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Disney's gross profit margin for the third quarter of its fiscal year 2012 has increased when compared to the same period a year ago. The company has grown its sales and net income during the past quarter when compared with the same quarter a year ago, and although its growth in net income has outpaced the industry average, its revenue growth has not. Disney has weak liquidity. Currently, the Quick Ratio is 0.93 which shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.
At the same time, stockholders' equity ("net worth") has remained virtually unchanged only increasing by 2.72% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the future.The current P/E ratio indicates a significant discount compared to an average of 34.57 for the Media industry and a value on par with the S&P 500 average of 16.49. To use another comparison, its price-to-book ratio of 2.38 indicates valuation on par with the S&P 500 average of 2.28 and a significant discount versus the industry average of 3.90. The current price-to-sales ratio is well above the S&P 500 average, but below the industry average. Upon assessment of these and other key valuation criteria, Disney proves to trade at a discount to investment alternatives within the industry.
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