Walt Disney Co. (NYSE:DIS)

Current Income Tax Expense

The current income tax expense exhibits an overall increasing trend from 2020 to 2023, starting at 974 million US dollars in 2020 and peaking at 2,744 million US dollars in 2023. There is a slight decline observed in 2024 to 2,603 million US dollars, followed by a significant drop to 1,189 million US dollars in 2025. This indicates increased tax payments during the earlier years with a notable decrease in the most recent year.

Deferred Income Tax Expense (Benefit)

The deferred income tax component shows considerable volatility throughout the period. It begins at a negative 275 million US dollars in 2020, indicating a deferred tax benefit. This benefit deepens significantly in 2021 to negative 1,252 million US dollars, turns positive at 168 million US dollars in 2022, and then returns to negative figures in 2023, 2024, and 2025 at -1,365 million, -807 million, and -2,617 million US dollars respectively. The negative amounts mostly suggest deferred tax benefits being recognized, with the magnitude fluctuating substantially from year to year.

Income Tax Expense (Benefit) on Income from Continuing Operations

The combined income tax expense on income from continuing operations displays a less consistent pattern. Starting at 699 million US dollars in 2020, it sharply decreases to 25 million in 2021. In 2022, the expense rises substantially to 1,732 million, followed by a moderate decline to 1,379 million in 2023. It then increases again to 1,796 million in 2024 before turning negative to -1,428 million in 2025, representing an overall income tax benefit in that year. This reversal in 2025 could reflect significant changes in tax positions, deferred tax assets, or other tax management factors.

Overall Analysis

The data reveals increasing current tax expenses through 2023, despite fluctuations in deferred tax benefits. The deferred tax figures are highly variable, with both substantial negative and occasional positive values, indicating changes in timing differences and tax strategy effects. The total income tax expense on continuing operations aligns with current tax trends initially but diverges notably in the final year with a tax benefit, suggesting a shift in tax circumstances or accounting treatment. Understanding the drivers behind the deferred tax volatility and the 2025 reversal would be crucial for assessing tax strategy and future tax expense projections.

Federal Income Tax Rate

The federal income tax rate remained consistent at 21% throughout the entire period, indicating stability in the baseline tax obligation applied to the company’s income.

State Taxes, Net of Federal Benefit

State taxes exhibited notable fluctuations. After a decline from 4.3% in 2020 to 1.9% in 2021, the rate increased again to 5.8% by 2023 before decreasing to 2.4% in 2025. This suggests variability in state tax environments or changes in geographic income distribution.

Change in Hulu Income Tax Classification

This metric emerged only in 2025, recording a significant tax impact of -27.3%. The introduction and magnitude of this item imply a recent tax reclassification affecting reported tax expenses substantially.

Non-tax Deductible Impairments

The percentage increased sharply to 3.5% in 2023, peaked at 8.8% in 2024, then dropped significantly to 0.9% in 2025. This trend indicates a period of notable impairments that were not deductible for tax purposes, impacting the effective tax rate in those years.

Foreign Derived Intangible Income

The impact of foreign derived intangible income tax credits was negative throughout the periods measured, ranging from -6.4% in 2021 to a lesser negative value of -2.2% in 2025. This consistent but diminishing negative contribution suggests gradual changes in the treatment or scale of foreign intangible income.

Income Tax Audits and Reserves

This factor showed variability, with negative impacts in early years (-6.1% in 2020 and -4.8% in 2021), turning positive briefly in 2022 and 2023, then negative again in 2024 and 2025. This fluctuation reflects changes in audit outcomes or reserve adjustments affecting tax expense.

Tax Rate Differential on Foreign Income

After a significant negative differential of -16.5% in 2020, the rate shifted positively to 12% in 2021, before stabilizing near zero in subsequent years. This suggests changes in foreign income taxation and related rate disparities that impact the overall effective tax rate.

U.S. Research and Development Credits

The R&D credit effect was consistently negative but small, ranging from -0.6% to -1.1%. This indicates a steady utilization of R&D tax credits, modestly reducing tax expense over time.

Tax Impact of Equity Awards

Tax effects related to equity awards were variable, moving from a positive 3.7% in 2020 to negative and near zero values in later years, suggesting shifts in stock-based compensation tax treatments and their timing.

Valuation Allowance

Valuation allowance impacts fluctuated between negative and positive values without a consistent trend, indicating adjustments related to deferred tax assets and expected realizability over the period.

