Ethics and Compliance Daniel Bell, Francisco Le Febre, Gloria White, Jack Proctor, and Jennifer Carrier FIN/370 August 29, 2011 Rich Tappe Ethics and Compliance The Walt Disney Corporation is known worldwide with their parks around the globe, movies made monthly, and merchandise in every store. Walt Disney started his company on a dream and little did he know how rapidly it would turn into a multimillion dollar enterprise.
By using the Disney’s annual reports and SEC filings for the last two years, Team A will assess the role of ethics and compliance in the financial environment and describe procedures in place to provide an ethical environment. As well as identify processes that comply with SEC regulations and evaluate their financial performance during the past two years using financial ratios. Financial Environment The financial environment of Walt Disney World assesses a role and compliance of ethics in the business.
Disney has high expectations for the company’s employees and cast members to have the knowledge and training to act ethically and legally. The training comes from the company’s Standards of Business Conduct upon hire. Within the Standards of Business Conduct, employees are responsible to act professionally by maintaining integrity, honesty, respect, fair play, and teamwork with all finance involvement. Finance involvement includes; the use of corporate information, opportunities, assets, and financial institutions. All company information is confidential.
Any person working under Disney is not allowed to use the information to trade in stock of the Company and give away information about real-estate transactions or sales and earnings figures. Acquisitions or mergers, strategic business plans, major contracts, stock splits, commencement of legal litigation, the sale of an associated company, or new project contemplated by the company are all forms of finance information that is important to stay confidential(Walt Disney World Company, 2008). Any cast member or employee who participates in decisions concerning anaging and launching the relationship between the company and other financial institutions must not personally enter into a transaction or a receipt of any assistance or opportunity from a intermediary institution that is not open to other customers or clients whom may be in relation with the financial institutions. The same applies to close family members of an employee or cast member that transactions are entered into by or have benefits and opportunities offered to the family. A financial goal in line of ethical standards of Disney is to provide a reasonable return back to the shareholders and build the value of the company’s investment.
Lastly, all reporting should be accurate for all financial purposes. Part B – Ethical Procedures In order for companies to do business ethically and to keep their employees truthful they have to create a set of rules and policies, which address all possible issues that the employees and companies could potentially have with customers and other coworkers. Within Disney some of the main policies they have in place to ensure ethical behavior are policies on conflicts of interest, the use of corporate information, protection of intellectual property, and lastly prohibit agreements with customers that hinder or restrain competition.
The conflicts of interest policy states that an employee should not take private interests over company interests that can depend on the company’s products. The next policy, which is the use of corporate information, is important because it restricts the use of any company confidential information that could be used for personal benefit or the benefit of others. The next policy that is in place refers to the protection of intellectual property, which makes sure that all company employees maintain the confidentiality of information that is entrusted to the company.
The last policy that is in place is one that prohibits employees from making agreements that would restrain any competition the company has. This would mean that there are certain types of agreements that can be made that would be illegal by law and that all Disney employees should have no part of these types of agreements and should never enter into this type of agreement or understanding. All of the above policies are just some of the policies that Disney has in place in order to make sure that all employees and the company work in an ethical and proper manner so that they re offering the best business practices possible. Complying with SEC Regulations The Walt Disney Company is known for its major family closeness and family values for entertainment all around the world. While the general manager has changed over the years, the core value values of the company has remained the same; providing innovative, quality entertainment for all members of the family, everywhere and all across America and the world. The company ensures the ethical standards of the Walt Disney Company and that is part of the business practice.
The company is an equal opportunity employer (EOE) in regards to race, religion, color, sex, sexual orientations, national origins, age, marital status, covered veteran, mental or physical disability, pregnancy or any other basic prohibited by state or federal law (The Disney Company, 2009). So the Disney Company is a great place of employment for all age groups of peoples. The Walt Disney Company is part of all of these forums and chapters listed below: Multi-Fibre Avangement (MFA) Forum – 2006 Business for Social Responsibility (BSR) – 1998 Social Accountability International (SAI) – 2008
International Council Troy Industries Care Process (ICTI) – 2008 Financial Performance in 2009 and 2010 Walt Disney reported a profitable financial status in the 2009 fiscal year. According to the annual report from Walt Disney, the 2009 end of year current assets totaled $11,889,000 with total liabilities of $8,934,000. The company’s 2009 return on equity totaled $35,425,000 with the total liabilities and equity ending the year at $63,117,000. In considering the firm’s financial liquidity, the ratio of assets to liabilities is 1. 3 times. The calculation of operating income return on investments is 45%.
Regarding financial decisions, the 2009 debt ratio was 75% allowing a mere 25% available for dispersion. The return on equity totaled 6%. These calculations reflect the financial state of the organization. The following year financial status improved for the ever growing company. The 2010 report claimed assets to equal $12,225,000 while liabilities were $11,000,000 ending the year with a positive net balance. The return on equity was $39,342,000 causing the final assets, liabilities and equity to total $69,206,000. In 2010, Walt Disney’s financial liquidity calculated at 1. 1 times.
The operating income return on investments for the year is 54%. Financial decisions may be made based on the 2010 debt ration equaling 90%. The return on equity at the end of 2010 was 6%. The year’s calculations have reported a potentially profitable year with availability to expand. The organization has proven lucrative despite the recovery stage of this nation. Overall, Walt Disney has maintained a positive balance throughout expansion and modernization of the company over the past two years. The net assets increased over the time span and have maintained their return on equity.
Therefore, the company appears to be in a healthy financial state. Discussion on Trends and Financial Health As shown in the last two years’ financial reports, the Walt Disney Corporation has a strong financial grasp on financial performances. They did end the 2009 fiscal year on a downslide; but rebounded for the year of 2010. In 2009, the company’s return on equity totaled $35,425,000 while the total liabilities and equity totaled $63,117,000, giving a negative balance of $27,692,000. This certainly is not what any company would want to see on a year-end report.
As they entered 2010, they came out in the positive $1,225,000 net balance. Throughout the years of the company, they have proven to bounce back in a financial crisis and continue to remain strong to this day despite the economic downfall of the nation. They continue to grow and reach other arenas of the entertainment industry while maintaining a financially comfortable profit versus liability status. The Disney Company has a Human Resource Department that enforces all the company policies and monitors all harassment preventions and discrimination policies.
The company also provides business standards and ethic training to all employees to help employees understand the company rules, regulations, and policies. Disney provides knowledge and training on how to act ethically and legally in compliance with the company’s standard of business conduct (The Walt Disney Company, 2011). Most companies do not go to the extent of this much training for its employees. The Disney Company value all of its employees and the reputation of it company and want to value its employees. References Walt Disney World Company. 2008). Google. Retrieved from http://corporate. disney. go. com/corporate/conduct_standards5. html Walt Disney World Company, (2011). Investor Relations. Retrieved from http://corporate. disney. go. com/investors/annual_reports. html The Walt Disney Company. Fiscal Year 2010 Annual Financial Report and Shareholder Letter. http://amedia. disney. go. com/investorrelations/annual_reports/WDC-10kwrap-2010. pdf? int_cmp=corp_IR_ARview_link1__Intll Mahone, Troy. Feb. 28, 2011. “Disney Ethic and Compliance” http://. www. brainmass. com