Disney Financial Report and Financial Analysis: 2015 to 2019

Walt Disney Financial Report and Financial Analysis started with an in-depth review of Disney's 10k Annual report, specifically, Disney's income statement and balance sheet. 

Next Paul Borosky, MBA., summarized their financial information and input it into a proprietary financial model, which shows their income statement and balance sheet trends as well as calculations for Disney's financial ratios, and financial ratio trends covering 5 years.  

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Each Public Company Financial Report will include:

  • Summarized income statement for the last 5 years.
  • Summarized balance sheet for the last 5 years.
  • Summary analysis by myself of important income statement, balance sheet, and financial ratio trends and other happenings.
  • Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
  • Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
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  • Each section includes an “in other words” segment.  This is were the researcher uses plain English to explain finance concepts.

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Disney Summary

Disney stock price started 2019 at $107.94.  It ended the year with a stock price of $146.40.  This is a growth rate annually of 35.63%.  From an investor’s perspective, this growth rate well exceeds overall market returns.

Disney has been consistently paying dividends over the last five years.  Further, their dividend payments have been growing continuously as well.  However, the actual growth rate for dividends has been declining.  In 2016, the growth rate for dividends was 8.76%.  However, in 2019, this growth rate slowed to 2.33%.  Investors should expect this growth rate declined to continue for your seeable future. 

Disney Income Statement Summary

Cost of Goods Sold

Disney’s cost of goods sold, as a percentage of revenue, has been increasing steadily for the last five years.  In 2015, the cost of goods sold as a percent of revenues was approximately 54%.  This percentage grew to 60.4% in 2019.  This indicates that the company’s operations are becoming more and more expensive.  Further, these expenses are not being passed on to customers in the form of higher prices.

Walt Disney 2019 Income Statement
Column1 2019 2018 2017 2016 2015
Revenues                    69,570                    59,434                    55,137                    55,632                      52,465
COGS                    42,018                    32,726                    30,306                    29,993                      28,364
Gross Profit                    27,552                    26,708                    24,831                    25,639                      24,101
SG&A                    11,541                      8,860                      8,176                      8,754                        8,523
Depreciation                            -                      3,011                      2,782                      2,527                        2,354
R & D                            -                            -                            -                            -                             -
Other                            -                            -                            -                            -                             -
Operating Expenses                    55,111                    11,871                    10,958                    11,281                      10,877
EBIT                    14,459                    14,837                    13,873                    14,358                      13,224
Other Income                            -                         601                           78                            -
Interest Expense                         978                         574                         385                         260                           117
EBT                    13,944                    14,729                    13,788                    14,868                      13,868
Taxes                      3,031                      1,663                      4,422                      5,078                        5,016
Net Income                   11,584                   13,066                     9,366                     9,790                      8,852

Disney Balance Sheet Summary

Accounts Payable

Disney’s accounts payable has grown from 7.8 billion to 17.9 billion within a five-year time frame.  Also, as a percentage of sales, this increase is from 15% to 25.8%.  The substantial increase in accounts payable shows that the firm is taking longer to pay their suppliers for raw material. 

A benefit for the delayed payments is that the firm can utilize the funds for operations.  This may lower the need for additional outside financing.  An issue with delayed accounts payable is the company misses out on discounts on early payment opportunities.  Further, slow pay with accounts payable often leads to vendor animosity.  This animosity could result in disloyalty from the vendors.

Walt Disney Summary Balance Sheet 2019
Column1 2019 2018 2017 2016 2015
Cash                        5,418                    4,150                    4,017                    4,610                    4,269
Short Term Investment                              -                         -                         -                         -                         -
Account Receivable                      15,418                    9,334                    8,633                    9,065                    8,019
Inventory                        1,649                    1,392                    1,373                    1,390                    1,571
Other                           979                    1,949                    1,866                    1,901                    2,132
Current Assets                    28,124                16,825                15,889                16,966                16,758
Net PPE                      31,603                  29,540                  28,406                  27,349                  25,179
Goodwill                      80,293                  31,269                  31,426                  27,810                  27,826
Other                        4,715                  14,152                  13,073                  12,959                  11,247
Total Assets                  193,984                98,598                95,789                92,033                88,182
Accounts Payable                      17,942                    9,479                    8,855                    9,130                    7,844
Accrued Expense                              -                         -                         -                         -                         -
Accrued Taxes                              -                         -                         -                         -                         -
Notes Payable                              -                         -                         -                         -                         -
LT Debt - Current                        8,857                    3,790                    6,172                    3,687                    4,563
Other                        4,722                    4,591                    4,568                    4,025                    3,927
Total Current Liabilities                      31,521                  17,860                  19,595                  16,842                  16,334
LT Debt                      31,521                  17,084                  19,119                  16,483                  12,773
Other                      13,580                    6,590                    6,443                    7,730                  10,420
Total Liabilities                  100,095                45,766                50,785                44,710                39,527
Common Stock                      53,907                  36,779                  36,248                  35,859                  35,122
Treasury                           907                  67,588                  64,011                  54,703                  47,204
Retained Earnings                      42,494                  82,679                  72,606                  66,088                  59,028
Other                        5,012                    4,059                    3,689                    3,979                    2,421
Total Equity                    93,889                52,832                45,004                47,323                48,655
Total Equity & Liability                  193,984                98,598                95,789                92,033                88,182

Disney Financial Ratio Summary and Analysis

Cash Ratio

Disney’s cash ratio had fallen from .26 in 2015 to .17 in 2019.  The steady decline indicates that the company is trying to find the optimal cash position to support operations.  From an investor’s perspective, they may assume this ratio will continue to fall until optimization is achieved.

Inventory Turnover

Disney’s inventory turnover had increased from 33.4 in 2015 to 42.2 in  2019.  This indicates that the company is holding less inventory.  As long as inventory sellouts are not an issue, this practice is well received by financial analysts.  Not only does this allow for organizations to use less space for storage but it also helps the company avoid product obsolescence.

Net Profit Margin

The company’s net profit margin is currently at 16.7% for 2019.  This is down substantially from 22% in 2018.  The main reason for this decline could be increased interest expenses for the company.  In some situations, when an organization takes on debt, return on the investments may take several years.  However, interest expenses often impact the organization’s bottom line within 12 months.

Walt Disney Liquidity Ratios 2019
Ratios 2019 2018 2017 2016 2015
Current Ratio                           0.89                    0.94
Cash Ratio                           0.17                    0.23
Quick Ratio                           0.84                    0.86
Net Working Capital                         4,543                  5,397

Walt Disney Asset Utilization 2019
Ratios 2019 2018 2017 2016 2015
Total Asset Turnover                           0.36                    0.60
Fixed Asset Turnover                           2.20                    2.01
Days Sales Outstanding                         80.89                  57.32
Inventory Turnover                         42.19                  42.70
Accounts Receivable Turnover                           4.51                    6.37
Working Capital Turnover                         15.31                  11.01
AP Turnover                           3.88                    6.27
Average Days Inventory                           0.12                    0.12
Average Days Payable                           0.01                    0.02

Walt Disney Profitability Ratios 2019
Ratios 2019 2018 2017 2016 2015
Return on Assets 5.97% 13.25%
Return on Equity 12.34% 24.73%
Net Profit Margin 16.65% 21.98%
Gross Profit Margin 39.60% 44.94%
Operating Profit Margin 20.78% 24.96%
Basic Earning Power 7.45% 15.05%
ROCE 8.90% 18.38%
Capital Employed                     162,463                80,738
ROIC 31.31% 37.67%