Case Study The Walt Disney Company’s Yen Financing Alexandra Molnár Laure Vigneron Manuel Aguilee Pimprapai Lertamornkitti Pranav Goyal Executive Summary Walt Disney, an American leisure and entertainment company, receives royalty payment from Tokyo Disneyland every year. The royalties were denominated in yen and were constantly growing and becoming significant for the company (8 billion Yen in 1984, with 10-20% projected growth). However, the depreciation of the yen against the dollar could incur the risk of devaluation on the royalties to be received, indicating that Walt Disney should perform hedging. Different solutions are available. First is to (1) buy options to sell yens for dollars or to buy dollars with yen.
The first concern is the projected units that will be sold and the amount of revenue in year 9. The company’s sales budget indicates that 3,510 units will be sold in year 9, generating $5.25M in revenue, which is an increase of 3.2% over year 8. While the forecasted units of 3,510 in year 9 seem in line with the 3,400 units sold in year 8, it is in sharp contrast with the trend over the past 2 years. In reviewing the horizontal analysis data, revenue increased by 33.3% between years 6 and 7 then dropped by 15% between years 7 and 8 due to the decline in economic conditions. The weaker economy resulted in sponsorship cutbacks for professional riders.
SciTronics’ profit as a percentage of sales in 2008 was 5.7 %. 2. This represented an increase from 3.4 % in 2005. 3. SciTronics had a total of $ 102,000 (75,000 + 27,000) of capital at year-end 2008 and earned before interest but after taxes (EBIAT) $ 16,120 (avg.
Recently, competitors have moved facilities overseas in an effort to reduce labor costs. Due to seasonality, high demand and production of its apparel lines occur for 6 months out of the year from August through January. Significant swings in production activity have a negative impact on the useful lives of the machinery and are evidenced by high maintenance costs throughout the year. Analysis In order to evaluate the costs and net income associated with seasonal versus level production, pro forma financial statements were created for the income statement, balance sheet, and statement of cash flows Exhibit 2, 3 and 4. Assumptions shown in Exhibit 1(b) for 2012 projections were used to evaluate changes in Accounts Payable purchases, inventory levels, and associated expenses of each option.
“Another negative factor was a 6.6 percent drop, on an annualized basis, in federal defense spending.” She supports that the decrease in GDP is directly related to the decrease in government spending g which proves how fiscal policy can affect overall economic growth. Monetary policy can be defined as: A central banks changing of the money supply to influence interest rates and assist the economy in achieving price stability, full employment, and economic growth. The article discusses how decline in economic growth can in part be due to uncertainty of interest rates which is directly controlled by the Federal Reserve. The author supports this idea by showing that uncertainty of interest rates has affected business investments and the slowing of the housing
By how much could they reasonably be expected to vary? From exhibit 9A, we can see that the total CAPEX for these years for MCI would be around $8.6billion based on an assumed $20m of negative changes in the working capital, as has been the case historically. Assuming that the company does not increase its debt amounts, it would be able to generate roughly $4.3billion internally net income tax and depreciation. Therefore, the total funding needs would be in the region of $4.3b. Taking into
TASK 1D By looking at the cash flow forecast for the year, you can see that from January through to July (6 months) you will have a negative bank balance at the end of each month. You need to think about how you can counteract this by making appropriate decisions now. You could try to negotiate longer credit terms for the radio advert and insurance company. Spreading these amounts over a longer time period would reduce the amount you will be overdrawn by each month. Think about ways to promote your business to encourage more customers to use your services, this will increase your income during these months.
You will need to consider at least two of the strategy concepts. Introduction: The objective of this report is to understand how the global economic recession of 2009 affected Caterpillar Inc. this report will set out and analyse Cat’s recent profitability and performance, looking at information over a ten year period 2000-2010. Taking into account the globalised world in which Caterpillar Inc. operates, this report will introduce two strategy concepts that will explain Cat’s performance. The two strategies that will be included are Porter’s Five forces and Chandler’s. The report will conclude with an overall discussion on the findings and reach a final decision relating back to the original question.
The base average is 215.495 (US Government). To maintain Social Security’s purchasing power, retirement benefits, effective December, automatically increase each year by the percentage change in the consumer price index for urban wage earners and clerical workers (CPI), a measure of price inflation. Some experts argue that the CPI overstates cost-of-living increases. • Critics argue that the CPI does not adequately factor in consumers’ ability to find cheaper substitutes when the prices of those goods increase. • COLA reductions would lower the cost of Social Security and help preserve the program’s solvency for a longer period of
Using Exhibit 5 as a starting point for our analysis, we completed a DuPont analysis. In this, we found several major trends: net income is decreasing while sales, assets, and equity all increased year over year. We found these results to be a troubling because of a decline in ROA and ROE with increased asset and equity bases. Further analysis is required to discern decreased performance from these metrics, however one thing has become clear; Disney, because of various factors, is not financially healthy, thereby prompting this potential hostile takeover. The Company faces numerous issues.