Legislative Changes

Significant volatility was observed, with a 4.4% positive impact in 2020 followed by a sharp negative effect of -12.2% in 2021 and minor positive effect in 2022. The lack of data in later years limits further interpretation, but these early changes suggest adaptation to tax law modifications.

Other

Contributions categorized as "Other" shifted from a substantial negative impact of -36.3% in 2020 to near neutral by 2024 and 2025, indicating resolution or stabilization of miscellaneous tax factors over time.

Effective Income Tax Rate

The effective income tax rate exhibited high volatility. Starting from a substantial negative rate of -40.1% in 2020, it swung to nearly zero in 2021, then increased sharply to 32.8% in 2022. It declined moderately to 23.7% in 2024 before turning negative again to -11.9% in 2025. Such fluctuation reflects the combined effects of the various tax items, including impairments, foreign income differentials, legislative impacts, and classification changes, indicating significant variability in the company’s tax obligations and strategies over the years.

Net Operating Losses and Tax Credit Carryforwards

The value generally shows fluctuations with a rising trend from 3,137 million in 2020 to a peak of 3,944 million in 2021, followed by a decline and subsequent modest recovery toward 3,629 million in 2025.

Accrued Liabilities

There is a clear downward trend in accrued liabilities, decreasing steadily from 2,952 million in 2020 to 1,011 million in 2025, indicating improved management or payment of obligations over time.

Licensing Revenues

Licensing revenues exhibit variability over the periods, beginning with 202 million in 2021, declining through 2023, but then markedly increasing to 807 million in 2025, suggesting a significant expansion or renewed focus in this revenue stream in the latest period.

Lease Liabilities

Lease liabilities remain relatively stable, fluctuating slightly around the 750–860 million range, with no clear upward or downward long-term trend.

Other Items

The category labeled "Other" shows inconsistency, peaking at 819 million in 2022, then dropping to 413 million in 2025, indicating volatility or changes in miscellaneous financial factors.

Deferred Tax Assets before Valuation Allowance

This metric declines overall from 8,179 million in 2021 to 6,290 million in 2024, then recovers slightly to 6,646 million in 2025, reflecting changes in anticipated tax benefits.

Valuation Allowance

The valuation allowance consistently increases in magnitude (more negative) from -2,410 million in 2020 to a peak of -3,187 million in 2023, before slightly decreasing in negativity to -2,931 million in 2025, signifying adjustments for potentially uncollectible deferred tax assets.

Deferred Tax Assets

Net deferred tax assets decrease from 5,156 million in 2020 to a low of 3,299 million in 2024, with modest recovery to 3,715 million in 2025, mirroring trends in deferred tax assets before valuation allowance and valuation adjustments.

Depreciable, Amortizable, and Other Property

There is a clear downward trend in these assets, with negative values diminishing from -8,574 million in 2020 to -3,998 million in 2025, indicating substantial asset reductions, disposals, or impairment over time.

Investment in U.S. Entities

Investment values show improvement (less negative) from -2,775 million in 2021 to -916 million in 2025, suggesting divestitures or revaluations of domestic investments.

Investment in Foreign Entities

This category fluctuates without a clear pattern, with amounts ranging from -543 million in 2022 to a more negative -879 million in 2025, indicating variability in foreign investment valuations or exposure.

Right-of-Use Lease Assets

These assets have marginal fluctuations but display a minor decreasing trend from -740 million in 2020 to -628 million in 2025, consistent with lease asset amortization or changes in lease obligations.

Deferred Tax Liabilities

There is a steady decline in deferred tax liabilities from -12,115 million in 2020 to -6,510 million in 2025, reflecting reductions in deferred tax obligations.

Net Deferred Tax Asset (Liability)

Net deferred tax liability decreases in magnitude over time, from -6,959 million in 2020 to a smaller liability of -2,795 million in 2025, indicating an improving net tax position.

Deferred Tax Assets

The deferred tax assets have shown a generally increasing trend over the analyzed periods. Starting at 329 million USD in 2020, they increased sharply to 686 million USD in 2021. Subsequently, the values fluctuated slightly but remained elevated relative to the initial value, with minor decreases in 2022 (636 million USD) and a recovery to 671 million USD in 2023. The most recent periods show a slight decline to 655 million USD in 2024, followed by an increase to 729 million USD in 2025, indicating an overall upward movement in deferred tax assets over the five-year span.

