Jasir Syed Project (208519684052)

A Project Report on
“A STUDY ON FINANCIAL PERFORMANCE OF THE WALT

DISNEY COMPANY POST-ACQUISITION OF 21ST CENTURY
FOX”
submitted to
Osmania University, Hyderabad-500007

in partial fulfillment of the requirements
for the award of the degree of
Bachelor of Business Administration (BBA)
Submitted By
JASIR MOHAMMED SYED
2085-19-684-052
Under the Guidance of
MS. MOHINI POOJA HUGGAHALLI

ASSOCIATE PROFESSOR
Department of Management
Avinash Degree College, Kukatpally
Hyderabad -500 072
2019-2022
INTERNAL GUIDE EXTERNAL GUIDE

i
CERTIFICATE
Avinash Degree College,
ACC Towers, Plot No. 21, 22, 53 & 54 Ushamullapudi Road,
Behind South India Shopping Mall, A.S.Raju Nagar,
Kukatpally Housing Board Colony, Kukatpally, Hyderabad,
Telangana 500072
Date:
CERTIFICATE
This is to certify that the project work entitled “A STUDY ON FINANCIAL
PERFORMANCE OF THE WALT DISNEY COMPANY POST-
ACQUISITION OF 21ST CENTURY FOX”, is the bonafide work done by
JASIR MOHAMMED SYED, Roll No: 2085-19-684-052, as a part of their
curriculum in the Department of Management, Avinash Degree College,
Kukatpally, Hyderabad - 500072. This work has been carried out under my
guidance.
INTERNAL GUIDE EXTERNAL EXAMINER
HEAD OF DEPARTMENT PRINCIPAL
MS. MOHINI POOJA HUGGAHALLI MS. P. SATHYAVATHI
iⅰ
Avinash Degree College,
ACC Towers, Plot No. 21, 22, 53 & 54 ,Ushamullapudi
Road, Behind South India Shopping Mall, A.S.Raju Nagar,
Kukatpally Housing Board Colony, Kukatpally, Hyderabad,
Telangana 500072
Date:
CERTIFICATE
This is to certify that the project entitled “A STUDY ON FINANCIAL
PERFORMANCE OF THE WALT DISNEY COMPANY POST-
ACQUISITION OF 21ST CENTURY FOX”, submitted to the Osmania
University, in partial fulfillment of the requirements for the award of the Degree
of Bachelor of Business Administration (BBA), is a bonafide record of original
project work done by JASIR MOHAMMED SYED (Reg. No. 2085-19-684-
052) during the period of March-2022 to June-2022 her / his study in the UG
Department of Management Avinash Degree College, Hyderabad, Telangana-
50007. Under my supervision and guidance the project has not previously
formed the basis for the award of any Degree, Diploma, Associate ship,
Fellowship or other similar title to any other candidate of any University. The
Project represents entirely an independent work of the candidate.
Project Guide
MS. MOHINI POOJA HUGGHALLI
iⅱ
DECLARATION
Date:
I, JASIR MOHAMMED SYED (Reg. No. 2085-19-684-052) hereby
declare that the project entitled “A STUDY ON FINANCIAL PERFORMANCE OF
THE WALT DISNEY COMPANY POST-ACQUISITION OF 21 ST CENTURY
FOX”, submitted to the Osmania University, in partial fulfillment of the requirements
for the award of the Degree of Bachelor of Business Administration (BBA) is a
bonafide record of original project work done by me during the period of February-
2022 to May-2022 under the supervision and guidance of MS. MOHINI POOJA
HUGGAHALLI and it has not formed the basis for the award of any Degree,
Diploma, Associateship, Fellowship or other similar title to any other candidate of any
University.
Signature of the Candidate
iv
ACKNOWLEDGEMENT
ACKNOWLEDGEMENT
This project is the end of my journey in obtaining my BBA Degree. At the end of my
project, it is a pleasant task to express my thanks to all those who contributed in many ways to
the success of this study and made it an unforgettable experience for me.
I sincerely record my thanks to Mr. AVINASH BRAHMADEVARA the Chairman
and Mr. B. SANTHOSH Director of Operations of Avinash Degree College, Kukatpally, and
other members of the management committee for encouraging me to take up this UG
programme in this reputed Institution.
I am grateful to our Principal Ms. P SATYAVATHI, for providing us the opportunity
and platform to work on the project and providing all the necessary facilities for the successful
completion of this work.
I express my humble gratitude to Head of the Department Ms. MOHINI POOJA
HUGGAHALLI, for guiding, supporting and inspiring me during my project work.
I am happy to express my gratitude to my Project Guide MS. MOHINI
POOJA HUGGAHALLI and my father SYED MOHAMMED AHMED, my friends and the
almighty.
JASIR MOHAMMED SYED
v
CONTENTS
CONTENTS
Certificate ii - iii
Declaration iv
Acknowledgement v
Contents vi
List of Figures vii
List of Tables viii - ix
Chapter Title Page No.
I INTRODUCTION
1
II REVIEW OF LITERATURE
5
III INDUSTRY PROFILE /COMPANY PROFILES OF THE
11
SELECTED COMPANY
IV DATA ANALYSIS & DATA INTERPRETATION 19
V FINDINGS, SUGGESTIONS AND CONCLUSION 46
BIBLIOGRAPHY
ANNEXURES
ⅴi
LIST OF FIGURES
FIGURE TITLE PAGE

NO. NO.
1 Liquidity Ratios of 21CF 21
2 Profitability Ratios of 21CF, Return on Sales 23
3 Profitability Ratios of 21CF, Return on 25

Investments
4 Solvency Ratios of 21CF, Debt Ratios 28
5 Total Asset Turnover of 21CF 29
6 Liquidity Ratios of Disney 33
7 Profitability Ratios of Disney, Return on Sales 35
8 Profitability Ratios of Disney, Return on 37

Investments
9 Solvency Ratios of Disney, Debt Ratios 40
ⅵi
LIST OF TABLES
Table Title Page

No. No.
1 Current Ratio of 21CF 19
2 Quick Ratio of 21CF 20
3 Cash Ratio of 21CF 20
4 Gross Profit Margin Ratio of 21CF 21
5 Operating Profit Margin Ratio of 21CF 22
6 Net Profit Margin Ratio of 21CF 23
7 ROE Ratio of 21CF 24
8 ROA Ratio of 21CF 24
9 Debt to Equity Ratio of 21CF 25
10 Debt to Capital Ratio of 21CF 26
11 Debt to Assets Ratio of 21CF 27
12 Financial Leverage Ratio of 21CF 28
13 Total Asset Turnover Ratio of 21CF 29
14 EPS of 21CF 30
ⅶi
Table Title Page
No. No.
15 Current Ratio of Disney 31
16 Quick Ratio of Disney 32
17 Cash Ratio of Disney 32
18 Gross Profit Margin Ratio of Disney 33
19 Operating Profit Margin Ratio of Disney 34
20 Net Profit Margin Ratio of Disney 35
21 ROE Ratio of Disney 36
22 ROA Ratio of Disney 36
23 Debt to Equity Ratio of Disney 37
24 Debt to Capital Ratio of Disney 38
25 Debt to Assets Ratio of Disney 39
26 Financial Leverage Ratio of Disney 40
27 Total Asset Turnover Ratio of Disney 41
28 EPS of Disney 41
29 Pre-acquisition Ratios Summary of 21CF and Disney 42
30 Post-acquisition Ratios Summary of Disney 44
ix
ABSTRACT
Across the globe, M&A has become an important corporate strategy to survive and grow in
business in the domestic and the international market. Severe competition, rapid technological
change and rising stock market volatility have increased tremendous pressure on managers to
deliver superior performance and value for their shareholders. Therefore, managers have been
increasingly resorting to the strategy of inorganic growth through M&As. From an internal
perspective, M&A requires operational capabilities of the companies to be compatible to in
order to generate wealth and increase shareholder value.
The purpose of this study is to investigate the post-acquisition financial effects of 21st
Century Fox by The Walt Disney Company. The focus of the study lies in finding out whether
1) this mega-acquisition has a positive effect on the financial books of the company. 2) To
analyze the pre-merger and post-merger financial performance of Walt Disney and 21st
Century Fox. This research is based on secondary data which was collected from annual books
of the companies from financial databases and third party media industry reports. The ratio
analysis is used for interpreting financial information. It was found out that The Total Asset
Turnover ratio and the Profitability position of Disney deteriorated, while the Liquidity and
Solvency position of Disney improved post acquisition of 21CF.
KEYWORDS: Mergers and Acquisitions, Disney, Media and Entertainment Industry

