Question

The Walt Disney Company's annual report for the year ended September 29, 2018, includes income statements for the years ending in 2016, 2017, and 2018. Net income for these three years is as follows (all in millions): $9,790 (2016), \$9,366 (2017) and \$13,066 (2018). Further analysis of the same income statements reveals that revenues were the following amounts for these same years (all in millions): \$47,130 (2016), \$46,843 (2017), and \$50,869 (2018). State each year's net income as a percentage of revenues and comment briefly on the trend you see over the three-year period.

Answer 1

The calculation of the three-year income statement for The Walt Disney Company's annual report ending September 29, 2018, reveals that the net income and revenues for the three years (2016-2018) are as follows:2016: Net income of $9,790 million and revenues of $47,130 million.2017: Net income of $9,366 million and revenues of $46,843 million.2018: Net income of $13,066 million and revenues of $50,869 million.To determine the net income as a percentage of revenues for each year, divide the net income by the revenue and then multiply by 100. Using the figures given above, we get the following results:2016: 9,790 / 47,130 x 100% = 20.8%2017: 9,366 / 46,843 x 100% = 20.0%2018: 13,066 / 50,869 x 100% = 25.7%In general, we observe an upward trend in net income as a percentage of revenues for the three-year period. The percentage increased from 20.8% in 2016 to 25.7% in 2018, indicating that the company's profitability improved. This is a good trend because it shows that The Walt Disney Company is efficiently managing its costs and generating more profits over time.