Running head: ETHICS AND RATIO ANALYSIS PAPER Ethics and Ratio Analysis Paper Ethics and Ratio Analysis Paper This will be an Ethics and Compliance paper on the organization Disney. We will obtain and include a copy of our selected organization’s annual report and SEC filings for the past two years. The objective of this paper will be to analyze the data in our selected organization’s annual reports and SEC filings. Our analysis will address the following: Assess the role of ethics and compliance in your selected organization’s financial environment.
This paper will describe the procedures that Disney has put in place to ensure ethical behavior. This paper will identify the process Disney uses to comply with SEC regulations. We will evaluate Disney’s financial performance over the past two years using financial ratios and calculate the following ratios for each year: Current, Debt, ROE (return on equity) and Days receivable. Finally we will discuss the trend for each ratio and what it tells you about the organization’s financial health.
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According to the role of ethics and compliance of Disney’s financial environment “The Walt Disney Company is committed to conducting business in accordance with the highest standards of business ethics and complying with applicable laws, rules and regulations. In furtherance of this commitment, the Board of Directors (the “Board”) promotes ethical behavior, and has adopted this Code of Business Conduct and Ethics for Directors (“Code”).
Every Director must: (1) represent the interests of the shareholders of The Walt Disney Company; (2) exhibit high standards of integrity, commitment and independence of thought and judgment; (3) dedicate sufficient time, energy and attention to ensure the diligent performance of his or her duties; and (4) comply with every provision of this Code. ” (The Walt Disney Company [Disney. com], n. d. , p. 1) These are Disney’s procedures that have been put into place to ensure ethical behavior.
They have codes of conduct for directors which include: Disney’s introductory statement, conflicts of interest, business relationships with directors, use of corporate information, opportunities, assets, confidentiality, compliance with laws, rules and regulations, fair dealing and accountability and waiver. In identifying the processes that Disney uses to comply with SEC regulations, the company requires strict compliance by all of their directors with all rules, regulations and laws.
These include securities laws, federal laws, and insider trading laws and the company’s compliance policies pertaining to the company’s insider trading. Calculating the current ratio, debt ratio, ROE (return on equity), and the accounts receivable turnover to evaluate Disney financial performance over the past two years has ended with the following results: Amounts in the Millions Name |Formula |2009 |2008 | | | | | | |Current ratio |Current Assets/ |11,889/ |11,666/ | | |Current Liabilities |8,934 = 1. 33 |11,591 = 1. 0 | |Debt Ratio |Total debt/ |56,427/ |54,878/ | | |Total Assets |63,117 = . 89 |62,497 = . 87 | |ROE |Net income/ |3,307/ |4,427/ | |(Return on equity) |Common equity |27,038 = . 22 |26,546 = . 166 | |Days receivable |Credit sales/ |36,149/ |37,843/ | | |Accounts Receivable |4,854 = 7. 44/365 |5,373 = 7. 04/365 | | | |=49. 05 days |= 51. 4 days | As the current ratio illustrates in 2008 it shows 1. 00 and in 2009 it changed to 1. 33. This can explain how Disney has the ability to pay back its short term liabilities with the short term assets. In 2009 the company is above average which allows Disney to pay off any obligations if it came due at one point. The debt ratio in 2008 is . 89 and in 2009 it changed to . 87. Debt ratio indicates the proportion of debt Disney has relative to its assets.
As one can see Disney has lowered its debt from 2008 to 2009. The return on equity (ROE) in 2008 was . 122 and in 2009 it was . 166. The return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested. Disney return on equity has gone up 4% within the year. In 2008 it took Disney 51. 84 days to turn their receivables around. In 2009 Disney became more efficient and it took the corporation 49. 05 days to turn their receivables around.
With the results using the annual reports from Disney it seems that Disney has become more efficient with their corporation. Disney seems to be moving in the right direction when it comes to their financial performance. In conclusion, we have analyzed the data in our selected organization’s annual reports and SEC filings. We have addressed the role of ethics and compliance in our selected organization’s financial environment. We have described the procedures that Disney has put in place to ensure ethical behavior.
We have explained the process Disney uses to comply with SEC regulations. We have evaluated Disney’s financial performance over the past two years using financial ratios and calculated the following ratios for each year: Current, Debt, ROE (return on equity) and Days receivable. Finally we have discussed the trend for each ratio and what it tells you about the organization’s financial health. Reference The Walt Disney Company (n. d. ). Introductory Statement . Retrieved Febuary 9, 2010, from Disney. com