CHAPTER – 1
1 INTRODUCTION
The goal of an M&A is to generate increased shareholder value by combining the two
companies into one larger firm. For the management, it is crucial to decide the amount they
are willing to pay for the acquired firm and when to announce it. Failing to identify the
adequate price can cause a loss of the deal or potential financial distress. M&A has become an
important corporate strategy to survive and grow in business in the domestic and the
international market. Severe competition, rapid technological change and rising stock market
volatility have increased tremendous pressure on managers to deliver superior performance
and value for their shareholders. Therefore, managers have been increasingly resorting to the
strategy of inorganic growth through M&As. More often than not, a firm is involved in M&A
activity at one stage or the other of its corporate existence. M&A activity enables the firms to
enhance their competitive advantage by obtaining required capabilities in a short span of time
and respond quickly to the new opportunities and challenges. Facing the competition
successfully in the international markets depends on the speed with which the capabilities are
obtained by a company through M&As. In the last two decades, the number and volume of
M&A activity have increased enormously across the globe (Weston et al, 2007).
The same phenomenon is occurring in the media and entertainment (M&E) industry.
Currently, the industry is experiencing a new convergence, which is the main driver for the
large numbers of global M&As (Baker & Barbaglia, 2018). The sector is riding on a wave of
consolidation triggered by disrupting technologies. In the past five years, four mega-mergers
were announced and completed, which have shaken the foundations of the industry. The
mighty telephone giant AT&T won the fight with the U.S. government court regarding the
acquisition of Time Warner’s content bundle, consisting of HBO, Warner Bros, and Turner
Broadcasting. The bidding war for 21st Century Fox between the Walt Disney Company and
Comcast ended in a $71.3 billion Disney-Fox transaction and a $39 billion takeover of Sky by
Comcast. However, these transactions were not the only ones and are likely not to be the last.
Nonetheless, what caused all the tumult and the urge to react now? As similar to other
industries, the M&E industry is threatened by the four horsemen of the digital apocalypse:
Apple, Google, Amazon, and Netflix. Especially the last two global platforms became
legitimate competitors that are now applying pressure on the traditional media companies,
driving the need for scale and differentiation. However, to understand the rationale behind
consolidation, one of the largest transactions in the past years will be analyzed. While the
AT&T-Time Warner was a vertical transaction, the horizontal Disney-Fox deal will provide
better details for the rationale and the impact on the industry.
1
On December 14, 2017, The Walt Disney Company announced to acquire 21st Century Fox for
$52.4 billion in stock (The Walt Disney Company, 2017b). It stated that it would buy 21 st
Century Fox film and TV studios, cable networks including Fox Networks, Fox Sports
Regional Networks, and Fox’s international networks. Further, it would acquire Indian
satellite TV group Star India, an additional 30% stake in Hulu and other assets. However, 21st
Century Fox would spin off Fox Broadcasting network into the “Fox Corporation” company
(The Walt Disney Company, 2017b).
The reason behind the spinoff is that Disney owns the American Broadcasting Company
(ABC) and the merger with the Fox Broadcasting Company would be illegal under the FCC’s
rule, which prohibits a merger of two major broadcast networks (Johnson, 2017). Fox
Corporation will also comprise of the following business units: Fox Television Stations, Fox
News Channel, Fox Business Network and Fox Sports Media Group (The Walt Disney
Company, 2017b). On June 12, 2018, Comcast offered a counter-bid of $65 billion for 21st
Century Fox assets (Welch, 2018). However, eight days later Disney and Fox announced that
they had improved their previous deal, increasing Disney’s offer to $71.3 billion.
It outbids the offer of Comcast with a 10% premium and offers shareholders the option to
receive cash instead of stock (The Walt Disney Company, 2018b). At the end of June 2018,
the US Department of Justice gave antitrust approval to the merger agreement (Bartz &
Shepardson, 2018). On July 19, 2018, Comcast announced that it would not pursue further to
acquire Fox assets but to focus on bidding for Sky (Comcast, 2018a). Shortly after, the
shareholders of both Disney and Fox approved the acquisition (The Walt Disney Company,
2018c). The deal still needed to go through many commissions and regulators, while on
October 9, 2018, Comcast completed the acquisition of Sky for $39 billion (Comcast, 2018b).
The acquisition was finalized on March 20, 2019, in which 51.57% of the shareholders elected
to receive cash, 36.65% chose Disney shares and 11.79% failed to make an election (The Walt
Disney Company, 2019a)
Researchers generally follow either share price performance study or operating/cash flow
performance study to evaluate the wealth effects of M&As on the shareholders of companies
involved in such activity. A number of studies in the USA, the UK and other countries
examined the stock price effects of announcement of M&As on the shareholders of the
acquiring and the target company by examining the share price changes. All these studies are
unanimous that stock holders of target companies gain large and statistically significant
abnormal returns on the announcement of mergers and takeovers. However, as far as the
abnormal returns of acquiring company shareholders are concerned, the results are mixed—
small negative or break even or small positive but not statistically significant. Further, there is
no conclusive evidence whether M&As create value or destroy it for the shareholders of
combined firm. Similarly, operating performance studies conducted in the advanced countries
are also not clear whether operating performance improves in the period following the
completion of mergers.
2
PURPOSE OF THE STUDY:
• To examine the financial position of the Disney Company post-acquisition.

• To compute and make a comparative analysis of financial health, synergies, firm value
in the pre and post period of Disney-fox acquisition.
RESEARCH GAP:
• Previous research had mainly focused on ascertaining whether acquisitions create value
to the firm. In most of the global mergers and acquisitions, it seems that there is some
positive, negative and in few cases the results are inconclusive on value creation.
Therefore, this study focuses on investigating the impact of acquiring firms on creating
value.
• Mergers and Acquisitions create a value for the acquiring firm in terms of short term
profitability and operating performance but generally struggle to realise long-term value.
This is an outwardly contradictory result which can perhaps be explained through the
proposed study.
OBJECTIVES:
1. To examine whether the mega-acquisition has a positive effect on the financial books of
the company.
2. To analyze the pre-merger and post-merger financial performance of Walt Disney and
21st Century Fox.
RESEARCH METHODOLOGY:
• This research is based on secondary data. The secondary data is collected from annual
books of the companies from financial databases and media industry reports.
FINDINGS:
1. The Total Asset Turnover ratio and the Profitability position of Disney deteriorated post
acquisition of 21CF.
2. The Liquidity and Solvency position of Disney improved post acquisition of 21CF.
3
LIMITATIONS:
1. The accounting year of selected firms are changing frequently and complicates
comparative study.
2. There is limited qualitative information to interpret the financial books.
3. Covid 19 Pandemic has disrupted the financial position of the company.
CHAPTERISATION:
Chapter 1 Introduction to the topic

Chapter 2 Review of Literature
Chapter 3 Industry and Company Profile
Chapter 4 Data Analysis & Data Interpretation
Chapter 5 Findings, Analysis, and Limitations
References
Bibliography
Annexures Consolidated Balance Sheets and Income Statements
4
CHAPTER – 2
REVIEW OF LITERATURE
Aiello, Watkins (2001) in research article titled that “The fine art of friendly acquisition.”
explains the five distinctive phases of Mergers and Acquisitions negotiating principles.
i. Screening potential deals

ii. Reaching an initial agreement
iii. Conducting with due diligence
iv. Setting final terms
v. Achieving closure
Similarly in another research article titled that “The fine art of friendly acquisition.”
It explains the following characteristics must for an acquirer for competitive bidding situation
by comparing the position with competitors:
i. Ability to make quick decisions.

ii. Ability to realise synergies with the target.
iii. Attractiveness of currency, in the case of stock-for-stock acquisitions.
iv. Financing capacity.
v. Reputation for treating target’s management with respect and for successful
vi. integrating target’s management.
vii. Reputation for getting deals done.
viii. Post-acquisition performance record.
Angelica Kedzierska – Szczepaniak (2008) in dissertation report titled that “Financial

Aspects of Mergers & Acquisitions of companies quoted on the Warsaw Stock Exchange;
dean perspective for European programme since 2008.” investigates the comparisons of
some Mergers and Acquisitions made all over the world. The study considers the internal
risk factors and external risk factors. The study observed that 40% of the transactions failed.
The types of deals in Mergers were pioneered by Damodaran (2002) where it adds the types of
classification when a company is not bought by another one, but rather, by its own
management team (Management Buyout) or by investors, on the basis of a high level of
debt (Leverage Buyout)
The typical financial analysts’ classification explains that the deals are sub-divided in
the following characteristics:
Horizontal Acquisition – Refers to a transaction in which both the acquirer and

acquiree are settled in the same industry, competing with similar products.
5
A horizontal merger involves the merger of two or more firms operating and
competing in the same kind of business activity. It is the combination between two
competitors. For example, it is the merger between two firms involved in cement
manufacturing or distributing industry. Elimination or reduction in competition,
putting an end to price-cutting, economies of scale in production, research and
development, marketing and management by eliminating duplication of facilities and
operations, broadening the product lines and entering new geographical markets are
the chief gains accruing from such mergers. Horizontal mergers account for majority
of the merger cases. They are defended on the grounds that they permit efficiency
gains by exploiting economies of scale, avoiding duplication of expenditure etc.
Increased horizontal mergers can affect the level of competition in an industry.
Vertical Acquisition – The firms included in the deal are from a different stage in the
value chain. For example, a firm buys its supplier or distributor.
A vertical merger is a combination of two or more firms involved in different

