Comprehensive Questions On HABRO Annual Report Q1- During which year (1996 or 1997), the firm was doing well in terms of : 2-A/R : Account Receivables bTrade Payables (Account Payable) Inventories d- CCC. To do so, you may compute DSO, DPO & DIO (DOH) before Calculating the firm's CCC during the years 1996 & 1997 (See the formulas in the appendix). 02- Comment on the firm PREPAID EXPENSES between 1996 & 1997. 03- Does the firm Divest or Invest in PP&E (Plants, Properties & Equipement)? - Suuport your answer by using your own ratios. Q4-What is your take on the firm's strategy of Re-acquiring its common shares ? Compare the case the two years, 05- Is the firm kin to go for more or less short term debt? - Explain. Specifically, does the debt be used to finance the cash dividends or the treasury stocks? And in which proportion ? Is it appropriate for the firm to do so ? 06-Compute the following ratios : ROE, ROA, Operating Leverage (Gross Profit/EBIT), Interest Burden (EBT/EBIT), Debt-to-Assets Ratio (D/total Assets), Interest Coverage (EBIT / Interest). Financial Leverage (EBIT/EBT) and Total Leverage (Operating Leverage x Financial Leverage) Write your own interpretaion for each ratio (calulated for 1996 & 1997) using short paragraphs. Appendix Days of Sales Outstanding (DSO) (365/Receivables Turnover) Days of Inventory on Hand (DIO) (365/Inventory Turnover) Days of Payables Outstanding (DPO) (365/Payables Turnover Ratio) Cash Conversion Cycle (Days of inventory, DIO) + (Days of Sales Outstanding, DSO) - (Number of Days of Payables Outstanding. DPO) Notes (from 2 to 8) of HASBRO - Year 1996 & 1997 (2) Acquisitions On May 2. 1997. Hasbro purchased certains of Odd On Products, Inc., and Cap Toys, Inc., wholly owned subeldiaries of Russ Bertie and Company, Inc. The consideration for this purchase was $167.379. This acquisition accounted for using the purchase accounting method and based on estimates of fair value 563.582 has been allocated to net tangible assets, 576,700 to product rights and 547,097 to goodwill (3) Inventories Finished products Work in process Raw materials 1997 $158.215 12.200 32.279 22.702 209903 16,310 6.536 22320 (4) Property. Plant and Equipment 1996 Land and improvements Buildings and improvements Machinery and equipment Less accumulated depreciation Tools, dies and molds, net of amortization 1992 $ 13.257 181362 265.313 459572 219.105 200 39,737 $200.000 205.400 251499 77.50 215.172 2922 51 252 31354 Expenditures for maintenance and repaies which do not materially extend the life of the assets are changed to operations (5) Short-Term Borrowings Hasbro has available unsecured committed and uncommitted lines of credit from various bandes approximating 5550.000 and $750.000, respectively. Substantially all of the short-term borrowings outstanding at the end of 1997 and 1996 represent bank borrowing related to international units made under these lines of credit. The weighted average interest rates of the outstanding borrowings were 6.3% and 5.0%, respectively. Rasho's working capital needs were fulfilled by borrowing under these lines of credit and through the issuance of commercial paper, both of which were on terms and at interest rates generally extended to companies of comparable creditworthiness. Included as part of the committed line is 5440,000 available from a revolving credit agreement. This agreement contains certain restrictive covenants with which the Company is in compliance. Compensating balances and facility fees were not material. (6) Accrued Liabilities Royalties Advertising Payroll and management incentives 1997 restructuring anuals (note 131 Other 1997 $ 95.418 112.299 64,014 120,099 224.203 $596,633 1996 81053 3.91 32.678 202.220 399 RSD (7) Long-Term Debt torte... Sit the comedian (a) Treme The -Incame the natitage tatian team 1888 nes Suite DE 41 Det Used Seo DU 22 000 w ES Certain tabeflected in the age of 2 56.739 in 1 und 56, 27. primarily to todos A co the statutory sited States oder eine tante altre in me CE 24 Store Se and local com how more foxon action in Other 123 Und 1990 1993 3152,37 TL 120 Santamaaling berisi The components of catered income tax experientowym is the same HON www.and we for the stars in the direct way with www deng AR th ble for 1 the Home of the three KPMG Peat Maurel LLP ho Comprehensive Questions On HABRO Annual Report Q1- During which year (1996 or 1997), the firm was doing well in terms of : 2-A/R : Account Receivables bTrade Payables (Account Payable) Inventories d- CCC. To do so, you may compute DSO, DPO & DIO (DOH) before Calculating the firm's CCC during the years 1996 & 1997 (See the formulas in the appendix). 