> Tying It All Together Case 12-1 Before you begin this assignment, review the T

Question

> Tying It All Together Case 12-1 Before you begin this assignment, review the Tying It All Together feature in the chapter. It will also be helpful if you review The Disney Company's 2015 annual report (https://www.sec.gow/Archives/edgar/data/1001039/0001001039 15000255/fy2015. q4x10k.htm), isney Company is a diversified entertainment company that is comprised of five different business segments Walt Disney began as a cartoon studio in 1920 and today is known as a leading rovider Requirements . On The Walt Disney Company's balance sheet dated October 3,2015, the company reports borrowings of $12,773 million. Review 2. Perform a web search for the terms commercial paper and U.S. medium-term notes. What do each of these terms mean? 3. Review the information included in Note 8 What are the maturity dates for The Walt Disney Company's U.S. medium-term notes? Note 8 (Borrowings) of the company's annual report. What are the different types of borrowings the company holds?

Explanation / Answer

Ans.1 Under the long term liability the company reports borrowings of $12,773. if we check note 8 Borrowings, we can see the company has mentioned that it has:

Commercial Paper

U.S Mid term Notes

The mentioned are the differnet type if borrowings the company hold

Ans.2 Commercial Paper: Commercial paper are unsecure short term debt instruemnts which are listed by the companeis to raise capital for a short period of time. Typically they are issued to finance the account receivables or short term liabilities. Commercial papers are issued at discout, and reflect prevailing market rate. The quallity of debt rating would enable the companies to find buyers easily. One big advantage of the commercial paper is that, it does not require any registration with SEC if they expire within 270 days. This makes it really less costly comapre to issuing bonds.

U.S Mid term note: A mid term note, as the name suggest, is a debt isntrument which matures within five to ten years. A company can continuesly offer mid term notes. Investors have the choice of choosing from nine months range to a long term.

The coupons offered in these type of isntruements are high, and it also enables investors to see the maturity, and take the decisions based on the economic scenario. The coupon rate offered are usually high than the short term debt instruement. This allows a company to finance their cashflows, it allows to keep a check on their debt issuance. Usually these type of isntruements have to registerd with SEC. This isntruemnet comes in both callable, and non callable option from the company.

Ans.3 With respect to the notes (Section 8 of Borrowings) the US Mid Term Notes total amount upto the date 2015, is at $13.9 billion with maturity randing from 1 to 78 years. This include the fixed notes of amount $13.7 billion, with the interest rate of .45% to 7.5%. It also has $260 million worth floating rate tha bear the interest rate of LIBOR plus minus the spread. The efefctive rate as of 30 October was .69%. There is also a mention of European Medium term notes where the company has the option to issue security worth $4 billion subject to market conditions.

Type of Borowwing 2015 ($)

Commercial Paper

2,430

U.S Mid term Notes

13,873 Foreign currency denominated debt 447 Capital Cities/ABC Debt 108 other 159 International Theme Park Borrowing 319 Less Current Portion 4,563 Total Borrowing 12,773

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.