Question

Analyze The Walt Disney Company by segment The Walt Disney Company (DIS) is a leading worldwide entertainment company. Disney operates four business segments. These segments and some of their larger businesses are: • Media Networks: ABC Network, ESPN, Disney Channel, and A&E • Parks and Resorts: Walt Disney World Resort, Disneyland, and International Disney Resorts • Studio Entertainment: Walt Disney Pictures, Pixar, Marvel, and Lucasfilm • Consumer Products and Interactive Media: Licensing of Disney characters, publishing, and retail stores Recent comparative revenues for the four segments are as follows (in millions): Segment Media Networks Parks and Resorts Studio Entertainment Consumer Products and Interactive Media Year 3 Year 1 $23,689 $21,152 16,974 15,099 9,441 7,278 5,528 5,284 $55,632 $48,813 Total a. Prepare a vertical analysis of the segment sales to total sales for Year 1 and Year 3. Round percentages to nearest whole percent. Note: Due to rounding, your totals may exceed 100 percent. Segment Year 3 Year 3 Percentage Year 1 Year 1 Percentage Media Networks $23,689 % $21,152 Parks and Resorts 16,974 15,099 Studio Entertainment 9,441 7,278 Consumer Products & Interactive Media 5,528 5,284 Total $55,632 % $48,813 b. The revenues of Parks and Resorts and Consumer Products & Interactive Media segments as a percentage of total revenue has from Year 1 to Year 3. The offsetting gains came from two- percentage point gains from from Year 1 to Year 3. Thus, there was slight adjustment in the relative segment sales between Year 1 and Year 3. c. Prepare a horizontal analysis of the segment sales between Year 1 and Year 3. Round percentages to nearest whole percent.

Answer 1

a.

Segment	Year 3	Year 3 percentage	Year 1	Year 1 percentage
Media networks	$23,689	42.58%	$21,152	43.33%
Parks and resorts	16,974	30.51%	15,099	30.93%
Studio entertainment	9,441	16.97%	7,278	14.91%
Consumer products & interactive media	5,528	9.94%	5,284	10.82%
Total	$55,632	100%	$48,813	100%

b.

The revenues of parks and resorts and consumer products & interactive media segments as a percentage of total revenue has decreased from year 1 to year 3. The offsetting gains came from two percentage gains from studio entertainment from year 1 to year 3. Thus there was slight adjustment in relative segment sales between year 1 and year 3.

c.

Segment	Year 3	Year 1	Amount Change	% Change
Media networks	$23,689	$21,152	$2,537	12%
Parks and resorts	16,974	15,099	1,875	12%
Studio entertainment	9,441	7,278	2,163	30%
Consumer products & interactive media	5,528	5,284	244	5%
Total	$55,632	$48,813	$6,819	14%

d.

Studio entertainment showed the largest growth.

Consumer products & interactive media showed the smallest growth.