Business Finance
ACCT 5140 NSU Mattel Inc and Hasbro Inc Financial Statement Analysis

ACCT 5140

Nova Southeastern University

ACCT

Question Description

I don’t know how to handle this Accounting question and need guidance.

GENERAL PROJECT INFORMATION:

We will be conducting a Financial Analysis and Competitor Analysis for two companies in the Toy Industry: Mattel, Inc. and Hasbro, Inc.

This assignment requires TWO FILES (one Excel document and one Word document) to be uploaded by March 29. Do not hit submit until you have selected both files.

Chapter 14 of our textbook describes Financial Statement Analysis, including vertical analysis, horizontal analysis, and several performance ratios used to assess a company.

DELIVERABLES:

  1. REQUIRED EXCEL FINANCIAL ANALYSIS DOCUMENT:

Use this attached Hasbro 10-K Excel file to do all of the work described below. I will show you how I obtained these Financial Statements from the Securities and Exchange Commission during our first chat. As explained below and demonstrated in our first chat, your BALANCE SHEET and INCOME STATEMENT tabs should each include your Vertical and Horizontal Analyses for 2017 and 2018, and your RATIOS tab should include your Ratio Analyses for 2018.

You must show all cell formula calculations (points will be deducted for entering numbers as your answers--you must keep the formulas for the numbers within each cell).

Be sure to change this file to something with your name in it.

Hasbro 10-K.xlsx

Instructions:

You will be responsible for the following in your modified Hasbro 10-K Excel Document, which I will demonstrate in our first chat:

(1) Vertical Analyses:

Common Size Balance Sheet

Modify the BALANCE SHEET spreadsheet to include a common size analysis for the years ended December 31, 2017 and December 31, 2018. For 2017, each line item should be shown as a percentage of Total Assets on December 31, 2017. Likewise, for 2018, each item should be shown as a percentage of Total Assets on December 31, 2018. In your calculations, round each percentage to one place after the decimal. For example if Cash as a percentage of Total Assets is .054129834, your answer should be shown as 5.4%. We can then analyze these percentages.

Common Size Income Statement

Modify the INCOME STATEMENT spreadsheet to include a common size analysis for the years ended December 31, 2017 and December 31, 2018. For 2017, each line item should be shown as a percentage of Total Revenues on December 31, 2017. Likewise, for 2018, each item should be shown as a percentage of Total Revenues on December 31, 2018. In your calculations, round each percentage to one place after the decimal. For example if Advertising Expense as a percentage of Total Revenues is .186425, your answer should be shown as 18.6%.

(2) Horizontal Analyses of The Balance Sheet and Income Statement:

Add trend analysis for every account in both your BALANCE SHEET and INCOME STATEMENT spreadsheets by showing the percentage change from 2017 to 2018 for each account, calculated as follows:

(2018 Amount - 2017 Amount) / (2017 Amount)

Thus, each account on the Balance Sheet and Income Statement should show a percentage increase or decrease for the year, which we can then analyze. A negative number, or decrease, should be presented in "Accounting" format, which will be shown in parentheses.

(3) Ratio Analyses:

I have provided a RATIOS spreadsheet following the financial statements spreadsheets, which contains many important analysis ratios for this industry (as we will discuss in our first chat) from Exhibit 14-26 of your textbook.

For each of these ratios, you will be required to show your calculations for Hasbro, Inc.'s 2018 Financial Year only. You will show this work directly in the RATIOS spreadsheet, which I will also demonstrate in our first chat. You must provide the Excel formula for each calculation. Credit will be taken off for showing just the final answer as a number.

*Note: Whenever a ratio calls for an average, take the average of the beginning and ending balances as follows: (2017 Amount + 2018 Amount) / 2.

  1. REQUIRED WORD DOCUMENT:

ADDITIONALLY, you will be responsible for creating the following Competitor Analysis Word Document:

During our first chat session, we will perform the above Excel analyses for Mattel, Inc., a competitor of Hasbro. This will both serve as an excellent resource as you complete your Hasbro analyses, as well as provide a means of analyzing Hasbro relative to a competitor, which is key in financial statement analysis.

In your Word document, you will compare your results from Hasbro with our results from Mattel. Your analysis may discuss results from the vertical, horizontal, or ratio analyses; HOWEVER, I do not want you to simply state the results for each company. You must really ANALYZE the differences and what they mean.

Therefore, I want you to write a report describing (1) three key ratios or trends that are similar AND (2) three key ratios or trends that are different. For each of these six similarities/differences, you MUST analyze what they mean in terms of each company's financial performance, calling upon your understanding from our textbook, chat, and/or any other cited references. Again, you must interpret, not just list, your results. I am not looking for exact answers, but rather a deep understanding of the implications of these similarities and differences so I can see you have spent time really studying the Financial Analysis process.

If you use any sources outside of our textbook, you must cite them in proper APA format.

I will provide our completed Mattel, Inc. Excel Analysis in our Week 1 Wrap-Up after our first chat session, where we will be performing the analyses. This will be necessary for your Competitor Analysis Word Document deliverable.

Again, this assignment requires two files to be uploaded: your Excel Financial Analysis and Word Competitor Report files, as described above. Do not hit submit until you have selected both files.