stages of production or distribution. In the oil industry, for example, merger between
the firms involved in different stages of value chain such as the exploration and
production, refining and marketing to the ultimate consumer. Similarly, in the
pharmaceutical industry, firms associated with different stages such as research and
the development of new drugs, the production of drugs and the marketing of drug
products through retail drugstores, may merge to achieve synergy. Vertical mergers
are deals between companies that have a buyer and seller relationship with each other.
In vertical merger, the target company is either a supplier or buyer/customer of the
acquiring company. A vertical merger may take the form of ‘upstream merger’ or
‘downstream merger’. Upstream merger takes place when a firm combines with the
supplier of material (also called backward integration) and downstream merger occurs
when a firm combines with the customer firm (also called forward integration).
The transaction within the firm may eliminate the cost of searching for prices,
contracting, payment collecting and advertising and may also reduce the costs of
communicating and of coordinating production [Weston et al. (2007)]. The objective is
usually to ensure a source of supply or an outlet for products or services, but the effect
of the merger may be to improve efficiency through improving the flow of production
and reducing stockholding and handling costs.
Conglomerate Acquisition – The companies included in the deal are not competing
in the same industry which is mostly used to diversify the risk.
6
Conglomerate merger is a combination in which a firm established in one
industry combines with a firm from an unrelated industry. Conglomerate merger is a
combination of firms engaged in unrelated lines of business activity. The
conglomerate merger is based on financial synergy theory which hypothesizes
complementarities of investment opportunities and internal cash flows. A firm in a
declining industry will produce large cash flows since there are few attractive
investment opportunities. A growth industry has more investment opportunities and
no internal cash flows. A merger of two firms, with fluctuating, but negatively
correlated, cash flows, can bring stability of cash flows to the combined firm.
Conglomerate mergers have been distinguished into three types: product-extension
mergers (or concentric mergers), geographic market extension mergers and pure
conglomerate mergers. Product extension mergers are mergers between firms in
related business activities and may also be called concentric mergers. These mergers
broaden the product lines of the firms. Geographic market extension mergers involve
a merger between two firms operating in non-overlapping geographic areas. Pure
conglomerate mergers involve merger between two firms with unrelated business
activities. They do not come under product extension or market extension mergers
Damodaran (2005) suggests that synergies can be grouped into two groups. Operating
synergies affect the corporate operation of the consolidated company and include
operational benefits such as economies of scale, improved pricing power, and
higher growth potential. Contrary wise, financial synergies are more specific.
They include tax benefits, diversification and use for excess cash.
Operating synergies:
The aim of those synergies is to generate a higher operating income from existing assets
or increased growth. There are four synergies types:
Economies of scale – This refers to a cost advantage the combined firm obtains due to
the increased scale of the firm. This mostly occurs in horizontal mergers
Greater pricing power – Results from the diminished competition and increased market
share, which generally leads to an increased margin and operating income
Combination of different functional strengths – Represents the vertical acquisition in
which a firm acquires a firm that is specialized in a different stage of the value chain.
This type of synergy can be applied to multiple mergers, as the functional strength
can be translated across industries
Higher growth in new or existing markets – Mostly used to enter a new market by
using the established company as a stepping stone to increase sales of its own product.
Financial synergies:
The result of those synergies is to increase the cash flows, reduce the discount rate
(cost of capital) or both in combination.
7
Win-Win combination – The combination of a firm that has cash available but no
investment opportunities and a firm with limited cash but high-return projects can
generate higher value. The value can be generated by using the stored cash to invest in
projects. This synergy is mostly seen if a large company acquires a start-up.
Increased debt capacity – The consolidated firm may become more stable and therefore
cash flows could be more predictable. Resulting in banks that are more willing to fund
the company a larger credit than the two individual companies would have received.
Money is saved on taxes due to the lower cost of capital.
Tax benefits – Companies acquire other firms to take advantage of the tax laws that
provide them with money saving opportunities. A company can shelter its income
by acquiring a loss-making company to use its net operating losses to reduce the tax
burden. On the other hand, a company can increase its depreciation charges by writing
up the target company’s assets. Consequently, the company will save money on taxes
and increase its value.
Diversification – It relates to the spread of the risk by operating in multiple segments.

These segments are mostly not related, meaning that different factors influence them.
David Lewis (2010) explained that a company’s profits significantly increase, to

increase the cash balances and pay off debt and deal with internal affairs rather
than bringing on new entities and those have a bond with both by financially and
managerially to bring on growth through Mergers and Acquisitions. Healy, Palepu
and Ruback (1992) and Heron and Lie (2004) also find no relation
between the merger-related abnormal stock returns for the combined firm and form
of financing. On the contrary, Andre, Kooli and L’Her (2004) and Abhyankar, Ho
and Zhao (2005) find that more value is created when the consideration for
acquisition is cash or debt rather than equity. Healy, Palepu and Ruback (1997) also
find a significant relation between the profitability of takeover transactions and
methods of payment. Unlike other studies, they observe that takeovers with payment
of stock and debt outperformed cash transactions. Thus, this controversy of whether
M&As performance is affected by the form of payment is yet to be resolved in spite
of several decades of research. Investopedia, (2018) sees synergies as one of the
main driving forces for M&A deals. It is the concept in which the value of the
two merged companies will be larger than the sum of the two individual companies.
Jung Hur.et.al (2011) this study is an empirical explanation to the observed disparity in
outbound Mergers and Acquisitions inflows of developing and developed countries over the
past two decades. The study shows that most of cross border Mergers and Acquisitions has
flown toward developed countries. The previous research shows that the effect of
institutional reform on cross-border Mergers and Acquisitions in developing countries is
smaller than in developed countries.
8
Manish Khatri (2008) analysed the significance of Mergers and Acquisitions on
characteristics, measuring the performance in terms of size, profitability and risk of the
firms based on pre and post Mergers and Acquisitions period. The study reveals that an
increase in the number of Mergers and Acquisitions were due to economic growth,
international commodity prices, growth of infrastructure and cheap labour in the
international context. The result shows that the loss at the earlier stage proved to be a
strategic value in the long run. A study by Marks and Mirvis (2008) in book titled
that “Joining Forces: Making one plus one equal three in Mergers, Acquisitions and
Alliances.” explain the continuum ranging from License agreement, alliances, and
joint ventures to Mergers and Acquisitions green field start-up investments
Ross et. al (2003) indicate two different classifications to identify types of M&A –
legal procedures and the typical financial analysts’ classification.
The legal procedures category is sub-divided into three different transactions:
Merger and Consolidation – In a merger, the buying company takes over the target
company, including all the assets and liabilities. In a consolidation, a new legal entity
is formed, combining both companies into one. Both transactions require the approval
by the shareholders of both companies involved, most commonly by the majority (2/3)
of the voting shares.
Acquisition of Stock – The buying company makes an offer for the acquiree’s stocks.
Commonly, this deal is conducted through a tender offer, in which the acquirer makes
a public offer to the shareholders of the target firm. The shareholders then have the
right to decide whether to sell the shares or not, making it difficult for the acquirer to
buy the entire company.
Acquisition of Assets – The company buys all the assets from the target company
which was involved in the offer. This deal needs the approval of the shareholders
and the transfer of ownership can be costly.
Sanjay Dhir , Amita Mital (2012) in research article titled that “Decision-Making for
Mergers and Acquisitions: The Role of Agency Issues and Behavioural Biases.” discuss on
biases and agency issues in Mergers and Acquisitions. Sathish Kumar, Lalit K. Bansal
(2008) concludes that corporate enterprises cannot take it for granted that synergy will be
generated and profitability increase simply by going in for Mergers and Acquisitions.
The results indicate that in several cases of Mergers and acquisitions the bidding firms were
able to generate synergy in the long run that may be in the form of higher cash flows,
more business, diversifications and cost cuttings.
9
Sharma and Ho (2002), the free cash flow theory posits that acquisitions financed
by equity are associated with low returns relative to cash or debt financed acquisitions;
and from operating performance perspective equity financed acquisitions are preferred.
Further they argue that for debt or cash financed acquisitions, post-acquisition profits
will be lower if the financing method was equity (which may be invested unlike debt costs).
However, based on their empirical work, they find that merger financing do not influence
post-merger performance of the combined firms. Sirower and Sahni (2006), these authors
have found that M&A announcements have generally a negative impact on the stock
value of a company as the investors are skeptical that the transaction will generate
value for the acquiring company. More specifically, investors doubt that the synergies
implied in the premium paid will be achieved and that the value of each company will be
sustained or enlarged in the consolidated company. Furthermore, failed mergers are costly
and difficult to undo, meaning once the damage is done, the merger is irreversible.
In another study by T. B. Rubinstein (2011), he explains that the decomposition of the
synergies must be taken into account. The effect for the acquired company is determined by
the size of which is 20%- 40%. The effect for the acquiring firm is the same synergetic
effect, less premium and other costs. The study reveals that the process of Mergers and
Acquisitions in the industry develops especially in the post crisis period which determines
the importance of methods for assessing their effectiveness for the parties to Mergers and
Acquisitions. Another author Viktor Brage (2007) measured the value creation through
Mergers and Acquisitions by comparing related and unrelated firms. The studies aimed to
empirically test whether unrelated firms create greater value than related Mergers and
Acquisitions. The sample consisting of 15 related and 15 unrelated Mergers and
Acquisitions was selected and the difference between benchmark and post consummation
values of intellectual capital served as a tool of measuring the value creation by each
Mergers and Acquisitions deal.
A similar study by Valdimir.I.Ivaanov, Fie Xie (2010) examined whether mergers

add value to acquired companies. The results suggest that the target firm’s yields
evidence is highly consistent with that based on IPO Valuations: target firms received
higher takeover premium.
From another tangent Ye Cai, Merih Sevilir (2012) examined Merger and
Acquisition activities with a board connection
between an acquirer and the target firm. The study shows that acquirers obtain
significantly higher announcement return. “The first type is where the two firms
share a common director before the deal announcements; this is referred to as first degree
connections”. The second type is where one director from the acquirer and one director
from the target firm have been serving on the board of a third firm before the deal
announcements.
10
CHAPTER – 3
3 MEDIA & ENTERTAINMENT INDUSTRY PROFILE
Driven by the expansion of mobile internet access and increasing connection speeds, the
growing number of mobile and streaming devices leads to a steady growth in the demand
for all types of digital media. The major shift in the market can be attributed to the
COVID-19 pandemic, which has caused a tremendous increase in the demand for media
and the need for digitalization. This positive effect generates more growth, but digital media
entertainment will most likely remain predominant even after the pandemic.
Especially video-on-demand is expected to continue its growth avenue, with Netflix as

the current biggest player. According to predictions, however, Disney+ is set to become
the most popular streaming service by 2026. In the future, improved technology and new
ways of consuming media will align with the growing consumption by users and exhibit
steady growth. With the emergence of the Metaverse, for instance, the Digital Media and
Entertainment market will face a completely new dimension that will be accessible for
consumers and enable new possibilities for consumption. Because segments like the
Digital Video segment and the Digital Music segment are seeing an increase in the
number of competitors and variation between regions, the Digital Media market can
become highly fragmented and therefore be faced with challenges throughout the segments.
The U.S. industry is under a phase of transition with both traditional and new models
working hand-in-hand across multiple devices and platforms and the market is expected to
further expand in the upcoming years. Media & Entertainment Market Landscape is
expected to register a CAGR of over 13% during the forecast period (2021 - 2026).Digitization
as well as globalization of services has further fostered a revolution in the US M&E industry.

