Ratio of liabilities to stockholders’ equity and number of times interest charges are earned 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): 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) $945,045 $453,402 Interest expense 117,403 88,835 a. Determine the ratio of liabilities to stockholders’ equity for both companies. Round to one decimal place. b. Determine the number of times interest charges are earned for both companies. Round to one decimal place. c. Interpret the ratio differences between the two companies.

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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615
BuyFind

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781285743615

Solutions

Chapter
Section
Chapter 17, Problem 17.14EX
Textbook Problem

Ratio of liabilities to stockholders’ equity and number of times interest charges are earned

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):

Chapter 17, Problem 17.14EX, Ratio of liabilities to stockholders equity and number of times interest charges are earned Hasbro

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) $945,045 $453,402
Interest expense 117,403 88,835

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

b. Determine the number of times interest charges are earned for both companies. Round to one decimal place.

  c. Interpret the ratio differences between the two companies.

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Chapter 17 Solutions

Accounting (Text Only)
Ch. 17 - Horizontal analysis The comparative temporary...Ch. 17 - Horizontal analysis The comparative accounts...Ch. 17 - Vertical analysis Income statement information for...Ch. 17 - Vertical analysis Income statement information for...Ch. 17 - Current position analysis The following items are...Ch. 17 - Current position analysis The followingitems are...Ch. 17 - Accounts receivable analysis A company reports the...Ch. 17 - Accounts receivable analysis A company reports the...Ch. 17 - Inventory analysis A company reports the...Ch. 17 - Inventory analysis A company reports the...Ch. 17 - Long-term solvency analysis The following...Ch. 17 - Long -term solvency analysis The following...Ch. 17 - Times interest earned A company reports the...Ch. 17 - Times interest earned A company reports the...Ch. 17 - Asset turnover A company reports the following:...Ch. 17 - Asset turnover A company reports the following:...Ch. 17 - Return on total assets A company reports the...Ch. 17 - Return on total assets A company reports the...Ch. 17 - Common stockholders profitability analysis A...Ch. 17 - Common stockholders profitability analysis A...Ch. 17 - Earnings per share and price-earnings ratio A...Ch. 17 - Earnings per share and price-earnings ratio A...Ch. 17 - Vertical analysis of income statement Revenue and...Ch. 17 - Vertical analysis of income statement The...Ch. 17 - Common-sized income statement Revenue and expense...Ch. 17 - Vertical analysis of balance sheet Balance sheet...Ch. 17 - Horizontal analysis of the income statement Income...Ch. 17 - Current position analysis The following data were...Ch. 17 - Current position analysis PepsiCo, Inc., the...Ch. 17 - Current position analysis The bond indenture for...Ch. 17 - Accounts receivable analysis The following data...Ch. 17 - Accounts receivable analysis Xavier Scores Company...Ch. 17 - Inventory analysis The following data were...Ch. 17 - Inventory analysis Dell Inc. and Hewlett-Packard...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Ratio of sales to assets Three major segments of...Ch. 17 - Profitability ratios The following selected data...Ch. 17 - Profitability ratios Ralph Lauren Corporation...Ch. 17 - Six measures of solvency or profitability The...Ch. 17 - Six measures of solvency or profitability The...Ch. 17 - Earnings per share, price-earnings ratio, dividend...Ch. 17 - Price-earnings ratio; dividend yield The table...Ch. 17 - Earnings per share, discontinued operations The...Ch. 17 - Appendix Extraordinary item Assume that the amount...Ch. 17 - Income statement and earnings per share for...Ch. 17 - Unusual items Explain whether Colston Company...Ch. 17 - Horizontal analysis of income statement For 2016,...Ch. 17 - Vertical analysis of income statement For 2016,...Ch. 17 - Effect of transactions on current position...Ch. 17 - Nineteen measures of solvency and profitability...Ch. 17 - Solvency and profitability trend analysis Addai...Ch. 17 - Horizontal analysis of income statement For 2016,...Ch. 17 - Vertical analysis of income statement For 2016,...Ch. 17 - Effect of transactions on current position...Ch. 17 - Nineteen measures of solvency and profitability...Ch. 17 - Solvency and profitability trend analysis Crosby...Ch. 17 - Nike, Inc., Problem Financial Statement Analysis...Ch. 17 - Analysis of financing corporate growth Assume that...Ch. 17 - Receivables and inventory turnover Rodgers...Ch. 17 - Vertical analysis The condensed income statements...Ch. 17 - Profitability and stockholder ratios Deere Co....Ch. 17 - Comprehensive profitability and solvency analysis...

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