The Walt Disney Company
Response to the following problem:
Information from the 2005 financial statements of The Walt Disney Company is listed below. This information reports Disney's performance, by geographic area.
United States and Canada Europe Asia Pacific Latin America and Other
Sales $24,800 $5,207 $1,451 $480
Operating income 3,512 688 377 77
Identifiable assets 45,809 5,120 2,110 119
1. Disney divides its worldwide operations into four geographic areas: the United States and Canada, Europe, Asia Pacific, and Latin America and Other. Which of these four has the best 2005 profitability as measured by return on sales?
2. Which of Disney's four geographic areas has the best overall asset efficiency in 2005 as measured by asset turnover?
3. Discuss why return on equity cannot be computed for each geographic area.