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Hasbro, Inc., and Mattel, Inc., are the two largest toy companies in North America. Condensed liabilities and stockholders' equity from a recent balance sheet are
Hasbro, Inc., 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 Liabilities: Current liabilities $1,274,324 $1,252,608 Long-term debt 1,695,092 2,851,723 Other liabilities 539,086 469,669 Total liabilities $3,508,502 $4,574,000 Shareholders' equity: Common stock $104,847 $441,369 Additional paid in capital 1,275,059 1,812,682 Retained earnings 4,184,374 1,629,257 Accumulated other comprehensive loss and other equity items (294,514) Treasury stock, at cost (3,515,280) (859,226) (2,354,617) $669,465 Total stockholders' equity $1,754,486 Total liabilities and stockholders' equity $5,262,988 $5,243,465 The income from operations and interest expense from the income statement for each company were as follows (in thousands): Hasbro Mattel Income (loss) from operations (before income tax expense) $270,402 $(419,261) Interest expense 90,826 181,886 a. Determine the ratio of liabilities to stockholders' equity for both companies. Round your answers to one decimal place. Hasbro, Inc. 2.00 Mattel, Inc. 6.54 x b. Determine the times interest earned ratio for both companies. Round your answers to one decimal place. Hasbro, Inc. 2.98 x Mattel, Inc. -2.31 X c. Hasbro, Inc. provides sound margin of safety to creditors. Earnings for Hasbro is more than enough to make interest payments
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