). Retrieved from Yahoo Finance :

https://finance.yahoo.com/quote/DIS?p=DIS&.tsrc=fin-srch

The Walt Disney Company (DIS) Balance Sheet. (2020, July 5). Retrieved from Yahoo Finance:

https://finance.yahoo.com/quote/DIS/balance-sheet?p=DIS

The Walt Disney Company (DIS), Cash Flow. (2020, July 5). Retrieved from Yahoo Finance:

https://finance.yahoo.com/quote/DIS/cash-flow?p=DIS

The Walt Disney Company (DIS), Income Statement. (2020, July 5 ). Retrieved from Yahoo Finance:

https://finance.yahoo.com/quote/DIS/financials?p=DIS

16