Integration of new OTT services across the already existing subscription-based streaming
devices among the US household is expected to drive the media & entertainment sector
across the region. For instance, Comcast added Amazon Prime Video to the online content
available through its service thereby enhancing the application of the OTT media, which
already included streaming services such as Netflix, YouTube, and Pandora. Further,
Netflix is estimated to capture around 74% of the total penetration of US OTT
households, followed by Youtube with 54% and Amazon by 33% penetration. Such
high deployment of the OTT services across the region is expected to drive the demand
of the media & entertainment industry in the forthcoming years.
11
US MEDIA & ENTERTAINMENT INDUSTRY SEGMENTATION
Filmed Entertainment (Motion Pictures, Television, and Video)
Traditionally the film industry consisted of multinational corporations, major studios,

and independent studios. Today, multi-channel networks engage in the filmed entertainment
sector and Streaming Video On Demand (SVOD) platforms are major drivers in the
filmed entertainment sector. 

Alternatively, media houses are trying to diversify concession options, offer consumer
products such as movie or brand related merchandise, and offer membership discounts to
attract viewership.

The market overall is becoming increasingly polarized. Drawing on formidable strengths,
the U.S. film industry has a proven ability to produce films that generate a buzz and garner
the interest of millions, alternatively generating massive revenues from distribution across
strong domestic and international networks. Success in the industry is based on creativity
and financing, and the industry is largely self-regulated.

Many of the leading motion picture studios are part of larger media conglomerates that
often include television, video and streaming services, music services, newspaper, cable
and magazine segments.

The industry offers lucrative opportunities for international companies, both large and small,
and provides advanced film production resources and technologies. With the shift towards a
digital mode of production and distribution, foreign firms are continually seeking out U.S.
digital and animation expertise and new formats.

Music
The U.S. recorded music industry (including concerts and touring) is said to be the largest
global music market. Apart from contracting physical music sales, all segments of recorded
music are up, including digital, streaming, and sync licensing. Overtaking physical music
sales, digital sales have helped the music industry adapt to a fast-changing entertainment
landscape.

Live and recorded music sales are rising, and digitally recorded music is expected to further
grow. Many companies in the industry have diversified via signing up for sync deals with
vertical businesses for TV ads, in-flight entertainment, satellite radio, restaurants, touring,
live entertainment, and merchandise.

12
Digital technologies have greatly contributed in revolutionizing the music industry by
creating high quality, low-cost recording techniques and digital distribution, along with the
proliferation of devices to download and listen to music.

Future industry growth is likely to come from diversified services like licensing brand name
products and services, packaging consumer experiences around touring and live music,
bundling music services with other online content services and more.

Video Games
The U.S. gaming industry accounts for a significant amount of the M&E industry, and
revenues are expected to grow exponentially. Today’s consumers have access to multiple
devices for gaming, including PCs, mobile phones, digital or physical consoles, and tablets.

The sector comprises: physical, digital, and online games; mobile apps; and virtual and
augmented reality (VR/AR). Electronic sports, also known as “e-sports”, includes
professional gaming, in which players compete before a live audience, and the industry is
growing quickly.

The industry is constantly innovating and bringing new applications to the market. The
use of digital technology like virtual reality and augmented reality to replace reality with a
complete and realistic, immersive simulation coupled with interactive computer-generated
content is garnering quite the attention of its consumers recently.

OTT Platforms
The United States remains the largest OTT video market globally, accounting for more
than half (55.6%) of all OTT revenue in the world and showing massive scope for growth
as the market matures further.

Streaming services will continue to grow and offer more personalized services in the
form of user experiences for consumers. The consumers have the power to influence
digital entertainment industries now more than ever before. Notably, SVOD’s share of
total revenue will increase over the upcoming years as the popularity of streaming services
continues to grow. The increase in competition means new entrants will have to work to
differentiate themselves from mainstream SVOD players in order to attract subscribers.
Content generated is particularly exclusive and original, which has proven to be the crucial
determinant in the battle to attract subscribers to streaming services. The level of content
being poured into the market by both new and existing players is prodigious and is only
expected to further grow among local and regional networks as well as national and
international markets.

13
Internet Advertising
While the US still lags behind China and other Asian markets in some areas, it remains
a hotbed of innovation and consolidation making it the largest global internet advertising
market. Furthermore, some of the defining recent trends in the internet advertising market,
like the rise of video and mobile advertising, have taken hold much earlier in the US than
in many other markets. Mobile is now dominant, accounting for 65.1% of US internet
ad spend.

US MEDIA & ENTERTAINMENT INDUSTRY DRIVERS
As the streaming wars continue to intensify, industry players have deployed new
technologies in order to reach out to their broader customer base:
Thriving popularity of Artificial intelligence (AI) and Virtual Reality
The M&E industry is poised to look on to a major transformation due to the advent of
transformative technologies such as AI, which has been deployed by several companies
in the entertainment industry in order to make personalized recommendations based on
consumer usage and further making the system more effective for content creation.

In addition, AI also assists companies in streamlining both pre as well as post-production
processes, thereby making all steps cohesive and therefore less resource consuming. The
industry is putting VR to use in order to captivate the attention of consumers by making
consumers interact with brands. By the help of consumer engagement, the companies
are able to improve the commercial success on their business front.

Personalised user experiences
As media and e-commerce experiences become more personal, gratification for

consumers is becoming more instant and immediate. In response, content creators and
distributors are devising new ways to appeal to consumers as individuals, and marketers
are busy figuring out how to meet people at the point of consumption and guide them
instantaneously towards purchase. The result is a rapid expansion of and evolution in
consumer experiences.

