Hasbro, Inc. and Mattel, Inc., are the two largest toy companies in North America. Condensed liabilities...

 

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Hasbro, Inc. and Mattel, Inc., are the two largest toy companies in North America. Condensed liabilities and stockholders' equity from a recent balance sheet are shown for each company as follows (in thousands): Current liabilities Current liabilities Long-term debt Deferred liabilities Total liabilities Shareholders' equity: Hasbro Mattel $960,435 $1,716,012 1,396,421 1,100,000 461,152 643,729 $2,818,008 $3,459,741 Common stock $104,847 $441,369 Additional paid in capital 655,943 1,727,682 Retained earnings 3,354,545 3,515,181 Accumulated other comprehensive loss and other equity items (72,307) (464,486) Treasury stock, at cost (2,535,649) (2,152,702) Total stockholders' equity $1,507,379 $3,067,044 Total liabilities and stockholders' equity $4,325,387 $6,526,785 The income from operations and interest expense from the income statement for each company were as follows (in thousands): Income from operations (before income tax) Interest expense Hasbro Mattel $453,402 $945,045 117,403 88,835 a. Determine the ratio of liabilities to stockholders' equity for both companies. Round to one decimal place. Hasbro Inc. Mattel Inc. 1.9 1.1 b. Determine the number of times interest charges are earned for both companies. Round to one decimal place. Hasbro Inc. Mattel Inc. 10.6 X 3.9 X c. Together, these ratios indicate that earnings are more than enough with a greater Feedback margin of safety than Hasbro. to make interest payments. With that said, Mattel does provide creditors Check My Work a. Divide total liabilities by total stockholders' equity. b. Divide the sum of income before income tax plus interest expense by interest expense. c. Consider the relationship of the accounts involved. Consider the differences between the two companies. Learning Objective 4. Hasbro, Inc. and Mattel, Inc., are the two largest toy companies in North America. Condensed liabilities and stockholders' equity from a recent balance sheet are shown for each company as follows (in thousands): Current liabilities Current liabilities Long-term debt Deferred liabilities Total liabilities Shareholders' equity: Hasbro Mattel $960,435 $1,716,012 1,396,421 1,100,000 461,152 643,729 $2,818,008 $3,459,741 Common stock $104,847 $441,369 Additional paid in capital 655,943 1,727,682 Retained earnings 3,354,545 3,515,181 Accumulated other comprehensive loss and other equity items (72,307) (464,486) Treasury stock, at cost (2,535,649) (2,152,702) Total stockholders' equity $1,507,379 $3,067,044 Total liabilities and stockholders' equity $4,325,387 $6,526,785 The income from operations and interest expense from the income statement for each company were as follows (in thousands): Income from operations (before income tax) Interest expense Hasbro Mattel $453,402 $945,045 117,403 88,835 a. Determine the ratio of liabilities to stockholders' equity for both companies. Round to one decimal place. Hasbro Inc. Mattel Inc. 1.9 1.1 b. Determine the number of times interest charges are earned for both companies. Round to one decimal place. Hasbro Inc. Mattel Inc. 10.6 X 3.9 X c. Together, these ratios indicate that earnings are more than enough with a greater Feedback margin of safety than Hasbro. to make interest payments. With that said, Mattel does provide creditors Check My Work a. Divide total liabilities by total stockholders' equity. b. Divide the sum of income before income tax plus interest expense by interest expense. c. Consider the relationship of the accounts involved. Consider the differences between the two companies. Learning Objective 4.