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Microsoft Excel LibreOffice Calc


Economic Value Added (EVA)

Difficulty: Advanced

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Walt Disney Co., economic profit calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Sep 29, 2018 Sep 30, 2017 Oct 1, 2016 Oct 3, 2015 Sep 27, 2014 Sep 28, 2013
Net operating profit after taxes (NOPAT)1 hidden hidden hidden hidden hidden hidden
Cost of capital2 hidden hidden hidden hidden hidden hidden
Invested capital3 hidden hidden hidden hidden hidden hidden
Economic profit4 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25), 10-K (filing date: 2014-11-19), 10-K (filing date: 2013-11-20).

2018 Calculations

1 NOPAT. See Details »

2 Cost of capital. See Details »

3 Invested capital. See Details »

4 Economic profit = NOPAT – Cost of capital × Invested capital
= hiddenhidden × hidden = hidden

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Walt Disney Co.'s economic profit declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.

Net Operating Profit after Taxes (NOPAT)

Walt Disney Co., NOPAT calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Sep 29, 2018 Sep 30, 2017 Oct 1, 2016 Oct 3, 2015 Sep 27, 2014 Sep 28, 2013
Net income attributable to The Walt Disney Company (Disney) hidden hidden hidden hidden hidden hidden
Deferred income tax expense (benefit)1 hidden hidden hidden hidden hidden hidden
Increase (decrease) in allowance for doubtful accounts2 hidden hidden hidden hidden hidden hidden
Increase (decrease) in equity equivalents3 hidden hidden hidden hidden hidden hidden
Interest expense hidden hidden hidden hidden hidden hidden
Interest expense, operating lease obligations4 hidden hidden hidden hidden hidden hidden
Adjusted interest expense hidden hidden hidden hidden hidden hidden
Tax benefit of interest expense5 hidden hidden hidden hidden hidden hidden
Adjusted interest expense, after taxes6 hidden hidden hidden hidden hidden hidden
Interest and investment income hidden hidden hidden hidden hidden hidden
Investment income, before taxes hidden hidden hidden hidden hidden hidden
Tax expense (benefit) of investment income7 hidden hidden hidden hidden hidden hidden
Investment income, after taxes8 hidden hidden hidden hidden hidden hidden
Net income (loss) attributable to noncontrolling interest hidden hidden hidden hidden hidden hidden
Net operating profit after taxes (NOPAT) hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25), 10-K (filing date: 2014-11-19), 10-K (filing date: 2013-11-20).

2018 Calculations

1 Elimination of deferred tax expense. See Details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

3 Addition of increase (decrease) in equity equivalents to net income attributable to The Walt Disney Company (Disney).

4 Addition of interest expense on capitalized operating leases. See Details »

5 Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= hidden × 24.50% = hidden

6 Addition of after taxes interest expense to net income attributable to The Walt Disney Company (Disney).

7 Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= hidden × 24.50% = hidden

8 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Walt Disney Co.'s NOPAT declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

Cash Operating Taxes

Walt Disney Co., cash operating taxes calculation

USD $ in millions

Microsoft Excel LibreOffice Calc
12 months ended Sep 29, 2018 Sep 30, 2017 Oct 1, 2016 Oct 3, 2015 Sep 27, 2014 Sep 28, 2013
Income tax expense hidden hidden hidden hidden hidden hidden
Less: Deferred income tax expense (benefit) hidden hidden hidden hidden hidden hidden
Add: Tax savings from interest expense hidden hidden hidden hidden hidden hidden
Less: Tax imposed on investment income hidden hidden hidden hidden hidden hidden
Cash operating taxes hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25), 10-K (filing date: 2014-11-19), 10-K (filing date: 2013-11-20).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Walt Disney Co.'s cash operating taxes increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

Invested Capital

Walt Disney Co., invested capital calculation (financing approach)

