Financial risks

Financial risks are inherent to both individuals and businesses. For individuals, an example of financial risk would be carrying so much personal debt that it is impossible to qualify for a mortgage to buy a home. Similarly, for a business, an example of financial risk is carrying so much debt, or being so heavily leveraged, that the cost of additional debt becomes too high. This would not allow the business to support a new project or venture that could increase sales. In this case study, you will look at different types of risks and explore how these risks impact growth specific to sales, retained earnings, and dividends.

Directions

Go to the Walt Disney Company’s Investor Relations webpage. Scroll down the page until you see SEC filings. Find and download the quarterly report (Form 10-Q) with the latest filing date. Review the financial statements, and then write a response.

Specifically, you must address the following rubric criteria:

Systematic and Unsystematic Risk: Explain the differences between systematic and unsystematic risk.

Financial Risks: Describe the potential impacts of the following types of financial risk on the Walt Disney Company based on the quarterly report:

Interest rate risk

• Economic risk
• Credit risk

Operational risk

• Lower Growth Impact: Explain the impact that a lower growth in sales could have on the dividend policy and retained earnings for the company based on the quarterly report.
• Higher Growth Impact: Explain the impact that a higher growth in sales could have on the dividend policy and retained earnings for the company based on the quarterly report.

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