02- Comment on the firm PREPAID EXPENSES between 1996 & 1997. 03- Does the firm Divest or Invest in PP&E (Plants, Properties & Equipement)? - Suuport your answer by using your own ratios. Q4-What is your take on the firm's strategy of Re-acquiring its common shares ? Compare the case the two years, 05- Is the firm kin to go for more or less short term debt? - Explain. Specifically, does the debt be used to finance the cash dividends or the treasury stocks? And in which proportion ? Is it appropriate for the firm to do so ? 06-Compute the following ratios : ROE, ROA, Operating Leverage (Gross Profit/EBIT), Interest Burden (EBT/EBIT), Debt-to-Assets Ratio (D/total Assets), Interest Coverage (EBIT / Interest). Financial Leverage (EBIT/EBT) and Total Leverage (Operating Leverage x Financial Leverage) Write your own interpretaion for each ratio (calulated for 1996 & 1997) using short paragraphs. Appendix Days of Sales Outstanding (DSO) (365/Receivables Turnover) Days of Inventory on Hand (DIO) (365/Inventory Turnover) Days of Payables Outstanding (DPO) (365/Payables Turnover Ratio) Cash Conversion Cycle (Days of inventory, DIO) + (Days of Sales Outstanding, DSO) - (Number of Days of Payables Outstanding. DPO) Notes (from 2 to 8) of HASBRO - Year 1996 & 1997 (2) Acquisitions On May 2. 1997. Hasbro purchased certains of Odd On Products, Inc., and Cap Toys, Inc., wholly owned subeldiaries of Russ Bertie and Company, Inc. The consideration for this purchase was $167.379. This acquisition accounted for using the purchase accounting method and based on estimates of fair value 563.582 has been allocated to net tangible assets, 576,700 to product rights and 547,097 to goodwill (3) Inventories Finished products Work in process Raw materials 1997 $158.215 12.200 32.279 22.702 209903 16,310 6.536 22320 (4) Property. Plant and Equipment 1996 Land and improvements Buildings and improvements Machinery and equipment Less accumulated depreciation Tools, dies and molds, net of amortization 1992 $ 13.257 181362 265.313 459572 219.105 200 39,737 $200.000 205.400 251499 77.50 215.172 2922 51 252 31354 Expenditures for maintenance and repaies which do not materially extend the life of the assets are changed to operations (5) Short-Term Borrowings Hasbro has available unsecured committed and uncommitted lines of credit from various bandes approximating 5550.000 and $750.000, respectively. Substantially all of the short-term borrowings outstanding at the end of 1997 and 1996 represent bank borrowing related to international units made under these lines of credit. The weighted average interest rates of the outstanding borrowings were 6.3% and 5.0%, respectively. Rasho's working capital needs were fulfilled by borrowing under these lines of credit and through the issuance of commercial paper, both of which were on terms and at interest rates generally extended to companies of comparable creditworthiness. Included as part of the committed line is 5440,000 available from a revolving credit agreement. This agreement contains certain restrictive covenants with which the Company is in compliance. Compensating balances and facility fees were not material. (6) Accrued Liabilities Royalties Advertising Payroll and management incentives 1997 restructuring anuals (note 131 Other 1997 $ 95.418 112.299 64,014 120,099 224.203 $596,633 1996 81053 3.91 32.678 202.220 399 RSD (7) Long-Term Debt torte... Sit the comedian (a) Treme The -Incame the natitage tatian team 1888 nes Suite DE 41 Det Used Seo DU 22 000 w ES Certain tabeflected in the age of 2 56.739 in 1 und 56, 27. primarily to todos A co the statutory sited States oder eine tante altre in me CE 24 Store Se and local com how more foxon action in Other 123 Und 1990 1993 3152,37 TL 120 Santamaaling berisi The components of catered income tax experientowym is the same HON www.and we for the stars in the direct way with www deng AR th ble for 1 the Home of the three KPMG Peat Maurel LLP ho