Mikael La Ferla

Born and Raised in Philadelphia

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Mikael La Ferla’s Disney 10K Assignment

  1. Market Cap Calculation = Current market price per share multiplied by total number of outstanding shares
    1. The “weighted average number of common and common equivalent shares outstanding: basic” for 2020 is 1,808 (in millions)
    2. *Since October 3, 2020 was a Saturday, I’m using the adjusted close share price for October 2, 2020 (Friday). The share price was 122.55. Please understand this in case the answer you have is a little different.*
      1. 122.55 multiplied by 1,808 (in millions) = $221.57 billion
    3. *Here’s the source I used to find the market price per share for Disney*
  1. “Above the line” consists of “Costs of Goods Sold.” These costs are seen “above” the gross profit line. “Below the line” consists of “overhead” costs. These costs are not directly related to making the product or delivering a service. These costs are seen “below” the gross profit line. 
    1. “Above the line” in 2020 was 3,794 (in millions), so $3.79 billion. “Above the line” in 2019 was 11,830 (in millions), so $11.83 billion. Gross profit has decreased from 2019 to 2020 primarily because of the drop in product revenue and the rise in cost of services.
    2. “Below the line” in 2020 was -2,864 (in millions), so -$2.86 billion. “Below the line” in 2019 was 11,054 (in millions), so $11.05 billion. Disney experienced a net loss from 2019 to 2020 primarily because of the increase in restructuring and impairment charges and interest expense.
  1. At the beginning of fiscal 2019, Walt Disney began following a five-step model for revenue recognition set forth by the FASB. Disney now intends to recognize revenue when its products and services are transferred to customers. As a result, Disney’s new guidelines recorded a $116 million net reduction to opening fiscal 2019 retained earnings. There are four important changes to Disney’s revenue recognition policies. 1) Disney recognizes a smaller portion of immediate revenue and spreads out the remaining revenue in the future. 2) Any excess over actual earnings for character images, brands, and trademarks with minimum guaranteed license fees is recognized gradually when there’s a shortfall. 3) TV and Film title license fees are recognized when they exceed its set limit. 4) Instead of revenue being recognized when a licensing agreement is renewed or extended, it is now recognized when Disney content is available under the renewal or extension.
  1. The major segments of Walt Disney Company are: Media Networks, Parks, Experiences and Products, Studio Entertainment, and Direct-to-Consumer & International. 

The total revenue for all segments in 2020 was $65,338 (in millions).

  1. Media Networks = $28,393/$65,338 = .4342 = 43.42%
  2. Parks, Experiences and Products = $16,502/$65,330 = .2526 = 25.26%
  3. Studio Entertainment = $9,636/$65,338 = .1475 = 14.75%
  4. Direct-to-Consumer & International = $16,967/$65,338 = .2597 = 25.97%
  5. Eliminations = -$6,110/$65,338 = -.0935 = -9.35%
  1. Percentage and money variance from 2019 to 2020 → (2020 value – 2019 value)/2019 value
    1. Cost of services = 2019 = -36,493, 2020 = -39,406
      1. Percentage = .0798 = 7.98%  = Unfavorable variance
      2. Money = $2,913 (in millions) = $2.9 billion  = Unfavorable variance
    2. SG&A = 2019 = 11,549, 2020 = 12,369  
      1. Percentage = .0710 = 7.1%  = Unfavorable variance
      2. Money = $820 (in millions) = $820 million  = Unfavorable variance
    3. Gross Profit of Services = 2019 = $60,579 – $36,493 = $24,086, 2020 = $59,265 – $39,406 = $19,859
      1. Percentage = -.2129 = –21.29% = Unfavorable variance
      2. Money = –$4,227 (in millions) = –$4.2 billion = Unfavorable variance
    4. Gross Profit of Products = 2019 = $9,028 – $5,568 = $3,460 , 2020 = $6,123 – $4,474 = $1,649
      1. Percentage = -.5234 = -52.34% = Unfavorable variance
      2. Money = -$1,811 (in millions) = -$1.8 billion = Unfavorable variance

Solved by Mikael La Ferla

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