This document provides an analysis of Berkshire Hathaway and The Walt Disney Company. It includes information on: - Berkshire Hathaway's founding, core insurance business, and equity investments in companies like Coca-Cola and American Express. - Disney's founding, segments including media networks and parks/resorts, and target market of children, teenagers, and parents. - Financial analyses of profitability, liquidity, leverage, and growth for both companies from 2017-2019 using metrics like ROA, current ratio, and sales growth. - Berkshire Hathaway and Disney's largest shareholders. - Analyses of the US movie industry, competition among major studios, and

1. Berkshire Hathaway, Inc.
Founded by Warren Buffett in 1956, Berkshire Hathaway is a
company that specializes in insurance and has business
activities in many other areas. The most important of these are
direct property and reinsurance based property and disaster
insurance. Berkshire's core business is insurance, including
property, accident, reinsurance, and special insurance.
Berkshire has many very different businesses, but it has
gradually turned into a full acquisition of the company's equity.
Berkshire Hathaway's investment business is carried out by
holding shares in the company. These companies include:
American Express, Coca-Cola, Federal Home Mortgage
Corporation, Gillette, and Washington Post.
First Impressions from Financials
·
With the exception of 2018, profit margin and return on equity
are at a healthy level.
·
·
Clearly a very liquid corporation, but perhaps too liquid.
·
·
Financial leverage throughout the last three years has been
maintained at just about half debt, half equity.
·
·
Financial leverage is at a comfortable level, but under 0.5 is
ideal.
·
Implications from Financials
Walt Disney Co.
The Walt Disney Co. was originally founded on October 16,

2. 1923, by brothers Walt and Roy O. Disney as the Disney
Brothers Cartoon Studio, is a diversified international family
entertainment and media enterprise. It operates through the
following segments: Media Networks, Parks, Experiences and
Products, Studio Entertainment and Direct-to-Consumer and
International (DTCI).
First Impressions from Financials
·
Fairly profitable company, attractive profitability ratios.
·
·
Not very liquid, this company does not have enough assets on
hand to cover its liabilities.
·
·
Financial leverage of this company is consistently very near or
just better than the ideal level, less than 0.5.
·
·
Financial leverage is at a comfortable level, but could be
slightly improved.
·
Implications from Financials
Walt Disney Co.’s gross profit margin ratio deteriorated from
2017 to 2018 and from 2018 to 2019. Operating profit margin
ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Net profit margin ratio improved from 2017 to 2018 but then
deteriorated significantly from 2018 to 2019. ROE improved
from 2017 to 2018 but then deteriorated significantly from 2018
to 2019. ROA improved from 2017 to 2018 but then deteriorated
significantly from 2018 to 2019.
1. Market Analysis
Berkshire Hathaway’s Market: Companies it owns have target

3. markets that range from all types of people.
·
Size of Market: A total of 389,000 employees in 2019
(estimated # of people)
·
·
Market Share: The company's stock price is about $ 310,000 (%
of market owned)
·
Disney’s Market: Mainly children and teenagers, but also
parents.
·
Size of Market: A total of 201,000 employees in
2019(estimated # of people)
·
·
Market Share: According to the statistics of the boxofficemojo
website, in 2016, Disney occupied the top spot in six major
Hollywood studios with a 24.2% market share.(% of market
owned)
·
Resources:
Producers can take advantage of a large number of local
production talents and production centers and equipment,
especially in Hollywood, where there are many large-scale film
production facilities, modern shooting and production
equipment, and more than 180 modern studios.
Technology:
Whether a movie is selling well depends not only on whether
modern digital technology can bring a good movie viewing
effect to the movie viewers, but whether the special effects
technology is shocking is also one of consumers' expectations
for movies.
2. Industry Analysis
Berkshire Hathaway:
·

