MUHAMAD FITRI BIN SHAHIRAN

826315
FRSA (A201)
DR. SYED MOHD NA'IM
Case 8-2

a. Calculate and disaggregate Disney’s return on common equity for each of the two fiscal years ending
September 30, Year 9, and September 30, Year 13 (use year-end figures for any ratio computations typically
using averages).

Year 13
ROCE 13.34%
NOA 5527
NOA 497
Equity 5030
Leverage B 0.1
NOPAT 654
NFEC 17
Net Income 671
RNOA 11.82%
NFRD -3.52%
SPREADE 15.34%

ROCE $671/$5030 = 0.133

NOA $363+$1390+$609+$5228+$2272-$2821-$1514 = $5527
NOPAT ($8529-$6968-$515)x(1-($403/$1074))=$654

b. Drawing only on your answers to a and the data available, identify the two components that contributed most to
the observed change in Disney’s return on common equity between Year 9 and Year 13. State two reasons for the
observed change in each of the two components.

 D experienced above average growth in the film entertainment business, which has the lowest operating margin of

D experienced deterioration in consumer product margins as the business mix shifted away from licensing and royal

 Euro D losses and reserve provision (write-off) hurt Year 13 results, as compared with no effect in Year 9.

D experienced deterioration in the theme park margins because of lower attendance, this, in turn, stemmed from a s
The profit margin on sales is offset, to some extent, by the favorable effects of financial leverage as the return on fin
ach of the two fiscal years ending
es for any ratio computations typically

Year 9
23.09% Net Income / Equity
3243 Total Assets - All liabilities
199
3044
0.07
677
26
703
20.87%
-13.17%
34.04%

$703/$3044=0.321
$381+$224+$909+$3397+$1084-$1262-$1490 = $3243
($4594-$3484-$0)x(1-($450/$1153)= $677

he two components that contributed most to

ear 9 and Year 13. State two reasons for the

ss, which has the lowest operating margin of any of its business segments.

ess mix shifted away from licensing and royalty income.

s compared with no effect in Year 9.

er attendance, this, in turn, stemmed from a slower economy and more expensive admission prices.
fects of financial leverage as the return on financial assets (other current assets) exceeds borrowing costs.