Microsoft Word - Prospective Client Risk Assessment.docx Prospective Client Risk Assessment “The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company...

This is a team project and I was assigned to do the four questions which were No. 8. abcd.I also posted a project sample to provide you some ideas. and our team chose US Bancorp as the our company to analyze.


Microsoft Word - Prospective Client Risk Assessment.docx Prospective Client Risk Assessment               “The Walt Disney Company, together with its subsidiaries, is a diversified worldwide entertainment company with operations in five business segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive (“Annual Report”, 2012).   Prepared by: Gabriella Armetta Giselle Prego Matthew Mahellick           2   Prospective  Client  Risk  Assessment                                                                                   3   Prospective  Client  Risk  Assessment   TABLE OF CONTENTS COMPANY OVERVIEW Industry 5 Primary Products 5 Corporate Strategy 6 Raw Materials Used 7 Company Size 7 Sales Assets Employees Market Capitalization Company Location 10 Closely Associated Persons/Companies 10 Customer Base 10 Annual Report 12 Company Image Segments and Functional Content Primary Cost Drivers Research and Development INDUSTRY OVERVIEW Key Economic Factors 12 Company Life Cycle 13 Factors for Success & Application of these Factors 13 Accounting Considerations 15 Regulatory Matters of Concern 16 Social Matters of Concern 17 Primary Competitors 17 Personnel Turnover 18 Ease of Entry into the Industry 18 Management Integrity 18 Michael Porter’s “Five Forces Model” 19 FINANCIAL HEALTH Company Health 21 Z-Score Analysis DuPont Analysis Ratio Analysis 23 Company Movement 24     4   Prospective  Client  Risk  Assessment   Sources and Value of Capital 24 Capital Marketplace Response 24 Quality of Earnings 26 Auditor and Nature of Audit Reports 27 PERCEPTION Perception of User Community 28 AUDIT CONCERNS Material Transaction Cycles 32 Risk Assessment 33 High-risk Areas Low-risk Areas Integrity Assessment 34 Client Selection Process 35 Audit Effort Among Geographical Areas 36 External Control in Relation to Sarbanes-Oxley Section 404 36 Audit Resources 37 Internal Audit Outside Specialists Specific Areas of Audit Expertise Expected Form of Auditors’ Report 38 Implications of SOX 404 39 SWOT Analysis 40 CLIENT BUSINESS RISK MATRIX Client Business Risk Matrix 41 APPENDIX A: Project Team Cooperation 43 Time Budget Leadership Coordination Norms Conflict Contribution Instructions Other Accomplishments Proposal APPENDIX B: Bibliography 47     5   Prospective  Client  Risk  Assessment   COMPANY OVERVIEW Industry The Walt Disney Company’s industry is diversified entertainment. Together with its subsidiaries, Disney is a diversified worldwide entertainment company with operations in five business segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive. Media Networks The Media Networks segment includes international and domestic cable television networks; a domestic broadcast television network, television production operations, domestic and international television distribution, domestic television stations, domestic broadcast radio networks and stations, and publishing and digital operations. Disney’s cable networks include ESPN, Disney Channels Worldwide, ABC Family, and SOAPnet. The cable networks group produces its own programs or acquires rights from third parties to air programs on our networks.ESPN, ESPN2, ESPNEWS, ESPN Classic, ESPNU, Disney Channel – Domestic, Disney Channels – International, Disney Junior – Domestic, Disney Junior – International, Disney XD – Domestic, Disney XD – International, ABC Family, SOAPnet, A&E Television Networks (AETN), A&E, Lifetime, HISTORY, LMN, BIO, H2, and Lifetime Real Women are all the networks available whereby Disney either owns 50% or more. Parks and Resorts The Company owns and operates the Walt Disney World Resort in Florida, the Disneyland Resort in California, Aulani, a Disney Resort & Spa in Hawaii, the Disney Vacation Club, the Disney Cruise Line and Adventures by Disney. The Company also partially own parks internationally. Studio Entertainment The Studio Entertainment segment produces and acquires live-action and animated motion pictures, direct-to-video content, musical recordings and live stage plays. The Company distributes produced and acquired films (including its film and television library) in the theatrical, home entertainment and television markets primarily under the Walt Disney Pictures, Pixar and Marvel banners. The Company produces and distributes Indian movies worldwide through its UTV banner. The Company’s studio entertainment operational segment includes segments of business in the theatrical market, home entertainment market, television market, and music recording