Use attachments to answer the following Required:a. Calculate and disaggregate Disney’s return on common equity for each of the two fiscal years ending September 30, Year 9, and September 30, Year 13 (use year-end figures for any ratio computations typically using averages).b. Drawing only on your answers to a and the data available,identify the two components that contributed most to the observed change in Disney’s return on common equity between Year 9 and Year 13. State two reasons for the observed change in each of the two componentCHECK(a) Yr. 13 RNOA = 11.82% (b) Yr. 13 Spread =15.34% Walt Disney CompanyWalt Disney Company (Disney) is a diversified inter-national entertainment company with operations in threebusiness segments. Revenue and operating income data for the three segments are shown below.($ millions)Business SegmentsBUSINESS SEGMENT DATAYears Ending September 30Theme parks and resorts.Film entertainmentConsumer products.Revenue$3,4413,6731,415$8,529YEAR 13OperatingIncome$ 747622355$1,724Revenue$2,5951,588411$4,594YEAR 9Chapter Eight | Return on Invested Capital and Profitability AnalysisThe profitability of the leisure-time industry is influenced by various factors including economicconditions, the amount of available leisure time, oil and transportation prices, and weather pat-terns. Disney management has been very aggressive in raising theme park admission prices. Forthe 10-year period ending in Year 13, admission prices increased at an annual rate of 8-9%compared to less than 4% for U.S. consumer price inflation. Disney's Film Entertainment businesshas grown rapidly because of increasing acceptance of The Disney Channel and, importantly,management efforts to exploit the expanding distribution opportunities available for its extensivevideo library. Disney's Consumer Products revenue has also grown meaningfully as the companyhas moved its product mix aggressively toward direct publishing and direct retail and away fromhigher-margined licensing and royalty income sources. During the fourth quarter of fiscal Year 13(ending September 30, Year 13), Disney wrote off the full carrying value of Euro Disney. Thecharge was $350 million ($218 million after tax).OperatingIncome$ 785256188$1,229499 WALT DISNEY COMPANYSelected Financial Statement and Other DataYears Ending September 30($ millions except per share data)Income StatementRevenueOperating expensesInterest expense...Investment and interest incomeIncome (loss) from Euro Disney.Pretax income.Taxes.Net income.Earnings per share.Dividends per shareBalance SheetCash.ReceivablesInventoriesOther...Current assetsProperty, plant, and equipment, net.Other assets.Total assetsCurrent liabilitiesBorrowings.Other liabilities.Stockholders' equity.Total liabilities and stockholders' equity.Cash Flow from Operations..Other DataCommon shares outstanding (millions)Closing price, common stock per shareYear 13$ 8,529(6,968)(158)186(515)1,074(403)671$$ 1.23$ 0.23$3631,3906091,8894,2515,2282,272$11,751$ 2,8212,3861,5145,030$11,751$ 2,145544$37.75Year 9$4,594(3,484)(24)6701,153(450)$703$ 1.27$0.11$ 3812249096622,1763,3971,084$6,657$1,2628611,4903,044$6,657$1,275552$30.22Note: Total assets except "other" current assets, current liabilities, and otherliabilities are considered operating, as is the Euro Disney loss.

Return on common equity is the profitability ratio that measures how much amount the common…

Answered: Walt Disney Company (Disney) is a…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q