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Transcript

Investment

Key Assumptions

Valuation

  • The Disney Store is valued at $6,012,561.48.
  • Its Internal Rate of Return (IRR) Percentage is 76.88% and its Net Present Value (NPV) is $2,365,185.75
  • The Disney Store's debt to equity ratio is very low at 31.13%. This means that 31.13% of their assets are financed with their liabilities. This in turn shows how the store takes a reduced aggressive approach to finance its growth with its debt. Thus, reducing its risk as a company.
  • The Disney Store automatically comes with an enormous fan base, the famous "Disney" brand, and consumer market. The Disney characters are ubiquitously known and accepted throughout every culture, ethnicity, age, etc. Investors would be assured of the continuous success of the Disney store due to its consistent clienteles.

Market Multiples Approach Disney Store Toy's R Us

Liquidity

Company Overview

Table of Contents

  • Rapidly growing sales are to blame for the Disney Store's negative cash from operations in Year 1. However, in the following years cash flow gradually increases.
  • In the worst case scenario, cash flow from operations is negative until Year 3. This is due to the inability of the insufficient gross profits to cover fixed operating costs during the first two years.
  • Decreasing the working capital requirements will be able to support the Disney Store until the cash flow from operations turns positive.
  • The Disney Store is the chain retail branch from the most well-known leader in family entertainment and media enterprise, The Walt Disney Company.
  • The Walt Disney Company is the world's largest conglomerate; involved in movies, television, publishing and theme parks.
  • The Disney Store incorporates the company's characters by creating customer merchandise based on its movies and television shows.
  • Their primary financial goals are to maximize earnings and cash flow, and also to distribute capital profitability toward growth initiatives that will drive long-term shareholder value.

Introduction

Company Overview

Key Assumptions

Investment

Valuation

Liquidity

Financial Issues and Weaknesses

Introduction

Company Overview

Key Assumptions

Investment

Valuation

Liquidity

Financial Issues and Weaknesses

Introduction

Financial Issues and Weaknesses

  • The main purpose of this presentation is to analyze and display the Disney Store's attractive values and benefits to potential investors.
  • The focus of this demonstration is on identifying and interpreting financial issues of the Disney Store.
  • This presentation focuses on financial issues and should be viewed as only a part of the overall business plan for The Walt Disney Co.
  • Since the Disney Store is part of such a large conglomerate, they have high sunk costs which could obstruct their future financial abilities. The Walt Disney Company must maintain their reputable quality by updating all of the parks, cruise ships, hotels, resorts, etc. This in turn continuously increases their costs, especially for their merchandise stores.
  • These escalated prices discourage many customers and thus creates a chain effect: revenue decreases, earnings before income taxes decreases, and net earnings decreases as well. Earnings before income taxes and net earnings are negative until Year 3.
  • Due to the Disney stores being available in retail malls and inside the Disney theme parks, customers might tend to prefer buying the merchandise from the theme park location.
  • The decreasing birth rate also affects the Disney Store. As the rate of children grow less and less, the Disney Store loses more of their biggest target market.

Financial Analysis

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