Page 717 - Accounting Principles (A Business Perspective)

17. Analysis and interpretation of financial statements

a. EPS of common stock.
b. Net income to net sales.
c. Net income to average common stockholders' equity.

d. Times interest earned ratio.
Problem G The Walt Disney Company operates several ranges of products from theme parks and resorts to
broadcasting and other creative content. The following balance sheet and supplementary data are for The Walt
Disney Company for 2000.
The Walt Disney Company
Consolidated balance sheet
For 2000 September 30
(USD millions)
Assets
Cash and cash equivalents $ 842
Receivables 3,599
Inventories 702
Film and television costs 1,162
Other 1,258
Total current costs $7,563
Film and television costs 5,339
Investments 2,270
Theme parks, resorts, and other property, at
cost
Attractions, buildings, and equipment $16,160
Accumulated depreciation (6,892)
9,718
Project in process 1,995
Land 597
Intangibles assets, net 16,117
Other assets 1,428
Total assets $25,027
Liabilities and stockholders' equity
Accounts payable and accrued liabilities $ 5,161
Current portion of borrowing 2,502
Unearned royalties 739
Total current liabilities $ 8,402
Borrowings 6,959
Deferred income taxes 2,833
Other long-term liabilities 2,377
Minority interest 356
Common shareholders' equity
Common shares ($.01 par value) $12,101
Retained earnings 12,767
Cumulative translation and other adjustments (28)
Treasury shares (740) 24,100
Total liabilities and stockholders' equity $45,027
• Net income, USD 920.
• Income before interest and taxes, USD 3,231.
• Cost of goods sold, USD 21,321.
• Net sales, USD 25,402.
• Inventory on 1999 September 30, USD 796.
• Total interest expense for the year, USD 598.
Calculate the following ratios and show your computations. For calculations normally involving averages, such

as average stockholders' equity, use year-end amounts unless the necessary information is provided.
a. Current ratio.
b. Net income to average common stockholders' equity.
c. Inventory turnover.

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