Posted: December 8th, 2015
Number of times interest charges are earned for both companies (Hasbro and Mattel, Inc)
Hasbro 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):
| Hasbro | Mattel | ||||
| Current liabilities | $960,435 | $1,716,012 | |||
| Long-term debt | 1,396,421 | 1,100,000 | |||
| Deferred liabilities | 461,152 | 643,729 | |||
| Total liabilities | $2,818,008 | $3,459,741 | |||
| Shareholders’ equity: | |||||
| 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):
| Hasbro | Mattel | |||
| Income from operations (before income tax) | $453,402 | $945,045 | ||
| Interest expense | 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. |
b. Determine the number of times interest charges are earned for both companies. Round to one decimal place.
| Hasbro Inc. | |
| Mattel Inc. |
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