Case Analysis for Disney's Yen Financing

Part I. The fundamental information of Walt Disney The Walt Disney Company, a diversified multinational troupe operated pleasure and recreational complexes, produced effort picture and television set features, developed community real estate projects, and sold consumer products. The troupe was founded in 1938 as a successor to the animated motion picture business established by Walt and Roy Disney in 1923. The company operated the Disneyland amusement theme park in Anaheim, California, and the Walt Disney World close resort in Orlando, Florida. In addition to the domestic entertainment and recreation revenues from Disneyland and Walt Disney World, the company received royalties, paid in yen, on certain revenues generated by Tokyo Disneyland. Owned and operated by an uncorrelated Japanese corporation, Tokyo Disneyland was opened to the public on April 15, 1983. In twelvemonth 1984, the consolidated revenues for The Walt Disney Company and its subsidiaries change magnitude by virtually 27% to $1.7 billion. Total entertainment and recreation revenues, including royalties from Tokyo Disneyland, increased by 6% to $1.1 billion in the fiscal year ended September 30, 1984. Net income totaled $97.8 million in 1984, an increase of 5% from 1983.

During fiscal 1984, yen royalty communicate had been just over ?8 billion, however, Disney foresaw a constant get along growth at 10% to 20% per year over next few years. At the same time, there were mercurial fluctuations in the yen/dollar exchange rate. Yen has depreciated approximately 8% last year, which indicated a shrink in royalty receipts in yen. Rolf Anderson, the director of finance at The Walt Disney was considering heterogeneous ways of hedging the exposure. Besides, considering the increased interest costs on high level of borrowing and excessive short-run give and commercial paper, the company planned to reduce such short-term debts. Part II. Should Disney hedge its yen royalty cash prevail? Why or why not? Disney should hedge its yen... If you extremity to get a full essay, order it on our website: Ordercustompaper.com

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