The central theme of this growing world of media is that it’s highly customized and
increasingly digital. And it is constructed by the individual for his or her own enjoyment
and gratification, and delivered through personal devices. Companies, in turn, are tailoring
their offerings and business models to revolve around personal preferences, using data and
usage patterns to pitch their products not at audiences of billions, but at billions of
individuals.
14
Company Profiles
The Walt Disney Company
The Walt Disney Company, commonly known as Disney, is one of the largest mass media and
entertainment conglomerate in the world. The brothers Walt and Roy O. Disney founded it in
1923. The company operates in four different industry segments: media networks; parks,
experiences and products; studio entertainment; direct-to-consumer and international. Disney’s
headquarter is located in Burbank, USA, and employees approximately 190,000 people as of
May 12, 2022. The company’s current CEO is Bob Chapek (The Walt Disney Company, 2022).
The Media Networks business segment includes an extensive amount of cable and broadcast
networks, radio networks and stations, as well as television production and distribution. In addition,
the company has equity investments in programming services. The company is conducting business
as the Disney-ABC Television Group. The group includes the American Broadcasting Company
(ABC), which is one of the five American commercial broadcast television networks, and the
Disney Channel US. The latter includes the following channels: Disney Channel, Disney XD, and
Disney Junior. Among other small domestic channels, the group also holds 80% ownership in
ESPN Inc. and 50% in A&E Networks (The Walt Disney Company, 2022). The former company
is an American sports media conglomerate that broadcasts various sports. The latter is an American
broadcasting company that focuses on reality and history series, lifestyle, and entertainment
programming. A&E owns 20% of Vice Group Holding, Inc. (Vice), which offers documentaries
aimed towards millennials. Additionally, Disney owns 11% of Vice (The Walt Disney Company,
2018).
The Parks, Experiences and Consumer Products unit fulfills the function to bring Disney’s stories
and characters to life and is by far the largest business segment. The segment counts approximately
150,000 people (Disney Parks, Experiences and Products, 2019). In 1952, Disney formed the
division Walt Disney Imagineering. Its task was to design the first Disneyland, which opened doors
in 1955. Since then, Disney has grown into a leading provider of family travel and leisure
experiences. Today, the company owns and operates four resorts destinations: Disneyland Resort
in California, Walt Disney World Resort in Florida, Tokyo Disney Resort, and Disneyland Paris.
In addition, the company owns 47% of the Hong Kong Disneyland Resort, and 43% of the Shanghai
Disney Resort (The Walt Disney Company, 2022).
Besides the parks, Disney holds non-themed park travel units, which includes Disney
Cruise Line (fleet of four ships), Disney Vacation Club (14 themed hotels-resorts), and
Adventures by Disney (group guided tours). Furthermore, Disney offers consumer products
across a wide range of toys, apparel, home goods, and digital games and applications. Lastly,
it owns 200 physical Disney stores around the world, the e-commerce platform ShopDisney,
as well as Disney Publishing Worldwide, the world’s largest publisher of children’s books
and magazines (Disney Parks, Experiences and Products, 2021).
15
The Studio Entertainment sector has been the foundation for The Walt Disney Company. Over
90 years ago, the company released its first short film entitled ‘Alice’s Wonderland’. Shortly
after, the in-house film studio ‘The Walt Disney Studios’ released a sound film with its most
iconic character ‘Mickey Mouse’. Today, the studio is one of the major film studios in
Hollywood. The following units complete the segment: the Walt Disney Animation Studios,
Disney Live Action, Disney Theatrical Group and Disney Music Group (The Walt Disney
Company, 2018). Furthermore, the company made major acquisitions throughout the years,
which expanded its studio entertainment empire. In 2006, Disney purchased Pixar
Animation Studios for $7.4 billion (The Walt Disney Company, 2006). In 2009, it
acquired Marvel Entertainment for $4.2 billion (The Walt Disney Company, 2009),
and in 2012, it bought Lucasfilm for $4.06 billion (The Walt Disney Company, 2012).
This newly created Direct-To-Consumer and International business field was initiated after the
acquisition of BAMTech in 2017 (The Walt Disney Company, 2017). It serves as a global,
multiplatform media organization for the content created by Disney. The segment will include the
international media business of Disney, BAMTech and Disney’s ownership stake in Hulu (30%).
The first mentioned business unit will be responsible for the international channels operated by
Disney that are divided into the following areas: South Asia, North Asia, EMEA, and Latin
America. In the 2017 announcement of the BAMTech acquisition, it was stated that it would
develop two streaming platforms for Disney. ESPN+ and the Disney-branded direct-to-consumer
streaming service (Disney+). ESPN+ is a multi-sport video streaming service that launched in
April 2018. Disney+ is an SVOD platform for exclusive Disney content (The Walt Disney
Company, 2018).
Disney+ is an American subscription video on-demand over-the-top streaming service owned and
operated by the Media and Entertainment Distribution division of The Walt Disney Company.
The service primarily distributes films and television series produced by The Walt Disney Studios
and Walt Disney Television, with dedicated content hubs for the brands Disney, Pixar, Marvel,
Star Wars, and National Geographic, as well as Star in some regions. Original films and television
series are also distributed on Disney+.(The Walt Disney Company, 2019)
Disney+ was launched on November 12, 2019, in the United States, Canada, and the Netherlands,
and expanded to Australia, New Zealand, and Puerto Rico a week later.
It became available in select European countries in March 2020 and in India in April
through Star India's Hotstar streaming service, which was rebranded as Disney+ Hotstar.
Additional European countries received the service in September 2020, with the service
expanding to Latin America in November 2020. The service will be expanded to South Africa
in May 2022, followed by other countries of MENA and Eastern Europe in June 2022, and
Southeast Asian countries at the end of the year.
16
Upon launch, it was met with positive reception of its content library, but was criticized for
technical problems and missing content. Alterations made to films and television shows also
attracted media attention. Ten million users had subscribed to Disney+ by the end of its
first day of operation. The service has 137.7 million global subscribers as of April 2, 2022.
(The Walt Disney Company, 2022)
21st Century Fox:
Twenty-First Century Fox, Inc., commonly known as 21st Century Fox (21CF), is a multinational
mass media conglomerate. The company was formed in 2013 as one of the two spin-offs from
the News Corporation assets. News Corporation was founded by Rupert Murdoch in 1980 but
was pressured to spin off its business following a series of scandals in 2011 and 2012. Two new
companies were formed. Along 21st Century Fox, which retained most of the media businesses, a
new News Corporation was spun out. The company conducts business in the following segments:
Cable Network Programming; Television; Filmed Entertainment; and Other, Corporate and
Eliminations. The headquarter is based in Manhattan, USA, and employees approximately 22,400
people as of June 30, 2018. The current CEO is Rupert Murdoch, whose family holds 17% Equity
and 39% voting rights (21st Century Fox, 2018).
In the Cable Network Programming segment, 21st Century Fox produces and licenses a vast
variety of media and entertainment content (e.g. news, sport, and documentaries) for all kinds of
distribution channels, such as cable television systems and online video. The primary unit for 21st
Century Fox’s television distribution is the Fox Networks Group. However, the included units are
split among this segment and the TV segment. The Cable Network Programming comprises of
National Geographic, the FX Networks, and Fox News Group. National Geographic produces
documentaries about nature, science, and history. FX Networks is the premium entertainment
channel of the company that features hit and critically acclaimed series, including The Americans,
Fargo, and Two and a Half Men. Fox News Group includes the Fox News Channel, an American
news channel, and Fox Business Network, which focuses on delivering real-time financial
information. In addition, the company operates FOX Sports Media Group, which broadcasts a
variety of major sporting events, including NFL, MLB, NASCAR, international soccer and UFC.
It also has a Spanish-language sports channel to address the U.S. Hispanics. Lastly, the company
operates STAR India, which is one of India’s leading media conglomerates.
Regarding the Television unit, 21CF owns and operates 28 television stations in 17 markets that
broadcast the network’s programming. These include all of the above-mentioned media content
(e.g. news, sports, and movies). The company covers approximately 99% of U.S television homes.
It is one of the five big television networks in the U.S.
In the Filmed Entertainment area, the company produces and acquires movies for distribution and
licensing. It mainly operates as the Fox Entertainment Group that focuses on filmed entertainment
and cable network programming.
17
The motion picture section includes 20th Century Fox, one of the “Big Six” film studios in
Hollywood, Fox Studios in Australia and India, and the Home Entertainment division of 20th
Century Fox. 20th Century Fox released 1,136 titles, including in-house movies, to the
domestic home entertainment market in 2018. This is due to several home video distribution
arrangements with other film studies (e.g. Metro-Goldwyn-Mayer and Lionsgate). The television
section includes the television unit of 20th Century Fox that produced inter alia: The Simpsons
and X-Files (21st Century Fox, 2018).
The Other, Corporate and Eliminations segment is comprised of ownership stakes in several
companies. 21CF holds around 39% equity interest in Sky, which is Europe’s leading pay
television service. It operates in the UK, Ireland, Germany, Austria, Italy, Spain, and Switzerland.
Furthermore, the company holds 30 % equity interest in Hulu, as The Walt Disney Company and
NBCUniversal do. In addition, it holds interest in the Endemol Shine Group, a global
multiplatform content provider. It was created as a joint venture of 21st Century Fox and Apollo
Global Management. Both companies have an equal ownership interest. Furthermore, 21CF has
a 20% interest in Tata Sky, a direct broadcast satellite television provider in India. Lastly, the
company has a minority equity interest in Vice and DraftKings, an online fantasy game operator.
18
CHAPTER – 4
4 DATA ANALYSIS AND DATA INTERPRETATION
4.1 The financial performance of 21st Century Fox is calculated with Ratio Analysis and
interpreted below. The financial data is in US $ Millions:
4.1.1 Liquidity ratios
4.1.1.1 Current ratio: A liquidity ratio calculated as current assets divided by current liabilities.
Current ratio is an indicator of firm's commitment to meet its short term liabilities. Current ratio
is an index of the concern's financial stability since it shows the extent of the working capital
which is the assets exceeds the current liabilities.. It shows if the business is trading beyond its
resources. The ideal ratio is 2:1.
Current Ratio 30-Jun-17 30-Jun-18
Current assets 16,286 19,333

Current liabilities 7,238 8,244
Current ratio 2.25 2.35
Interpretation:
Twenty-First Century Fox Inc. current ratio improved from 2.25 to 2.35 in 2017 to 2018.
As stated earlier a higher current ratio would indicate inadequate employment of funds while
a poor current ratio is a danger signal to the management.
4.1.1.2 Quick ratio: A liquidity ratio calculated as cash plus short-term marketable investments
plus receivables divided by current liabilities. It indicates the company’s ability to instantly use
its near-cash assets (assets that can be converted quickly to cash) to pay down its current
liabilities, it is also called the acid test ratio. An "acid test" is a slang term for a quick test
designed to produce instant results. The ideal ratio is 1:1
19
Quick Ratio 30-Jun-17 30-Jun-18
Cash and cash equivalents 6,163 7,622

Receivables, net 6,477 7,120
Total quick assets 12,640 14,742
Quick ratio 1.75 1.79
Interpretation:
Twenty-First Century Fox Inc. quick ratio improved from 1.75 to 1.79 in
2017 to 2018. A higher quick ratio indicates high liquidity position but improper
utilization of funds.
4.1.1.3 Cash ratio: A liquidity ratio calculated as cash plus short-term marketable investments
divided by current liabilities. It tells creditors and analysts the value of current assets that could
quickly be turned into cash, and what percentage of the company’s current liabilities these cash
and near-cash assets could cover.
Cash Ratio 30-Jun-17 30-Jun-18
Cash and cash equivalents 6,163 7,622

Total cash assets 6,163 7,622
Cash Ratio 0.85 0.92
20
Interpretation:
Twenty-First Century Fox Inc. cash ratio improved from 0.85 to 0.92 in
2017 to 2018. There are more current liabilities than cash and cash equivalents. It
means insufficient cash on hand exists to pay off short-term debt.
4.1.2 Profitability ratios
4.1.2.1 Gross profit margin: Gross profit margin indicates the percentage of revenue available
to cover operating and other expenditures. The gross profit margin calculates the amount of
profit made before deducting selling, general, and administrative costs, which is the firm's net
profit margin. If a company's gross profit margin wildly fluctuates, this may signal poor
management practices and/or inferior products.
Gross profit margin 30-Jun-17 30-Jun-18
Gross profit 10,725 10,631

Revenues 28,500 30,400
Gross profit margin 37.63% 34.97%
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Interpretation:
Twenty-First Century Fox Inc. gross profit margin ratio deteriorated from 37.63% to
34.97% in 2017 to 2018. This signals inferior operating performance from managerial
and/or product perspective.
4.1.2.2 Operating profit margin: A profitability ratio calculated as operating income divided by
revenue. The operating margin measures how much profit a company makes on a dollar of sales
after paying for variable costs of production, such as wages and raw materials, but before paying
interest or tax. Higher ratios are generally better, illustrating the company is efficient in its
operations and is good at turning sales into profits.
Operating profit margin 30-Jun-17 30-Jun-18
Operating income 6,240 6,307

Revenues 28,500 30,400
Operating profit margin 21.89% 20.75%
Interpretation:
Twenty-First Century Fox Inc. operating profit margin ratio slightly deteriorated from
21.89% to 20.75% in 2017 to 2018. It can be inferred that high operating margins are a
prime indicator of business efficiency and can be attributed to better management controls,
more efficient use of resources, improved pricing, and more effective marketing.
4.1.2.3 Net profit margin: An indicator of profitability, calculated as net income divided by
revenue. Net profit margin helps investors assess if a company's management is generating enough
profit from its sales and whether operating costs and overhead costs are being contained. Net profit
margin is one of the most important indicators of a company's overall financial health. The higher
the margin, the better the performance of the company.
22
Net profit margin 30-Jun-17 30-Jun-18
Net income 2,952 4,464