Deferred Tax Liabilities

Deferred tax liabilities exhibited a contrasting trend with an overall significant decline throughout the analyzed timeframe. Beginning at 7,288 million USD in 2020, the value remained relatively stable in 2021 at 7,246 million USD. There was an increase in 2022 to 8,363 million USD, marking the highest point within the periods. However, from 2023 onward, there was a marked downward trend, decreasing to 7,258 million USD, then sharply declining to 6,277 million USD in 2024, and further reducing significantly to 3,524 million USD in 2025. This represents a substantial reduction in deferred tax liabilities in the latest period analyzed, which could have implications for future tax expenses and overall financial strategy.

Overall Insights

The contrasting movements of deferred tax assets and liabilities suggest a shift in the company's temporary differences affecting taxable income. The increase in deferred tax assets combined with the notable decrease in deferred tax liabilities may result in an improved net tax position and potentially lower future tax burdens. This pattern may reflect changes in tax planning, asset utilization, or valuation allowances. Continuous monitoring of these items is advisable to assess the impact on the company’s financial health and effective tax rate.

Total Assets

Reported total assets showed a relatively stable trend from 2020 through 2023, fluctuating slightly around the 200 billion US dollar mark. In 2024, there was a noticeable decline, bringing the figure to under 197 billion US dollars, where it remained nearly constant into 2025. Adjusted total assets mirrored this pattern closely, with a minor reduction from 2023 to 2024 followed by stability in 2025.

Total Liabilities

Reported total liabilities consistently decreased over the entire period. Starting just above 104 billion US dollars in 2020, liabilities gradually fell each year, reaching approximately 83 billion US dollars in 2025. Adjusted total liabilities exhibited a similar downward trend but at levels consistently below reported liabilities, suggesting adjustments reduced the reported obligation figures by a few billion dollars each year. The overall reduction indicates improvement in the company’s leverage or debt management.

Shareholder’s Equity

Reported total shareholder’s equity increased steadily from about 83.6 billion US dollars in 2020 to nearly 110 billion US dollars in 2025. Adjusted shareholder’s equity consistently remained higher than reported equity across all years and rose from around 90.5 billion in 2020 to approximately 112.7 billion US dollars in 2025. This growth trend in equity suggests strengthening financial position and improved asset retention or profitability over the period when considering both reported and adjusted figures.

Net Income (Loss)

The reported net income showed significant volatility. In 2020 there was a substantial loss near 2.9 billion US dollars. This was followed by a recovery in 2021 with a profit of roughly 2 billion US dollars, and a general upward trajectory culminating in a strong net income of over 12 billion US dollars in 2025. Adjusted net income also started with a loss in 2020 but at a slightly greater magnitude. Adjusted net income was positive in most subsequent years but exhibited less consistency and magnitude compared to reported figures, especially in 2023 where adjusted income dropped significantly. The upward trend from 2023 onwards suggests improving operational performance and earnings quality after adjustments.

Net Profit Margin

Both reported and adjusted net profit margins exhibit significant improvement over the observed periods. Starting with negative margins around -4.8% (adjusted) and -4.38% (reported) in 2020, both metrics transition to positive territory by 2021. The upward trend continues steadily, culminating in reported margins exceeding 13% and adjusted margins surpassing 10% by 2025. This reflects increasing profitability and likely operational efficiency gains or favorable market conditions.

Total Asset Turnover

The ratios for total asset turnover, both reported and adjusted, show a consistent positive trajectory from 0.32 in 2020 to 0.48 in 2025. This steady increase indicates an enhanced ability to generate revenue per unit of asset, suggesting improved asset utilization over time.

Financial Leverage

Financial leverage ratios demonstrate a gradual decline throughout the period, with reported leverage decreasing from 2.41 to 1.8 and adjusted leverage from 2.22 to 1.75. This trend implies a reduction in the company's reliance on debt relative to equity, signaling a potentially stronger equity position and decreased financial risk.

Return on Equity (ROE)

The reported ROE trends upward from a negative value (-3.43%) in 2020 to a robust 11.29% in 2025, mirroring improvements in net profit margins and asset turnover. Adjusted ROE follows a similar, albeit more moderated, path from -3.47% to 8.69%. The discrepancy between reported and adjusted figures suggests some impact from tax adjustments or one-time items, but the overall positive progression indicates strengthening shareholder returns.

