Analysis of Debt
Total Debt (Carrying Amount)
Walt Disney Co., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2025-09-27), 10-K (reporting date: 2024-09-28), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03).
- Short-term finance lease liabilities
-
There is a gradual decline in short-term finance lease liabilities over the reported periods. Starting at 37 million USD, the liabilities saw a slight increase to 41 million USD before returning to 37 million USD. From that point onward, the amount consistently decreased, reaching 21 million USD in the most recent period.
- Current portion of borrowings
-
The current portion of borrowings exhibited some volatility. Initially, it increased marginally from 5,711 million USD to 5,866 million USD, then sharply dropped to 3,070 million USD. Subsequently, it rose significantly to 6,845 million USD before slightly decreasing to 6,711 million USD. Overall, there is no clear linear trend, but notable fluctuations are present.
- Borrowings, excluding current portion
-
Long-term borrowings, excluding the current portion, steadily declined throughout the periods. From 52,917 million USD, the borrowings decreased in a consistent manner to 35,315 million USD in the last reported period, indicating a significant reduction in long-term debt obligations.
- Long-term finance lease liabilities
-
Long-term finance lease liabilities also followed a downward trend, moving from 271 million USD to 141 million USD. The decline appears steady over consecutive periods, reflecting a continuous reduction in these liabilities.
- Total borrowings and finance lease liabilities (carrying amount)
-
The total carrying amount of borrowings and finance lease liabilities consistently decreased during the reported periods. Starting at 58,936 million USD, the total declined progressively to 42,188 million USD in the most recent period. This overall reduction suggests an active effort to lower total debt levels.
- Summary
-
The debt profile reveals a general reduction in both short-term and long-term liabilities over time. While the current portion of borrowings showed some variability, long-term borrowings and finance lease liabilities declined steadily. The consistent decrease in total borrowings and finance lease liabilities underscores a trend toward debt reduction, suggesting improved leverage management or repayment strategies.
Total Debt (Fair Value)
| Sep 27, 2025 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Borrowings | 39,087) |
| Finance lease liabilities | 162) |
| Total borrowings and finance lease liabilities (fair value) | 39,249) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.93 |
Based on: 10-K (reporting date: 2025-09-27).
Weighted-average Interest Rate on Debt
Effective interest rate on borrowings and finance leases: 4.45%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 4.28% | 2,062) | 88) | |
| 4.43% | 38,658) | 1,713) | |
| 5.11% | 931) | 48) | |
| 4.55% | 1,075) | 49) | |
| 6.80% | 162) | 11) | |
| Total | 42,888) | 1,908) | |
| 4.45% | |||
Based on: 10-K (reporting date: 2025-09-27).
1 US$ in millions
2 Weighted-average interest rate = 100 × 1,908 ÷ 42,888 = 4.45%
Interest Costs Incurred
Walt Disney Co., interest costs incurred
US$ in millions
Based on: 10-K (reporting date: 2025-09-27), 10-K (reporting date: 2024-09-28), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03).
The annual interest costs incurred exhibit a generally rising trend over the analyzed periods, punctuated by fluctuations that reflect changing financial strategies or market conditions. The detailed interest expense and capitalization components offer additional insight into these trends.
- Interest expense, net of capitalized interest
- This measure shows a moderate variability across the observed years. Starting at 1,647 million in the earliest period, it slightly decreased to 1,546 million the following year before stabilizing near 1,549 million. Subsequently, there is a notable rise reaching 1,973 million and peaking at 2,070 million in the penultimate period, followed by a decline to 1,812 million. This pattern may indicate fluctuations in borrowing costs or changes in debt levels.
- Interest capitalized
- Interest capitalized reveals a clear upward trajectory from 157 million at the outset to a peak of 386 million. This reflects an increasing allocation of interest costs to capital assets rather than immediate expense, which could imply intensified investment activities or changes in accounting practices regarding capital projects. The final period sees a slight reduction to 322 million.
- Interest costs incurred
- The total interest costs incurred combine the previous two items and present a pronounced upward trend, beginning at 1,804 million and reaching 2,456 million before a decline to 2,134 million in the latest period. This overall increase suggests heightened borrowing or increased interest rates impacting total financing costs.
In summary, while net interest expense shows some volatility, the increase in capitalized interest points to potentially greater investment and capitalization efforts. The total interest costs incurred demonstrate a significant rise over time, with a recent softening that may reflect changing financing conditions or debt management strategies.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2025-09-27), 10-K (reporting date: 2024-09-28), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-10-01), 10-K (reporting date: 2021-10-02), 10-K (reporting date: 2020-10-03).
2025 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= 13,815 ÷ 1,812 = 7.62
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 13,815 ÷ 2,134 = 6.47
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio experienced a significant improvement over the analyzed period. Initially, the ratio was negative at -0.06, indicating an inability to cover interest expenses with operating income. In the following years, the ratio progressively increased to 2.66, then 4.41, showing enhanced capacity to meet interest obligations. Despite a slight dip to 3.42 in the 2023 fiscal year, the ratio rebounded in subsequent years to 4.66 and finally reached a strong level of 7.62 in 2025. This upward trend suggests improving earnings relative to interest expense and an overall stronger financial position concerning debt servicing.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted interest coverage ratio, which accounts for capitalized interest, follows a similar positive trajectory but remains slightly lower than the non-adjusted ratio throughout the period. Starting from -0.05, it increased to 2.37 in the second year and then to 3.78. Like the unadjusted ratio, it showed a decrease to 2.88 in 2023, reflecting a temporary reduction in income or higher interest costs when capturing capitalized interest. Nonetheless, the ratio recovered to 3.92 and then notably rose to 6.47 by 2025. This pattern further corroborates the company’s improving ability to cover interest expenses, even after considering capitalized interest costs.
- Overall Observations
- Both ratios indicate a clear trend of recovery and strengthening financial health over the five-year span, moving from negative coverage to robust levels. The improvement in interest coverage ratios implies enhanced operational earnings or effective management of debt financing costs. The temporary decrease in 2023 for both ratios suggests a brief period of increased financial strain or investment activity affecting earnings relative to interest expenses. The strong ratios in the last two years provide confidence in the company’s capacity to meet interest obligations and support ongoing financial stability.