The Walt Disney Company
Financial Accounting Project
Progress Report 2

8am M, W, Th
Yuli Tang
Wei Wang
Tianda Xu
Rui Zhang

Profitability:
In 2011, the profit margin of Walt Disney Company was 0.1176(11.76%). Due to the company’s huge net sales value, it shows a solid profit margin for a large company just as Walt Disney. In 2010, the profit margin was 0.1041(10.41%), which was 1.35% lower than 2011. The higher profits margin rate in 2011 indicates that the profit margin will increase in the future. Furthermore, the Walt Disney’s return on equity was 0.129(12.9%) in 2011, and the return on equity was 2.9% higher than the previous year, which showed that the Walt Disney keep steady profitability. Compared to its competitor DreamWorks Animation’s 0.123 profit margin, Walt Disney had lower profit margin that was 0.1041 (Appendix 2D). However, the ROE of DreamWorks Animation was 0.064(6.4%), which was much lower than Walt Disney (Appendix 1A&2A). Thus, Walt Disney made more profits than its competitor.
The net income of Walt Disney in 2011 was $ 4,807,000,000, and it net sales was $40,893,000,000 (Appendix 1D). There are huge amount differences between net income and net sales. Because Walt Disney doesn’t have cost of good sold, the main reason is high cost and expense that was $ 33,112,000,000. In addition, income tax and interest expense were other factors determined the discrepancy.

Liquidity and Capital Structure:
As we know that a quick ratio can measure the ability of a company to pay its current obligations, and also, a high quick ratio normally suggests good liquidity. From the Appendix 1F shows below, Disney’s quick ratio in 2011 was 1.006, which has a little increased from 0.980 in 2010. Therefore, Disney will be able to meet its obligations as they become due. Compared with the quick ratio of its competitor, DreamWorks, which shows in the