and production. Primary Products Because The Walt Disney Company is in the entertainment industry, it gains the majority (46%) of its revenue through the media networks that it owns. Theme parks and resorts are Disney’s     6   Prospective  Client  Risk  Assessment   second source of revenue. Although Disney is a global company with locations, products, and services in Europe, Asia, and Latin America, in total, 75% of its sales occur in the United States and Canada. Media and Entertainment Disney is a complex company with a variety of media networks, including major names such as ESPN, Disney Channels Worldwide, ABC Family, SOAPnet, and A&E Television Networks. Much of this revenue is generated through the fees charged to cable companies. In studio entertainment, Disney owns the Disney Music Group, Marvel Entertainment, Pixar, Touchstone Pictures, and Walt Disney Pictures. Also, Disney’s interactive media creates video games and social networks for children. Parks & Resorts, Consumer Product Disney’s parks and resorts located in the United States are Walt Disney World Resort in Orlando, FL, Disneyland in Anaheim, CA, a resort and spa in Hawaii, and Disney Cruise Line. Internationally, the company partially owns parks and resorts in Europe (51%), Hong Kong (48%), and Shanghai (43%). The main source of park revenue stems from admissions, sales of merchandise, and hotel and cruise reservations. Meanwhile, Disney’s consumer products are licensed, published, distributed, and sold globally. They design, develop, and sell a variety of products based on their new and existing characters. Below is a pie chart illustrating a more accurate breakdown of Disney’s sales mix. Corporate Strategy The Walt Disney Company has three key strategies that have led to their success over the last decade: creating exceptionally high quality content for families, engaging customers with 46%   30%   14%   8%   2%   Sales Mix Media Networks Parks & Resorts Studio Entertainment Consumer Products Interactive media     7   Prospective  Client  Risk  Assessment   accessible products through a use of innovation and technology, and consistently increasing brand awareness through by entering global markets. The driving force behind The Walt Disney Company’s continued profitability is Disney’s acquisition of several of the world’s paramount media brand names, such as Disney, ESPN, ABC, Pixar, Marvel, and Lucasfilm. These brands allow The Walt Disney Company to expand and adapt to the trends and preferences of consumers. Raw Materials Used Inventory primarily includes vacation timeshare units, merchandise, materials, and supplies. All raw materials necessary for these items are in use by Walt Disney Company. Raw material for merchandise, food and beverage, marketing, vacation club units, entertainment structures and technology, and fuel expense are included as well as materials needed for their diverse range of product categories, the most significant of which are: toys, apparel, home décor and furnishings, stationery, health and beauty, accessories, food, footwear, and consumer electronics. Company Size Sales Disney’s sales have been growing at an average rate of 3.39% a year since 2009, when Disney experienced a brief decrease in sales due to the financial crisis. Comparatively, competitors, such as Twenty-First Century Fox, Inc. and Time Warner Inc., have had a continued decline in revenue growth 17.89% and 0.85%, respectively. In 2012 alone, sales were $42,278 billion and are projected to be on the rise in years to come. Currently, sales are outpacing the growth of the market. Company Assets The total amount of Disney’s assets in 2012 was $74,898 billion. Disney’s largest asset group is cash and cash equivalents, followed by receivables, inventories and then television costs (“Form 10-K”, 2012). Property, Plant, and Equipment makes up 34% of Disney’s total assets, which has 37.84   36.15   38.06   40.89   42.28   $0   $10   $20   $30   $40   $50   2008   2009   2010   2011   2012   D ol la rs  in  B ill io ns   Revenue  by  Year       8   Prospective  Client  Risk  Assessment   experienced an upward trend in the past five years. Roughly $30 billion of total assets are intangible assets, including goodwill. The chart below shows that Disney’s assets have been increasing over the past 5 years steadily. Employees Disney offers a variety of opportunities for employment from student internships to life long careers. Currently, Disney has 166,000 employees across all of its business segments. Their employee growth rate over a one-year period is 6.41%, meaning in the past year they hired an average of 11,000 new employees. Diversity and culture of its employees is critical to the company’s image and reputation. Diversity: Disney benefits from their employees
Apr 20, 2021
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