You can access Playtex Products Inc.'s SEC filings, including 10-Ks (annual reports) at www.secinfo.com. Enter PYX, Playtex's ticker sym- bol in the search box. Select "Annual Reports Form 10-K." Within each report, select "Filing Table of Contents" to find the financial statements.

a. What were Playtex's liabiliites-to-assets and times-interest-earned ratios in 2000 and 2001?

b. How much could EBIT have fallen in 2001 before Playtex would have been unable to make its interest payments out of operating income?

c. How volatile has Playtex's operating income been over the period 1996-2001?

d. Playtex is a family of well-known retail brands. It is number one or two in each of its three main businesses: tampons, suntan lotion, and infant care. In general terms, how costly do you think financial distress would be to Playtex if it began to appear the company might be having difficulty servicing its debt? Why?

e. Based on your analysis, is Playtex heavily or modestly indebted? Should the company acquire more debt, or shed existing debt? Why?

AppendixLO1