Revenues 28,500 30,400
Net profit margin 10.36% 14.68%
Interpretation:
Twenty-First Century Fox Inc. net profit margin ratio improved from 10.36% to 14.68%
in 2017 to 2018. It can be inferred that expanding net margins over time are generally
rewarded with share price growth, as share price growth is typically highly correlated
with earnings growth.
4.1.2.4 ROE: A profitability ratio calculated as net income divided by shareholders’ equity. ROE
is often used to compare a company to its competitors and the overall market. The formula is
especially beneficial when comparing firms of the same industry since it tends to give accurate
indications of which companies are operating with greater financial efficiency and for the
evaluation of nearly any company with primarily tangible rather than intangible assets.
23
ROE 30-Jun-17 30-Jun-18

Total stockholders’
equity 15,722 19,564
ROE 18.78% 22.82%
Interpretation:
Twenty-First Century Fox Inc. ROE improved from 18.78% to 22.82% in 2017 to 2018.
It can be inferred that the management is efficient at utilizing equity financing provided
by shareholders. The higher the number, the better, from shareholders’ perspective.
4.1.2.5 ROA: A profitability ratio calculated as net income divided by total assets. Return on
assets is the simplest of such corporate bang-for-the-buck measures. It tells you what earnings
are generated from invested capital or assets.
ROA 30-Jun-17 30-Jun-18

Total assets 50,724 53,831
ROA 5.82% 8.29%
Interpretation:
Twenty-First Century Fox Inc. ROA improved from 5.82% to 8.29% in 2017 to 2018.
It can be inferred that the company is effective in converting the money it invests into net income.
The higher the ROA number, the better, because the company is able to earn more money with a
smaller investment. Put simply, a higher ROA means more asset efficiency.
24
4.1.3 Solvency ratio
4.1.3.1 Debt to equity ratio: A solvency ratio calculated as total debt divided by total
shareholders’ equity. It is a measure of the degree to which a company is financing its operations
through debt versus wholly owned funds. More specifically, it reflects the ability of shareholder
equity to cover all outstanding debts in the event of a business downturn. Higher-leverage ratios
tend to indicate a company or stock with higher risk to shareholders. The ideal ratio is 2.0
Debt to equity 30-Jun-17 30-Jun-18
Current borrowings 457 1,054

Non-current borrowings 19,456 18,469
Total debt 19,913 19,523
Total stockholders’ equity 15,722 19,564
Debt to equity 1.27 1
25
Interpretation:
Twenty-First Century Fox Inc. debt to equity ratio improved from 1.27 to 1 in 2017
to 2018. It can be inferred that the company is financing its growth by its own resources
and is associated with low risk.
4.1.3.2 Debt to capital ratio: A solvency ratio calculated as total debt divided by total debt plus
shareholders’ equity. All else being equal, the higher the debt-to-capital ratio, the riskier the
company. This is because a higher ratio, the more the company is funded by debt than equity,
which means a higher liability to repay the debt and a greater risk of forfeiture on the loan if
the debt cannot be paid timely. The ideal ratio is 0.5.
Debt to capital 30-Jun-17 30-Jun-18

Total debt 19,913 19,523
Total stockholders’
equity 15,722 19,564
Total capital 35,635 39,087
Debt to capital 0.56 0.5
Interpretation:
Twenty-First Century Fox Inc. debt to capital ratio improved from 0.56 to 0.5 in 2017
to 2018. The risk associated is less because the company is less funded by debt than equity.
26
4.1.3.3 Debt to assets ratio: A solvency ratio calculated as total debt divided by total assets. The
debt to asset ratio is commonly used by creditors to determine the amount of debt in a company,
the ability to repay its debt, and whether additional loans will be extended to the company. On
the other hand, investors use the ratio to make sure the company is solvent, is able to meet
current and future obligations, and can generate a return on their investment. The ideal ratio is
less than 1.
Debt to assets 30-Jun-17 30-Jun-18

Total debt 19,913 19,523
Debt to assets 0.39 0.36
Interpretation:
Twenty-First Century Fox Inc. debt to assets ratio improved from 0.39 to 0.36 in 2017
to 2018. It can be inferred that the company is solvent and is able to meet obligations and
also is attractive to lenders.
4.1.3.4 Financial leverage ratio: A solvency ratio calculated as total assets divided by total
shareholders’ equity. Leverage is the use of debt (borrowed capital) in order to undertake an
investment or project. The result is to multiply the potential returns from a project. At the same
time, leverage will also multiply the potential downside risk in case the investment does not
pan out. Debt is often favorable to issuing equity capital, but too much debt can increase the risk
of default or even bankruptcy. The ideal ratio should be 0.5 or less.
27
Financial leverage 30-Jun-17 30-Jun-18
Total Debt 50,724 53,831

Total stockholders’ equity 15,722 19,564
Financial leverage 3.23 2.75
Interpretation:
Twenty-First Century Fox Inc. financial leverage ratio decreased from 3.23 to 2.75
in 2017 to 2018. The lower the degree of financial leverage, the less volatile earnings
will be.
4.1.4 Activity ratio
4.1.4.1 Total asset turnover: An activity ratio calculated as revenues divided by total assets.
Total asset turnover is a financial ratio that measures the efficiency of a company's use of its
assets to product sales. It is a measure of how efficiently management is using the assets at its
disposal to promote sales. The ratio helps to measure the productivity of a company's assets.
28
Total asset turnover 30-Jun-17 30-Jun-18
Revenues 28,500 30,400

Total asset turnover 0.56 0.56
Interpretation:
Twenty-First Century Fox Inc. total asset turnover ratio has changed negligibly
at 0.56 in 2017 to 2018. This indicates that there is an efficient utilization of assets of
the company.
4.1.5 Price-earnings ratio
4.1.5.1 Earnings per share: EPS is calculated by dividing no. of common stock shares outstanding
by net income or loss. EPS measures the profit available to the equity shareholders on a per share
basis, that is, the amount that they can get on every share held. It is calculated by dividing the
profits available to the equity shareholders are represented by net profits after taxes and
preference dividend.
29
EPS 13-Aug-17 14-Aug-18
No. shares of common stock 1,851,057,916 1,852,574,153

Net income (loss) 2,952 4,464
EPS 1.59 2.41
Interpretation:
Twenty-First Century Fox Inc. earnings per share has increased from 1.59 to 2.41 in 2017
to 2018 and indicates greater profitability for shareholders of the company.
30
4.2 The financial performance of The Walt Disney Company is calculated with ratio
analysis and interpreted below. The financial data is in US $ Millions:
4.2.1 Liquidity ratios
4.2.1.1 Current ratio: A liquidity ratio calculated as current assets divided by current liabilities.
Current ratio is an indicator of firm's commitment to meet its short term liabilities. Current ratio
is an index of the concern's financial stability since it shows the extent of the working capital
which is the assets that exceeds the current liabilities.. It shows if the business is trading beyond
its resources. The ideal ratio is 2:1.
Current ratio 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
Current assets 15,889 16,825 28,124 35,251 33,657

Current liabilities 19,595 17,860 31,341 26,628 31,077
Current ratio 0.81 0.94 0.9 1.32 1.08
Interpretation:
Walt Disney Co. current ratio improved from 0.9 to 1.32 in 2019 to 2020 but
then slightly deteriorated to 1.08 in 2021. As stated earlier a higher current ratio would
indicate inadequate employment of funds while a poor current ratio is a danger signal
to the management.
4.2.1.2 Quick ratio: A liquidity ratio calculated as (cash plus short-term marketable investments
plus receivables) divided by current liabilities. It indicates the company’s ability to instantly use its
near-cash assets (assets that can be converted quickly to cash) to pay down its current liabilities, it
is also called the acid test ratio. An "acid test" is a slang term for a quick test designed to produce
instant results. The ideal ratio is 1:1
31
Quick ratio 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
Cash and cash

equivalents 4,017 4,150 5,418 17,914 15,959
Receivables, net 8,633 9,334 15,481 12,708 13,367
Total quick assets 12,650 13,484 20,899 30,622 29,326
Quick ratio 0.65 0.75 0.67 1.15 0.94
Interpretation:
Walt Disney Co. quick ratio improved from 0.67 to 1.15 in 2019 to 2020 but
then slightly deteriorated to 0.94 in 2021. A higher quick ratio indicates high liquidity
position but improper utilization of funds.
4.2.1.3 Cash ratio: A liquidity ratio calculated as (cash plus short-term marketable investments)
divided by current liabilities. It tells creditors and analysts the value of current assets that could
quickly be turned into cash, and what percentage of the company’s current liabilities these cash
and near-cash assets could cover. The ideal ratio is less than 1.
Cash ratio 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
Cash and cash

equivalents 4,017 4,150 5,418 17,914 15,959
Total cash assets 4,017 4,150 5,418 17,914 15,959
Cash ratio 0.21 0.23 0.17 0.67 0.51
Interpretation:
Walt Disney Co. cash ratio improved from 0.17 to 0.67 in 2019 to 2020 but
then slightly deteriorated to 0.51 in 2021. There are more cash and cash equivalents
than current liabilities. It means sufficient cash on hand exists to pay off short-term debt.
32
4.2.2 Profitability ratios
4.2.2.1 Gross profit margin: Gross profit margin indicates the percentage of revenue available
to cover operating and other expenditures. The gross profit margin calculates the amount of profit
made before deducting selling, general, and administrative costs, which is the firm's net profit
margin. If a company's gross profit margin wildly fluctuates, this may signal poor management
practices and/or inferior products.
Gross profit margin 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
Gross profit 24,831 26,708 27,552 21,508 22,287

Revenues 55,137 59,434 69,570 65,388 67,418
Gross profit margin 45.04% 44.94% 39.60% 32.89% 33.06%
Interpretation:
Walt Disney Co. gross profit margin ratio deteriorated from 39.6% to 32.89% in 2019
to 2020 but then slightly improved to 33.06% in 2021.This signals superior operating
performance from managerial and product perspective.
33
4.1.2.2 Operating profit margin: A profitability ratio calculated as operating income divided by
revenue. The operating margin measures how much profit a company makes on a dollar of sales
after paying for variable costs of production, such as wages and raw materials, but before paying
interest or tax. Higher ratios are generally better, illustrating the company is efficient in its
operations and is good at turning sales into profits.
Operating profit margin 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
Operating income (loss) 13,775 14,804 10,668 -1,941 3,005

