Accounting and Finance: Requirement #1 Stock Market Ticker Symbol: DIS Current Disney Stock Price: $ 88.54 (as of 10/22/2014) Current Disney Market Cap: $152.02 billion (as of 10/22/2014) Total Assets: $81, 241 million (as of 09/28/2013) Total Liabilities: $33,091 million (as of 09/28/2013) Total stockholders equity: $45, 429 million (as of 09/28/2013) The difference between market capitalization and total stockholders equity: $45, 429- $152.02 = $45,276.98 Million The external auditors (CPAs) used by Disney to certify the financial statements of the company: PricewaterhouseCoopers LLP The nature of the auditors opinion: Unqualified

Requirement #2Market capitalization is the amount of shares of a firm multiplied by the value of the shares of the firm i.e. the value of the firm in the market. The total stockholders equity is the total amount of money invested into the company in order to create value i.e. a firms total assets. The stockholders equity is used by the firm to create its market capitalization. The market capitalization is an external aspect of a business and the stockholders equity is an internal aspect of the firm. Requirement #3As a large multinational corporation, Disney faces innumerable challenges and risks that the firm cannot completely account for. Some of the risks Disney acknowledges include loss of stored data, increased competition, changes in regulation, changes in business strategy, labor disputes, and short-term dilution in earnings per share caused by the acquisition of Lucasfilm. However, the three greatest risks Disney faces are changing regional and global economic conditions, the maintenance of its intellectual property, and a sustained increase in pensions and postretirement medical costs of employees. Changing regional and global economic conditions such as economic recessions have a huge impact on Disneys business and is a fundamental risk the company faces. The company relies on people having enough disposable income to spend on Disney entertainment products and services. If peoples disposable incomes drop because of an economic downturn, consumers will purchase significantly less entertainment products such as Disney movies. Consumers will not buy as much entertainment because entertainment is a nondurable, luxury good not a necessity. When peoples incomes decrease, the quantity of luxury goods demanded also decreases thus Disneys revenues are adversely affected by economic downturns because peoples incomes decrease with recessions. Disney hopes to counter this fact by providing patrons with top-quality, recognizable brands that consumers know they can trust such as ESPN, Pixar, and Marvel entertainment. Disneys resorts and theme parks are the most vulnerable part of Disneys operation to economic slumps because going on vacation to one of these resorts or theme parks is one of the most significant monetary investments a family could make with Disney. Vacationing is one of the first things families cut from their budgets in lean economic times. Disney recognizes this critical fact by offering a superior vacationing experience so if consumers are inclined to go on vacation, Disney is certainly an attractive option to consider. Disney maintains its extensive entertainment empire by the liberal use of copyrights, trademarks, patents and other instances of intellectual property. However, internet privacy both in the U.S. and abroad unfavorably affects the revenues Disney makes on its intellectual property. Because such a large amount of Disneys revenues comes from the licensed use of its intellectual property, unlicensed use of Disneys intellectual property represent a significant threat to the firm. To combat privacy and other illegitimate use of its intellectual property, Disney litigiously pursues violators of its IP, invests in protective services, and lobbies for laws such as the Stop Online Piracy Act to defend its IP. Though longer life spans are generally a good thing, when people live longer Disney has to pay for their increasing medical costs as their former employees age. The increasing cost of pensions and postretirement benefits that Disney has promised its 175,000 employees considerably hampers Disneys ability to invest its assets in other profitable operations which is why it is a major risk for the firm. Increasing pensions are also a chief risk for Disney because the factors that cause employee pension costs to rise are mostly beyond Disneys control such as growing healthcare costs and increasing life spans. Disney attempts to mitigate increasing pension cost by scaling back the amount of benefits that current employees will receive in the future as well as consolidating and streamlining its multiple pension systems. Citations1) http://thewaltdisneycompany.com/sites/default/files/reports/fy13-form-10k.pdf2) http://finance.yahoo.com/q?s=DIS3) http://money.cnn.com/quote/quote.html?symb=DIS

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