The Walt Disney Company (DIS) is publicly traded on the NYSE and was chosen as it has not been previously analyzed by other students. The latest annual reports for fiscal years 2023 (ended September 30, 2023) and 2022 (ended September 30, 2022) were accessed from the Investor Relations section of the company’s website (https://thewaltdisneycompany.com/investor-relations/).

Financial Ratio Analysis:

Current Ratio:

• FY 2023:Current Assets (US$119.34 billion) / Current Liabilities (US$81.42 billion) = 1.47
• FY 2022:Current Assets (US$140.28 billion) / Current Liabilities (US$84.40 billion) = 1.66

Profit Margin Ratio:

• FY 2023:Net Income (US$12.03 billion) / Total Revenue (US$80.36 billion) = 0.15
• FY 2022:Net Income (US$11.54 billion) / Total Revenue (US$80.76 billion) = 0.14

Interpretation:

• Current Ratio:Both years show a current ratio exceeding 1, indicating the company has sufficient current assets to cover its current liabilities. However, the ratio has decreased from 1.66 in FY 2022 to 1.47 in FY 2023, which suggests a slight decrease in the company’s short-term liquidity.
• Profit Margin Ratio:The profit margin ratio has remained relatively stable between FY 2022 and FY 2023, hovering around 15%. This indicates that for every dollar of revenue generated, the company keeps approximately 15 cents as profit. While a steady profit margin is positive, a slight increase might suggest improved efficiency in converting revenue to profit.

Management Discussion and Analysis (MD&A):

The MD&A section of the FY 2023 annual report highlights several key points:

• Continued growth in Disney+ subscribers:The company emphasizes the substantial growth of its streaming service, Disney+, reaching over 221 million subscribers worldwide.
• Focus on expanding streaming content:The report mentions the company’s commitment to creating and acquiring high-quality content for its streaming platforms.
• Impact of global events:The MD&A acknowledges the challenges presented by global economic uncertainties and geopolitical events.
• Strategic investments in theme parks and experiences:The company outlines its plans for continued investment in theme park expansions and creating new guest experiences.

Auditor’s Report:

The FY 2023 annual report includes an unqualified audit opinion issued by Ernst & Young LLP. An unqualified opinion signifies that the auditors have reviewed the company’s financial statements and found them to be presented fairly, in all material respects, in accordance with generally accepted accounting principles (GAAP).

Initial Assessment:

Based on this initial review, The Walt Disney Company appears to be in a financially stable position with a strong current ratio and consistent profit margin. The company’s focus on expanding its streaming service and investing in theme park experiences suggests potential for future growth. However, it’s important to note that this is a limited analysis, and further research, including an evaluation of the company’s long-term debt, market trends, and competitor performance, would be necessary for a more comprehensive assessment.