Revenues 55,137 59,434 69,570 65,388 67,418
Operating profit margin 24.98% 24.91% 15.33% -2.97% 4.46%
Interpretation:
Walt Disney Co. operating profit margin ratio deteriorated from 15.33% to -2.97%
in 2019 to 2020 but then slightly improved to 4.46% in 2021.It can be inferred that high
operating margins are a prime indicator of business efficiency and can be attributed
to better management controls, more efficient use of resources, improved pricing, and
more effective marketing.
4.1.2.3Net profit margin: An indicator of profitability, calculated as net income divided by

revenue. Net profit margin helps investors assess if a company's management is generating
enough profit from its sales and whether operating costs and overhead costs are being contained.
Net profit margin is one of the most important indicators of a company's overall financial health.
The higher the margin, the better performance of the company.
34
Net profit margin 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
Net income (loss) 8,980 12,598 11,054 -2,864 1,995

Revenues 55,137 59,434 69,570 65,388 67,418
Net profit margin 16.29% 21.20% 15.89% -4.38% 2.96%
Interpretation:
Walt Disney Co. net profit margin ratio deteriorated from 15.89% to -4.38% in 2019
to 2020 but then slightly improved to 2.96% in 2021. It can be inferred that
expanding net margins over time are generally rewarded with share price growth, as
share price growth is typically highly correlated with earnings growth.
4.1.2.4 ROE: A profitability ratio calculated as net income divided by shareholders’ equity.
ROE is often used to compare a company to its competitors and the overall market. The formula
is especially beneficial when comparing firms of the same industry since it tends to give accurate
indications of which companies are operating with greater financial efficiency and for the
evaluation of nearly any company with primarily tangible rather than intangible assets.
35
ROE 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21

Net income (loss) 8,980 12,598 11,054 -2,864 1,995
Total Shareholder’s equity 41,315 48,773 88,877 83,583 88,553
ROE 21.74% 25.83% 12.44% -3.43% 2.25%
Interpretation:
Walt Disney Co. ROE deteriorated from 12.44% to -3.43% in 2019 to 2020
but then slightly improved to 2.25% in 2021.It can be inferred that the management is
efficient at utilizing equity financing provided by shareholders. The higher the number,
the better, from shareholders’ perspective.
4.1.2.5 ROA: A profitability ratio calculated as net income divided by total assets. Return on
assets is the simplest of such corporate bang-for-the-buck measures. It tells you what earnings
are generated from invested capital or assets.
ROA 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
Net income (loss) 8,980 12,598 11,054 -2,864 1,995

Total assets 95,789 98,598 193,984 201,549 203,609
ROA 9.37% 12.78% 5.70% -1.42% 0.98%
Interpretation:
Walt Disney Co. ROA deteriorated from 5.70% to -1.42% in 2019 to 2020 but then
slightly improved to 0.98% in 2021. It can be inferred that the company is effective in
converting the money it invests into net income. The higher the ROA number, the better,
because the company is able to earn more money with a smaller investment. Put simply, a
higher ROA means more asset efficiency.
36
4.1.3 Solvency ratio
4.1.3.1 Debt to equity ratio: A solvency ratio calculated as total debt divided by total
shareholders’ equity. It is a measure of the degree to which a company is financing its operations
through debt versus wholly owned funds. More specifically, it reflects the ability of shareholder
equity to cover all outstanding debts in the event of a business downturn. Higher-leverage ratios
tend to indicate a company or stock with higher risk to shareholders. The ideal ratio is 2.0
Debt to equity 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
Short-term lease liabilities 12 12 5 37 41

Current borrowings 6,172 3,790 8,857 5,711 5,866
Borrowings, excluding current
portion 19,119 17,084 38,129 52,917 48,540
Long-term lease liabilities 129 142 146 271 246
Total debt 25,432 21,028 47,137 58,936 54,693
Debt to equity 0.62 0.43 0.53 0.71 0.62
37
Interpretation:
Walt Disney Co. debt to equity ratio deteriorated from 0.53 to 0.71 in 2019 to 2020
but then improved to 0.62 in 2021 not reaching 2019 level. It can be inferred that the
company is financing its growth by its own resources and is associated with low risk.
4.1.3.2 Debt to capital ratio: A solvency ratio calculated as total debt divided by total debt
plus shareholders’ equity. All else being equal, the higher the debt-to-capital ratio, the riskier
the company. This is because a higher ratio, the more the company is funded by debt than
equity, which means a higher liability to repay the debt and a greater risk of forfeiture on the
loan if the debt cannot be paid timely. The ideal ratio is 0.5.
Debt to capital 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21

portion 19,119 17,084 38,129 52,917 48,540
Total debt 25,432 21,028 47,137 58,936 54,693
Total capital 66,747 69,801 136,014 142,519 143,246
Debt to capital 0.38 0.3 0.35 0.41 0.38
Interpretation:
Walt Disney Co. debt to capital ratio deteriorated from 0.35 to 0.41 in 2019 to
2020 but then slightly improved to 0.38 in 2021.The risk associated is less because the
company is less funded by debt than equity.
4.1.3.3 Debt to assets ratio: A solvency ratio calculated as total debt divided by total assets. The
debt to asset ratio is commonly used by creditors to determine the amount of debt in a company,
the ability to repay its debt, and whether additional loans will be extended to the company. On the
other hand, investors use the ratio to make sure the company is solvent, is able to meet current and
future obligations, and can generate a return on their investment. The ideal ratio is less than 1.
38
Debt to assets 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21

portion 19,119 17,084 38,129 52,917 48,540
Total debt 25,432 21,028 47,137 58,936 54,693
Total assets 95,789 98,598 193,984 201,549 203,609
Debt to assets 0.27 0.21 0.24 0.29 0.27
Interpretation:
Walt Disney Co. debt to assets ratio deteriorated from 0.24 to 0.29 in 2019 to 2020
but then slightly improved to 0.27 in 2021.It can be inferred that the company is solvent
and is able to meet obligations and is attractive to lenders.
4.1.3.4 Financial leverage ratio: A solvency ratio calculated as total assets divided by total
shareholders’ equity. Leverage is the use of debt (borrowed capital) in order to undertake an
investment or project. The result is to multiply the potential returns from a project. At the same
time, leverage will also multiply the potential downside risk in case the investment does not pan
out. Debt is often favorable to issuing equity capital, but too much debt can increase the risk of
default or even bankruptcy.
39
Financial leverage 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
Total assets 95,789 98,598 193,984 201,549 203,609

Total Shareholders'
equity 41,315 48,773 88,877 83,583 88,553
Financial leverage 2.32 2.02 2.18 2.41 2.3
Interpretation:
Walt Disney Co. financial leverage ratio increased from 2.18 to 2.41 in 2019 to
2020 but then slightly decreased to 2.3 in 2021. The lower the degree of financial leverage, the
less volatile earnings will be.
4.1.4 Activity ratio
4.1.4.1 Total asset turnover: An activity ratio calculated as revenues divided by total assets.
Total asset turnover is a financial ratio that measures the efficiency of a company's use of its assets
to product sales. It is a measure of how efficiently management is using the assets at its disposal to
promote sales. The ratio helps to measure the productivity of a company's assets.
40
Total asset turnover 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
Revenues 55,137 59,434 69,570 65,388 67,418

Total assets 95,789 98,598 193,984 201,549 203,609
Total asset turnover 0.58 0.6 0.36 0.32 0.33
Interpretation:
Walt Disney Co. total asset turnover ratio deteriorated from 0.36 to 0.32 in 2019
to 2020 but then slightly improved to 0.33 in 2021.This indicates that there is an
efficient utilization of assets of the company.
4.1.5 Price-earnings ratio
4.1.5.1 Earnings per share: EPS is calculated by dividing no. of common stock shares outstanding
by net income or loss. EPS measures the profit available to the equity shareholders on a per share
basis, that is, the amount that they can get on every share held. It is calculated by dividing the
profits available to the equity shareholders are represented by net profits after taxes and preference
dividend.
EPS 30-Sep-17 29-Sep-18 28-Sep-19 3-Oct-20 2-Oct-21
1,488,670,96
No. shares of common stock 1,510,312,194 4 1,802,398,289 1,810,485,037 1,817,655,948
Net income (loss) 8,980 12,598 11,054 -2,864 1,995
EPS 5.95 8.46 6.13 -1.58 1.1
Interpretation:
Walt Disney Co. earnings per share deteriorated from 8.46 to 6.13 in 2018 to 2019
but then slightly improved from -1.58 to 1.1 in 2020 to 2021 . Higher EPS indicates greater
profitability for shareholders of the company.
41
Pre-acquisition ratios summary:
Financial Ratios Summary of 21CF 30-Jun-17 30-Jun-18

Activity Ratio (Long-term)
Liquidity Ratios
Cash ratio 0.85 0.92
Solvency Ratios (Debt Ratios)
Debt to equity 1.27 1
Profitability Ratios (Return on Sales)
Profitability Ratios (Return on
Investment)
Return on equity (ROE) 18.78% 22.82%
Return on assets (ROA) 5.82% 8.29%
Earnings per share (EPS)
$1.59 $2.41
Financial Ratios Summary of Disney 30-Sep-17 29-Sep-18

