Question: Refer to the financial statement data for
Refer to the financial statement data for Hasbro in Problem 4.24 in Chapter 4. Exhibit 5.14 presents risk ratios for Hasbro for Year 2 and Year 3.
Financial statement in 4.24:
Exhibit 5.14:
REQUIRED:
a. Calculate these ratios for Year 4.
b. Assess the changes in the short-term liquidity risk of Hasbro between Year 2 and Year 4 and the level of that risk at the end of Year 4.
c. Assess the changes in the long-term solvency risk of Hasbro between Year 2 and Year 4 and the level of that risk at the end of Year 4.
Transcribed Image Text:
Exhibit 4.33 Hasbro Financial Statement Ratio Analysis (Problem 4.24) Year 4 Year 3 Year 2 Profit margin for ROA 6.7% 4.5% Assets turnover 1.0 0.9 ROA 6.6% 3.9% Profit margin for ROCE Capital structure leverage 5.6% 2.7% 2.4 2.6 ROCE 13.5% 5.9% Cost of goods sold/Sales Advertising expense/Sales Research and development expense/Sales Royalty expense/Sales Other selling and administrative expense/Sales Income tax expense (excluding tax effects of interest expense)/Sales 41.0% 39.0% 11.6% 10.5% 4.6% 5.5% 7.9% 10.5% 25.4% 28.0% 2.8% 2.0% Accounts receivable turnover 5.4 5.0 Inventory turnover 7.2 5.4 Fixed assets turnover 15.2 12.5 Exhibit 5.14 Risk Ratios for Hasbro (Problem 5.13) Year 4 Year 3 Year 2 Current ratio 1.6 1.5 Quick ratio 1.2 1.1 Operating cash flow to current liabilities ratio Days accounts receivable outstanding Days inventory held Days accounts payable outstanding Net days of working capital financing needed 0.479 0.548 68 73 51 68 47 49 72 91 Liabilities to assets ratio 0.556 0.621 Liabilities to shareholders' equity ratio 1.251 1.639 Long-term debt to long-term capital ratio Long-term debt to shareholders' equity ratio Operating cash flow to total liabilities ratio Interest coverage ratio 0.328 0.418 0.489 0.720 0.245 0.238 5.6 2.3
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