(answers to a, b & c)Hasbro (HAS) and Mattel, Inc. (MAT), are the two largest toy companies in North America. Liability and stockholders’ equity data from recent balance sheets are shown for each company below (in millions): HasbroMattelCurrent liabilities$ 1,065 $ 1,646 Long-term debt1,952 2,274 Total liabilities$ 3,017 $ 3,920 Total stockholders' equity1,704 2,633 Total liabilities and stockholders' equity$ 4,721 $ 6,553 The income from operations and interest expense from the income statement for both companies were as follows (in millions): HasbroMattelIncome from operations before tax$604 $464 Interest expense97 85 a. Determine the debt ratio for both companies. Round to one decimal place.Hasbro? %Mattel, Inc.? %b. Determine the ratio of liabilities to stockholders’ equity for both companies. Round to one decimal place.Hasbro? Mattel, Inc.?c. Determine the times interest earned for both companies. Round to one decimal place.Hasbro?Mattel, Inc.?c. What conclusions can be drawn from these data as to the ability of these two companies to meet their interest obligations?

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Answered: (answers to a, b & c) Hasbro (HAS) and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(answers to a, b & c)

Hasbro (HAS) and Mattel, Inc. (MAT), are the two largest toy companies in North America. Liability and stockholders’ equity data from recent balance sheets are shown for each company below (in millions):

	Hasbro	Mattel
Current liabilities	$ 1,065		$ 1,646
Long-term debt	1,952		2,274
Total liabilities	$ 3,017		$ 3,920
Total stockholders' equity	1,704		2,633
Total liabilities and stockholders' equity	$ 4,721		$ 6,553

The income from operations and interest expense from the income statement for both companies were as follows (in millions):

	Hasbro	Mattel
Income from operations before tax	$604		$464
Interest expense	97		85

a. Determine the debt ratio for both companies. Round to one decimal place.

Hasbro	? %
Mattel, Inc.	? %

b. Determine the ratio of liabilities to stockholders’ equity for both companies. Round to one decimal place.

Hasbro	?
Mattel, Inc.	?

c. Determine the times interest earned for both companies. Round to one decimal place.

Hasbro	?
Mattel, Inc.	?

c. What conclusions can be drawn from these data as to the ability of these two companies to meet their interest obligations?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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