USD $ in millions

Microsoft Excel LibreOffice Calc
Sep 29, 2018 Sep 30, 2017 Oct 1, 2016 Oct 3, 2015 Sep 27, 2014 Sep 28, 2013
Current portion of borrowings hidden hidden hidden hidden hidden hidden
Borrowings, excluding current portion hidden hidden hidden hidden hidden hidden
PV of operating lease payments1 hidden hidden hidden hidden hidden hidden
Total reported debt & leases hidden hidden hidden hidden hidden hidden
Total Disney Shareholder's equity hidden hidden hidden hidden hidden hidden
Net deferred tax (assets) liabilities2 hidden hidden hidden hidden hidden hidden
Allowance for doubtful accounts3 hidden hidden hidden hidden hidden hidden
Equity equivalents4 hidden hidden hidden hidden hidden hidden
Accumulated other comprehensive (income) loss, net of tax5 hidden hidden hidden hidden hidden hidden
Redeemable noncontrolling interests hidden hidden hidden hidden hidden hidden
Noncontrolling interests hidden hidden hidden hidden hidden hidden
Adjusted total Disney Shareholder's equity hidden hidden hidden hidden hidden hidden
Projects in progress6 hidden hidden hidden hidden hidden hidden
Securities classified as available-for-sale7 hidden hidden hidden hidden hidden hidden
Invested capital hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25), 10-K (filing date: 2014-11-19), 10-K (filing date: 2013-11-20).

1 Addition of capitalized operating leases. See Details »

2 Elimination of deferred taxes from assets and liabilities. See Details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of equity equivalents to total Disney Shareholder's equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of projects in progress.

7 Subtraction of securities classified as available-for-sale.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Walt Disney Co.'s invested capital increased from 2016 to 2017 and from 2017 to 2018.

Cost of Capital

Walt Disney Co., cost of capital calculations

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Borrowings3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 24.50%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 24.50%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2018-11-21).

1 USD $ in millions

2 Equity. See Details »

3 Borrowings. See Details »

4 PV of operating lease payments. See Details »

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Borrowings3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 35.00%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 35.00%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2017-11-22).

1 USD $ in millions

2 Equity. See Details »

3 Borrowings. See Details »

4 PV of operating lease payments. See Details »

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Borrowings3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 35.00%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 35.00%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2016-11-23).

1 USD $ in millions

2 Equity. See Details »

3 Borrowings. See Details »

4 PV of operating lease payments. See Details »

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Borrowings3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 35.00%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 35.00%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2015-11-25).

1 USD $ in millions

2 Equity. See Details »

3 Borrowings. See Details »

4 PV of operating lease payments. See Details »

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Borrowings3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 35.00%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 35.00%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2014-11-19).

1 USD $ in millions

2 Equity. See Details »

3 Borrowings. See Details »

4 PV of operating lease payments. See Details »

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Borrowings3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 35.00%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 35.00%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2013-11-20).

1 USD $ in millions

2 Equity. See Details »

3 Borrowings. See Details »

4 PV of operating lease payments. See Details »


Economic Spread

Walt Disney Co., economic spread calculation

Microsoft Excel LibreOffice Calc
Sep 29, 2018 Sep 30, 2017 Oct 1, 2016 Oct 3, 2015 Sep 27, 2014 Sep 28, 2013
Selected Financial Data (USD $ in millions)
Economic profit1 hidden hidden hidden hidden hidden hidden
Invested capital2 hidden hidden hidden hidden hidden hidden
Ratio
Economic spread3 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25), 10-K (filing date: 2014-11-19), 10-K (filing date: 2013-11-20).

2018 Calculations

1 Economic profit. See Details »

2 Invested capital. See Details »

3 Economic spread = 100 × Economic profit ÷ Invested capital
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Economic spread The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Walt Disney Co.'s economic spread deteriorated from 2016 to 2017 but then improved from 2017 to 2018 not reaching 2016 level.

Economic Profit Margin

Walt Disney Co., economic profit margin calculation

Microsoft Excel LibreOffice Calc
Sep 29, 2018 Sep 30, 2017 Oct 1, 2016 Oct 3, 2015 Sep 27, 2014 Sep 28, 2013
Selected Financial Data (USD $ in millions)
Economic profit1 hidden hidden hidden hidden hidden hidden
Revenues hidden hidden hidden hidden hidden hidden
Ratio
Economic profit margin2 hidden hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25), 10-K (filing date: 2014-11-19), 10-K (filing date: 2013-11-20).

2018 Calculations

1 Economic profit. See Details »

2 Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company's profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Walt Disney Co.'s economic profit margin deteriorated from 2016 to 2017 but then improved from 2017 to 2018 not reaching 2016 level.