Advanced Financial Management Essay Example | Topics and Well Written Essays - 2500 words

Advanced Financial Management - Essay Example Dividend Policy derived from the type of capital structure chosen by the company also affects the value of the company’s stock to a great extent that in turn may enhance the company’s bottom line. For this paper, the financial & investment strategies of The Walt Disney Company will be discussed in order to understand financial blueprints taken by the company from time to time & its effects on the company. Walt Disney is the second largest mass media company in the world with headquarter in California, United States. The common stocks of Disney are traded on New York Stock Exchange (NYSE) with a ticker symbol of DIS. As per the records, last time the company had paid dividend was on 16th of January, 2013 to all its shareholders. In the last financial year of 2013-14, the company has shown substantial financial improvement in terms of return on investment & shareholders, subsidiaries & joint ventures’ perspective. The company ranks 17th on Forbes in the list of most valuable brands with as low as 3% default risk as compared to their peer companies. In July, 2014 the US dollar bonds issued by the company were heavily traded as corporate fixed rate bonds near the best value. As a result of an exceptional trading volume of $ 28.9 million on 11th & 14th of July, 2014, Walt Disney became 16th most actively traded corporate bond issuer in the current financial year of 2014-2015 (Verma , 2012). The capital structure shows how a firm can finance its overall operations through optimum utilization of their sources of funds. Main sources of funds can be classified under Debt & Equity. Equity includes common stock, retained earnings & preferred stocks whereas debt includes bonds & bills i.e. long term payables (Baker and Martin, 2011). Using more debt instruments in the capital structure of a company increases the riskiness for the company due to continuous interest payment & obligation for payment of principle in long run. However, higher proportion of