Textbook Problem

a. Hasbro, 1.7

Ratio of liabilities to stockholders’ equity and times interest earned

 Hasbro, Inc. (HAS), and Mattel, Inc. (MAT), 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
Liabilities
Current liabilities	$1,617,859	$1,505,473
Long term debt	1,588,067	2,580,439
Total liabilities	$3,205,926	$4,086,012
Total stockholders’ equity	$1,862,736	$2,407,782
Total liabilities and stockholders’ equity	$5,068,662	$6,493.794

 The operating income and interest expense from the income statement for each company were as follows (in thousands):

	Hasbro	Mattel
Operating income (before income tax expense) Interest expense	$692,489 97,405	$409,472 95,118

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

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

c.     Interpret the ratio differences between the two companies.