Return on Assets (ROA)

ROA measures also show noticeable improvement. Reported ROA rises from -1.42% in 2020 to 6.28% in 2025, while adjusted ROA increases from -1.56% to 4.97%. These upward movements indicate enhanced profitability relative to total assets. The gap between reported and adjusted ROA suggests that deferred income tax affects asset profitability calculations but does not obscure the sustained positive trend.

The financial data reveals significant fluctuations and improvements in both reported and adjusted net income over the recorded periods. The reported net income initially shows a substantial loss but transitions into positive territory with consistent growth thereafter. Similarly, adjusted net income follows a comparable trend, albeit with a less pronounced recovery in the earlier years.

Reported Net Income (US$ in millions)

The initial period shows a significant loss of approximately 2.86 billion dollars, followed by a strong recovery to nearly 2 billion dollars in the next period. The upward trend continues through subsequent periods, culminating in a notable increase to over 12 billion dollars in the latest reported period. This indicates a robust improvement in the company's profitability from a loss-making state to a very strong profit position.

Adjusted Net Income (US$ in millions)

The adjusted net income also starts with a loss, slightly larger than the reported loss, and then increases to a positive figure, although with smaller gains in the early years compared to the reported figures. From the middle periods onwards, there is a pronounced improvement, particularly evident in the latest years, with adjusted net income surpassing 9.7 billion dollars. This suggests that after accounting for adjustments, the company shows a steady recovery and strong underlying profitability.

Reported Net Profit Margin (%)

The reported net profit margin transitions from a negative margin of -4.38% to positive values in the subsequent periods. There is a consistent upward trajectory from 2.96% to 13.14% by the last period. This reflects increasing efficiency and profitability relative to revenues, culminating in a very strong margin suggestive of enhanced operational performance and cost management.

Adjusted Net Profit Margin (%)

The adjusted net profit margin mimics the reported margin in trend but starts lower at -4.8%, moving gradually to 10.36% in the final period. The margin growth is steadier and generally slightly below the reported margin figures, indicating that adjustments account for some volatile elements affecting net profitability but still conveying an improving profitability profile.

Overall, the data indicates a transition from significant losses to strong profitability over the observed periods, with both reported and adjusted measures reflecting significant operational improvements. The increase in both net income and net profit margins suggests enhanced financial health and potentially effective strategic initiatives.

The analysis of the financial data reveals distinct trends in both the asset base and efficiency metrics over the examined periods.

Assets

Reported total assets demonstrated relative stability from 2020 through 2023, exhibiting marginal increases but peaked in the 2023 period before declining in the following years. Initially, assets rose slightly from 201,549 million USD in 2020 to 205,579 million USD in 2023, followed by a noticeable decrease to 196,219 million USD in 2024 and a minor recovery to 197,514 million USD in 2025.

Similarly, adjusted total assets mirrored the reported figures closely, suggesting few adjustments significantly altered the asset base. The adjusted assets increased modestly from 201,220 million USD in 2020 to 204,908 million USD in 2023, then declined to 195,564 million USD in 2024, with a slight rise to 196,785 million USD in 2025.

Asset Turnover Ratios

Both reported and adjusted total asset turnover ratios displayed a consistent upward trend, indicating improving asset utilization and operational efficiency over the periods. The ratio increased gradually from 0.32 in 2020 to 0.48 in 2025, reflecting an approximately 50% improvement in how effectively the company employed its asset base to generate revenues or sales.

The congruence between reported and adjusted turnover ratios suggests that deferred income tax adjustments did not materially affect the efficiency metrics, underscoring stable operational performance regardless of tax adjustments.

Overall, while the total asset base shows some contraction post-2023, asset efficiency has steadily enhanced, which might indicate strategic asset management or improved revenue generation relative to the company's asset size. This improvement in asset turnover could offset the impact of a reduced asset base and signifies a positive development in utilization effectiveness.

The data reflects the financial position of the company over a six-year period, with emphasis on total assets, shareholder’s equity, and financial leverage, both in reported and adjusted terms. An analysis of these elements reveals important trends and financial health indicators.

Total Assets

Reported total assets show a marginal increase from 201,549 million USD in 2020 to a peak near 205,579 million USD in 2023, followed by a decline to approximately 197,514 million USD by 2025. Similarly, adjusted total assets followed the same pattern with a slight increase until 2023 and a decrease afterward, ending at 196,785 million USD in 2025. This suggests a general stability in asset size with a slight contraction in the most recent years.