Liquidity Ratios
Cash ratio 0.21 0.23
Debt to equity 0.62 0.43
Profitability Ratios (Return on Sales)
Investment)
Return on equity (ROE) 21.74% 25.83%
Return on assets (ROA) 9.37% 12.78%
$5.69 $8.36
42
Interpretation:
1) The total asset turnover of 21CF was 0.56 in 2018 and was comparatively lower than
Disney at 0.6 in 2018. It can inferred that Disney had better asset utilization than 21CF to
promote sales.
2) The liquidity position of 21CF was Current Ratio = 2.35, Quick Ratio = 1.79 Cash
Ratio = 0.92 in 2018 and was significantly better than Disney at Current Ratio = 0.94,
Quick Ratio = 0.75, Cash Ratio = 0.23 in 2018. It can be deduced that 21CF had maintained
their cash reserves in ideal ratios for meeting short term obligations while Disney’s position
was a danger signal to its management.
3) The solvency position of 21CF was D/E = 1, D/C = 0.5, D/A = 0.36, FL = 2.75 in 2018
and was better than Disney at D/E = 0.43, D/C = 0.43, D/A = 0.3, FL = 0.3 in 2018. It can be
inferred that both companies relied on their equity for financing growth and were facing
low risk, but might have missed out on multiplying potential returns by the means of financial
leverage.
4) The profitability position of Disney was GP = 44.94%, OP = 24.91%, NP = 21.20% in 2018

and was significantly better than 21CF at GP = 34.97%, OP = 20.75%, NP = 14.68% in 2018.
It can be understood that both companies enjoyed high percentages of profits along with returns
on investment but Disney performed better from the shareholders’ perspective as more profits
mean higher dividends payout and more earnings per share.
43
Post-acquisition ratios summary:
Financial Ratios Summary of Disney 28-Sep-19 3-Oct-20 2-Oct-21

Total asset turnover 0.36 0.32 0.33
Liquidity Ratios
Current ratio 0.9 1.32 1.08
Quick ratio 0.67 1.15 0.94
Cash ratio 0.17 0.67 0.51
Debt to equity 0.53 0.71 0.62
Debt to capital 0.53 0.75 0.66
Debt to assets 0.35 0.41 0.38
Financial leverage 0.35 0.43 0.4
Sales)
Gross profit margin 39.60% 32.89% 33.06%
Operating profit margin 15.33% -2.97% 4.46%
Net profit margin 15.89% -4.38% 2.96%
Investment)
Return on equity (ROE) 12.44% -3.43% 2.25%
Return on assets (ROA) 5.70% -1.42% 0.98%
$6.64 $-1.58 $1.09
Interpretation:
1) The total asset turnover of Disney is comparatively lower post acquisition at 0.33 in 2021.
It can inferred that Disney struggled to utilize its assets effectively to promote sales.
2) The liquidity position of Disney improved post acquisition at Current Ratio = 1.08,
Quick Ratio = 0.94, Cash Ratio = 0.51 in 2021. It can be deduced that
Disney maintained their cash to meeting short term obligations but is still a danger
signal to its management.
3) The solvency position of Disney improved to D/E = 0.62, D/C = 0.66, D/A = 0.38, FL = 0.4
in 2021. It can be inferred that Disney still relies on their equity for financing growth and
were facing low risk, but might have missed out on multiplying potential returns by the means
of financial leverage.
44
4) The profitability position of Disney deteriorated post acquisition to GP = 33.06%, OP = 4.46%,
NP = 2.96% in 2021. It can be inferred that Disney suffers from low profits along with
returns on investment and faces scrutiny from the shareholders’ perspective as less profits
mean lower dividends payout and less earnings per share.
45
CHAPTER – 5
Findings:
1) The total asset turnover of Disney is at 0.33 in 2021 and is significantly lower from 0.6 in
2018. It can be inferred that Disney struggled to utilize its assets effectively to promote
sales post acquisition of 21CF, which is in line with previous literature that mergers struggle
with financial performance in short term.
2) The liquidity position of Disney is at Current Ratio = 1.08, Quick Ratio = 0.94, Cash Ratio
= 0.51 in 2021 and improved from Current Ratio = 0.94, Quick Ratio = 0.75, Cash Ratio = 0.23
in 2018 post acquisition of 21CF. It can be deduced that Disney maintained their current assets
to meet short term obligations but is still a danger signal to its management.
3) The solvency position of Disney improved from D/E = 0.43, D/C = 0.43, D/A = 0.3, FL = 0.3
in 2018 to D/E = 0.62, D/C = 0.66, D/A = 0.38, FL = 0.4 in 2021. It can be inferred that
Disney still relies on their equity for financing growth and are facing low risk, but might
have missed out on multiplying potential returns by the means of financial leverage. This
might prove a better strategy if post pandemic levels of returns are not restored and due to
the nature of M&E industry being in maturity stage and also of few big major players
concentrated in market share.
4) The profitability position of Disney deteriorated from GP = 44.94%, OP = 24.91%, NP =

21.20% in 2018 to GP = 33.06%, OP = 4.46%, NP = 2.96% in 2021. It can be inferred
that Disney suffers from low percentages of profits along with returns on investment primarily
due to Covid pandemic.
5) The earnings per share deteriorated significantly from $8.36 in 2018 to $1.09 in 2021 as
the revenues plummeted sharply and the other factor is the assets appreciation in balance sheet.
Suggestions:
1) It is suggested that Disney management should maintain their liquidity ratios to meet their
short term obligations or it may face bottlenecks and hamper its operational efficiency.
2) The verdict regarding favorable or unfavorable long term financial performance is

inconclusive as there is no available data and restoring pre pandemic market conditions
will take more time to recover.
3) It is suggested that the management should focus on increasing its profitability and sales as it
faces scrutiny from the shareholders’ and lenders perspective as less sales means less profits
which mean lower dividends payout and less earnings per share.
46
4) It is suggested that the management conducts a cost vs. benefit analysis on financial
leveraging the potential opportunity in the SVOD niche in the OTT segment as it
is in its growth stage of its cycle.
Conclusion:
The present study has brought out the various facts about the financial performance of The
Walt Disney Company. The suggestions made in the study are of immense use for the policy
makers to make appropriate decision for mitigating the financial problems and to better
financial performance . In order to compete with the competitors in the global Media and
Entertainment Industry and to sustain its place, Disney needs to monitor its financial
performance continually and take financial decisions rationally.
The analysis of financial performance was carried out by analyzing their activity, liquidity,
solvency and profitability ratios. The study can be summarized by suggesting that the
management should maintain their liquidity ratios and look for ways to improve its
profitability through new SVOD niche in the OTT segment by the means of financial leverage.
Further research scope lies in analyzing long term financial performance of Disney. The study
faced limitations due to the changing accounting year of selected firms which complicates
comparative study as well as due to Covid 19 pandemic.
47
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ANNEXURES
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A Project Report on

“A STUDY ON FINANCIAL PERFORMANCE OF THE WALT

Osmania University, Hyderabad-500007

Bachelor of Business Administration (BBA)

Under the Guidance of

MS. MOHINI POOJA HUGGAHALLI

INTERNAL GUIDE EXTERNAL GUIDE

This is to certify that the project work entitled “A STUDY ON FINANCIAL

PERFORMANCE OF THE WALT DISNEY COMPANY POST-

ACQUISITION OF 21ST CENTURY FOX”, is the bonafide work done by

JASIR MOHAMMED SYED, Roll No: 2085-19-684-052, as a part of their

curriculum in the Department of Management, Avinash Degree College,

INTERNAL GUIDE EXTERNAL EXAMINER

MS. MOHINI POOJA HUGGAHALLI

HEAD OF DEPARTMENT PRINCIPAL

MS. MOHINI POOJA HUGGAHALLI MS. P. SATHYAVATHI

MS. MOHINI POOJA HUGGHALLI

I, JASIR MOHAMMED SYED (Reg. No. 2085-19-684-052) hereby

declare that the project entitled “A STUDY ON FINANCIAL PERFORMANCE OF

THE WALT DISNEY COMPANY POST-ACQUISITION OF 21 ST CENTURY

FOX”, submitted to the Osmania University, in partial fulfillment of the requirements

for the award of the Degree of Bachelor of Business Administration (BBA) is a

Signature of the Candidate

JASIR MOHAMMED SYED

List of Figures vii

List of Tables viii - ix

Chapter Title Page No.

V FINDINGS, SUGGESTIONS AND CONCLUSION 46

FIGURE TITLE PAGE

1 Liquidity Ratios of 21CF 21

2 Profitability Ratios of 21CF, Return on Sales 23

3 Profitability Ratios of 21CF, Return on 25

5 Total Asset Turnover of 21CF 29

6 Liquidity Ratios of Disney 33

7 Profitability Ratios of Disney, Return on Sales 35

8 Profitability Ratios of Disney, Return on 37

Table Title Page

1 Current Ratio of 21CF 19

2 Quick Ratio of 21CF 20

3 Cash Ratio of 21CF 20

4 Gross Profit Margin Ratio of 21CF 21

5 Operating Profit Margin Ratio of 21CF 22

6 Net Profit Margin Ratio of 21CF 23

7 ROE Ratio of 21CF 24

8 ROA Ratio of 21CF 24

9 Debt to Equity Ratio of 21CF 25

10 Debt to Capital Ratio of 21CF 26

11 Debt to Assets Ratio of 21CF 27

12 Financial Leverage Ratio of 21CF 28

13 Total Asset Turnover Ratio of 21CF 29

15 Current Ratio of Disney 31

16 Quick Ratio of Disney 32

17 Cash Ratio of Disney 32

18 Gross Profit Margin Ratio of Disney 33

19 Operating Profit Margin Ratio of Disney 34

20 Net Profit Margin Ratio of Disney 35

21 ROE Ratio of Disney 36

22 ROA Ratio of Disney 36

23 Debt to Equity Ratio of Disney 37

24 Debt to Capital Ratio of Disney 38

25 Debt to Assets Ratio of Disney 39

26 Financial Leverage Ratio of Disney 40

27 Total Asset Turnover Ratio of Disney 41

29 Pre-acquisition Ratios Summary of 21CF and Disney 42