4. 1. Fidelity Management and Research Company
·
Fidelity Management and Research is the largest holder of
Berkshire shares, with 29,215 shares. Fidelity holds Berkshire
shares through its various funds, valued at Berkshire's
aforementioned share price of $ 8.7 billion and constitutes
3.88% of Berkshire's outgoing stock.
2. Capital world investors
Capital World Investors is the second largest shareholder of
Berkshire shares, with 21,490 shares. Capital has US $ 5.9
billion in shares, accounting for 2.85% of Berkshire's total
outgoing shares. Capital is a privately owned investment
manager, such as Fidelity, based in Los Angeles.
3.The first Manhattan company
The first Manhattan company was an investment manager based
in New York and the third largest shareholder of Berkshire
Hathaway's Class A shares. Compared to Fidelity and Capital,
the first Manhattan was a relatively small asset management
company with more than $ 16 billion in truth
4.Vista stock partner companies
Vista Stock Partners, the company is a technology investment
company and the fourth largest shareholder in Berkshire
Hathaway, with 5,390 shares worth $ 1.6 billion. The company's
shares in Berkshire Hathaway account for 0.72% of all outgoing
shares.
·
Disney:
·
Overview of American Movies:
In 2008, the annual income of US film overseas box office
exceeded US $ 25.8 billion, making it the second largest
currency exchange industry after aerospace. In the world film
market, it accounts for 92.3% of the total. American film is the
core force of the world film industry.
Competition among existing companies:

5. For the American film industry, it is characterized by an
oligopoly formed by several large movie companies. Although
there are many independent producers, they rely solely on
personal financing. The amount of possession has always been
small.
Cost structure:
For the six major companies, theaters consider their own
interests. They are more willing to accept large-scale
productions and large-scale publicity films than small-
production and low-cost films. But the big movie companies are
squeezing independent production companies and potential
threats by setting up high costs.
3. Company Analysis
Profit Analysis (2019 Financials):
Profitability
Company
ROA
ROE
ROCE
Sales
($ millions)
Berkshire Hathaway
0.10
19.17%
0.13
$327,223
Disney
0.06
11.77%
0.12
$59,434
Activity
Company
Inventory Turnover

6. Asset Turnover
Berkshire Hathaway
5.71
0.44
Disney
9.4
0.54
Risk Analysis (2019 Financials):
Company
Liquidity
Solvency
Current Ratio
Quick Ratio
Debt/Assets
Debt/Equity
Berkshire Hathaway
4.75
4.29
0.48
0.93
Disney
0.90
0.84
0.52
1.07
Growth Analysis:
Berkshire Hathaway
2017
2018
2019
Net Income
$44,940

7. $4,021 (-91.05%)
$81,417 (+77,396)
Sales
$242,061
$225,382 (-7.01%)
$327,223 (+45.19%)
Assets
$702,095
$707,794 (+0.81%)
$817,729 (+15.53%)
*dollar values are in millions
Disney
2017
2018
2019
Net Income
$8,980
$12,598 (+27.51%)
$11,054 (-12.26%)
Sales
$55,137
$59,434 (+7.79%)
$69,570 (+17.05%)
Assets
$95,789
$98,598 (+2.93%)
$193,984 (+96.74%)
*dollar values are in millions
iv. Select the best:
1. Creating composite indices using results from 3-a-I, ii, iii, &
others.
2. Establish selection process:
a. Aggressive approach: consider

8. i. Growth potential measures first,
ii. Profit measures second
iii. Then, risk measures.
b. Conservative approach: consider
i. risk measure first
ii. profit measures second
iii. Then growth potential measures
3. Using valuation models.
a. Choose the most under-valued item which has the largest gap
between the intrinsic value from the model and the current
market value.
b. Methods to find intrinsic values:
i. Present value methods：
1. Cash flow based
2. Earnings based
3. Dividend based
Ii. CAPM for expected return: Ri = Rf +βi (E(Rm) - Rf ) +εi
4. Other methods to find under-valued stocks:
a. Using P/E ratios
b. Using BV/MV ratios.
b. Time series: Trend analyses
i. Growing vs. shrinking in value