Ratio of Liabilities to Stockholders' Equity and Times Interest Earned 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 $1,064,647 $1,645,572 Long-term debt 1,547,115 1,800,000 Other liabilities 404,883 473,863 Total liabilities $3,016,645 $3,919,435 Shareholders' equity: Common stock $104,847 $441,369 Additional paid in capital 893,630 1,789,870 Retained earnings 3,852,321 3,745,815 Accumulated other comprehensive loss and other equity items (146,001) (848,899) Treasury stock, at cost (3,040,895) (2,494,901) Total stockholders' equity $1,663,902 $2,633,254 Total liabilities and stockholders' equity $4,680,547 $6,522,689 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) $603,915 $463,915 Interest expense 97,122 85,270

a. Determine the ratio of liabilities to stockholders' equity for both companies. Round to one decimal place. Hasbro Inc. Mattel Inc. b. Determine the times interest earned ratio for both companies. Round to one decimal place. Hasbro Inc. Mattel Inc. c. Together, these ratios indicate that both companies provide creditors with a sound margin of safety, and earnings are to make interest payments. That said, Hasbro provides creditors with a margin of safety.

Liabilities: Current liabilities Long-term debt Other liabilities $1,064,647 1,645,572 1,800,000 473,863 $3,016,645 $3,919,435 1,547,115 404,883 Total liabilities Shareholders' equity Common stock Additional paid in capital Retained earnings Accumulated other comprehensive loss and other equity items $441,369 1,789,870 3,852,321 3,745,815 (146,001) (848,899) (3,040,895) 2,494,901) $1,663,902 $2,633,254 $4,680,547 $6,522,689 $104,847 893,630 Treasury stock, at cost Total stockholders' equity Total liabilities and stockholders' equity 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) Interest expense a. Determine the ratio of liabilities to stockholders' equity for both companies. Round to one decimal place. Hasbro Inc. Mattel Inc. $603,91S $463,915 97,122 85,270 b. Determine the times interest earned ratio for both companies. Round to one decimal place Hasbro Inc. Mattel Inc c. Together, these ratios indicate that both companies provide creditors with a sound margin of safety, and earnings are to make interest payments. That said, Hasbro provides creditors with a margin of safety