Microsoft Word - Group Assignment 2 MBA Financial Management – Individua Assignment This is an individual assignment. In this assignment you will be applying the concepts you learned in class to a...

Individual Assignment
Part #1: Operational Performance
Walt Disney Company:
Walt Disney Co. is an American mass media entertainment company and is presently headquartered in Burbank, California. It was founded as a cartoon company for delivering entertainment to the children by Walt and Roy O. Disney in the year 1923. Presently they have diversified themselves in various fields including film production, television channels and theme parks specifically for the children.
Its shares are traded on the NYSE stock exchange and as on 2020 the revenue of the company stands at $65.388 billion. We will conduct a financial analysis of the company in order to evaluate and determine the intrinsic value. This will assist the potential investors to decide if investing in the security of Walt Disney Co will be prudent or not. We will first try to analyse the company with the liquidity ratio and compared it with the entertainment industry average in USA.
    Liquidity Ratios
    2019
    2018
    2017
    2016
    Current Ratio
    0.75
    0.87
    0.75
    0.94
    Quick Ratio
    0.70
    0.79
    0.68
    0.85
    Cash Ratio
    0.17
    0.23
    0.21
    0.27
    Industry Average
    2019
    2018
    2017
    2016
    Current Ratio
    1.69
    1.58
    1.56
    1.53
    Quick Ratio
    1.08
    1.05
    1.09
    1.09
    Cash Ratio
    0.51
    0.40
    0.42
    0.41
Current Ratio: Ideally the current ratio must be within 1.0 to 1.5. Ratio <1 signifies that the company is poor in paying off its current liability obligations. On the other hand a ratio of >1.5, states that the company’s cash is remaining idle. Presently, the company’s current ratio is 0.75 in 2019 and is slightly lower than 2018 at 0.87. The current ratio of the entertainment industry is at 1.69 in 2019. This signifies that the current ratio of Walt Disney compared to the industry is declining.
Quick Ratio: The ideal quick ratio is 1:1 and for Walt Disney Co the quick ratio is at 0.70 in 2019 compared to 0.79 in 2018, while the industry average is at 1.08 in 2019. This also illustrates that company is reduced in terms of quick ratio also.
Cash Ratio: The cash ratio of the companies must be within 0.5 to 1.0. But for Walt Disney it is much lower at 0.17 in 2019 and is also lesser than its 2018 ratio of 0.23. Compared to this the entertainment industry cash ratio is 0.51 which is at par with the ideal cash ratio. Hence, it can be stated that the Walt Disney cash ratio is also declining.
Part #2:...