Shareholder’s Equity

Reported Disney shareholder’s equity steadily increased during the entire period, rising from 83,583 million USD in 2020 to 109,869 million USD in 2025. The adjusted shareholder’s equity follows a similar, slightly higher trend, ending at 112,664 million USD in 2025. This continuous growth in equity indicates strengthened capitalization and retained earnings over the years.

Financial Leverage

Both reported and adjusted financial leverage ratios show a consistent downward trend, with reported leverage moving from 2.41 in 2020 to 1.8 in 2025, and adjusted leverage decreasing from 2.22 to 1.75 in the same period. This reduction in financial leverage suggests the company is lowering its reliance on debt relative to equity, thus potentially decreasing financial risk and improving the equity cushion.

In summary, the company has maintained relatively stable asset levels while enhancing shareholder equity substantially. The declining financial leverage ratio points to an improving financial structure with reduced leverage risk. The adjusted figures closely mirror the reported ones, indicating that deferred tax adjustments do not dramatically alter the overall financial position and trends observed.

The financial data reveals several notable trends related to income, equity, and return on equity (ROE) for the analyzed periods.

Net Income (Loss)

The reported net income attributable to the company exhibited a turnaround from a significant loss in the earliest period to gains in subsequent years. After a loss in the initial period, the company showed a recovery with positive reported net income figures, culminating in a substantial increase in the most recent periods. Adjusted net income reflected a similar trajectory, though showing more variability. Notably, adjusted figures presented a loss initially, then fluctuated with increases and temporary dips but ultimately demonstrated strong growth by the end of the series.

Shareholder’s Equity

Reported total shareholder’s equity has shown a steady upward trend across the entire timeline, indicating consistent growth in equity value. The adjusted shareholder’s equity values were higher than reported values throughout and displayed a similar upward progression, suggesting that adjustments made to equity figures account for additional factors that increase the equity base. The gap between reported and adjusted equity widened slightly in later periods.

Return on Equity (ROE)

Reported ROE started negatively but moved into positive territory and experienced gradual growth with some fluctuation. The most recent period registered a notably higher reported ROE, signifying improved profitability relative to shareholder equity. Adjusted ROE followed a comparable pattern but remained lower than reported ROE in most periods, reflecting more conservative profitability measures once adjustments for taxes and related items were considered. Both ROE metrics peaked in the latest periods, indicating enhanced financial performance and efficient utilization of equity.

Overall, the examined figures indicate a marked recovery and growth in financial performance over the periods, with increasing net income and equity levels accompanied by improving returns for shareholders. The adjusted data series presents a more moderated view but nonetheless confirms the upward trajectory in profitability and shareholder value creation.

Net Income Trends

The reported net income demonstrates significant volatility over the periods analyzed. It started from a substantial loss of $2,864 million, then turned positive at $1,995 million, and continued to rise, culminating at $12,404 million in the latest period. The adjusted net income follows a similar pattern but with less pronounced initial losses, starting at -$3,139 million, then a modest positive figure of $743 million before fluctuating and ultimately reaching $9,787 million. This indicates an improving profitability trend, particularly evident in the most recent years.

Total Assets Trends

The reported total assets show relative stability across the periods, hovering slightly above $200 billion for the initial years before declining modestly to under $198 billion in the final period. The adjusted total assets mirror the reported figures closely, maintaining similar stability and a slight decrease toward the later years. The asset base appears largely consistent, with no significant expansion or contraction over time.

Return on Assets (ROA) Analysis

Reported ROA shifts from negative territory at -1.42% to positive, reaching 6.28% in the final period, indicating improving operational efficiency in generating profits from the asset base. The adjusted ROA likewise shows an upward trend but remains lower than reported ROA, ending at 4.97%. Both measures suggest a notable enhancement in asset utilization profitability, particularly in the most recent years.

Overall Observations

The financial data reveal a marked improvement in profitability, as reflected by net income and ROA metrics, especially in the last two years. Despite fluctuations in adjusted net income, the upward trajectory is clear. Asset levels are relatively stable, suggesting that gains in profitability are likely driven by operational performance rather than asset growth. The adjusted figures provide a conservative view but confirm the positive trend in financial health.