Unformatted Attachment Preview

Hasbro, Inc. Consolidated Balance Sheets - USD ($) $ in Thousands Current assets Cash and cash equivalents Accounts receivable, less allowance for doubtful accounts of $9,100 in 2018 and $31,400 in 2017 Inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment, net Other assets Goodwill Other intangibles, net Other Total other assets Total assets Current liabilities Short-term borrowings Accounts payable Accrued liabilities Total current liabilities Long-term debt Other liabilities Total liabilities Shareholders' equity Preference stock of $2.50 par value. Authorized 5,000,000 shares; none issued Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 209,694,630 shares in 2018 and 2017 Additional paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 83,565,598 shares in 2018 and 85,244,923 shares in 2017 Total shareholders' equity Total liabilities, redeemable noncontrolling interests and shareholders' equity Dec. 31, 2018 Dec. 31, 2017 $ 1,182,371 1,188,052 $ 1,581,234 1,405,399 443,383 268,698 3,082,504 256,473 433,293 214,000 3,633,926 259,710 485,881 693,842 744,288 1,924,011 5,262,988 573,063 217,382 605,902 1,396,347 5,289,983 9,740 333,521 931,063 1,274,324 1,695,092 539,086 3,508,502 154,957 348,476 748,264 1,251,697 1,693,609 514,720 3,460,026 0 104,847 0 104,847 1,275,059 4,184,374 (294,514) (3,515,280) 1,754,486 $ 5,262,988 1,050,605 4,260,222 (239,425) (3,346,292) 1,829,957 $ 5,289,983 Hasbro, Inc. Consolidated Statements of Operations - USD ($) $ in Thousands Consolidated Statements of Operations [Abstract] Net revenues, external Costs and expenses Cost of sales Royalties Product development Advertising Amortization of intangibles Program production cost amortization Selling, distribution and administration Total expenses Operating profit Non-operating (income) expense Interest Expense Interest income Other (income) expense, net Total non-operating expense, net Earnings before income taxes Income taxes Net earnings Net Loss Attributable to Noncontrolling Interests Net Earnings Attributable to Hasbro, Inc. Net earnings attributable to Hasbro, Inc. per common share: Basic (in dollars per share) Diluted (in dollars per share) Cash dividends declared (in dollars per share) 12 Months Ended Dec. 31, 2018 $ 4,579,646 1,850,678 351,660 246,165 439,922 28,703 43,906 1,287,560 4,248,594 331,052 90,826 (22,357) (7,819) 60,650 270,402 49,968 220,434 0 $ 220,434 $ 1.75 1.74 $ 2.52 12 Months Ended Dec. 31, 2017 $ 5,209,782 2,033,693 405,488 269,020 501,813 28,818 35,798 1,124,793 4,399,423 810,359 98,268 (22,155) (51,904) 24,209 786,150 389,543 396,607 0 $ 396,607 $ 3.17 3.12 $ 2.28 Hasbro, Inc. Consolidated Statements of Cash Flows - USD ($) $ in Thousands Cash flows from operating activities Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation of plant and equipment Impairment of goodwill Impairment of intangible assets, finite-lived Amortization of intangibles Program production cost amortization Deferred income taxes Stock-based compensation Other non-cash items Changes in operating assets and liabilities net of acquired and disposed balances: Decrease (increase) in accounts receivable Increase in inventories (Increase) decrease in prepaid expenses and other current assets Program production costs Increase (decrease) in accounts payable and accrued liabilities Net deemed repatriation tax Other, including long-term advances Net cash provided by operating activities Cash flows from investing activities Additions to property, plant and equipment Investments and acquisitions, net of cash acquired Other investing activities Net cash utilized by investing activities Cash flows from financing activities Net proceeds from borrowings with maturity greater than three months Repayments of borrowings with maturity greater than three months Net (repayments of) proceeds from other short-term borrowings Purchases of common stock Stock option transactions Dividends paid Payments related to tax withholding for share based compensation Other financing activities Net cash utilized by financing activities Effect of exchange rate changes on cash (Decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental information Interest paid Income taxes paid 12 Months Ended Dec. 31, 2018 Dec. 31, 2017 $ 220,434 $ 396,607 Dec. 31, 2016 $ 533,151 139,255 86,253 31,303 28,703 43,906 (11,094) 27,892 (18,879) 143,018 0 0 28,818 35,798 112,105 56,032 (44,001) 119,707 32,858 0 34,763 35,931 (662) 61,624 (16,011) 180,113 (37,211) (11,929) (131,984) 107,426 27,027 (35,218) 645,997 (50,376) (25,301) 24,450 (48,003) (80,461) 181,305 (5,613) 724,378 (149,923) (12,065) 7,422 (48,690) 246,223 0 (27,015) 817,313 (140,426) (155,451) 9,400 (286,477) (134,877) 0 3,396 (131,481) (154,900) (12,436) 28,945 (138,391) 0 0 (142,357) (250,054) 29,999 (309,258) (58,344) (7,087) (737,101) (21,282) (398,863) 1,581,234 1,182,371 493,878 (350,000) (18,419) (151,311) 29,431 (276,973) (31,994) (6,785) (312,173) 18,225 298,949 1,282,285 1,581,234 0 0 8,978 (150,075) 42,207 (248,881) (21,969) (5,758) (375,498) 2,111 305,535 976,750 1,282,285 82,258 $ 117,854 89,294 $ 115,753 88,525 $ 98,913 SHORT-TERM LIQUIDITY: Current Ratio: Current Assets/Current Liabilities Quick Ratio: Quick Assets/Current Liabilities Working Capital: Current Assets - Current Liabilities Net Cash from Operating Activities: From the Statement of Cash Flows NCFOA to Current Liabilities: Net Cash from Operating Activities/Current Liabilities Accounts Receivable Turnover Rate: Net Sales/Average Accounts Receivable Avg. A/R times Days to Collect Average Accounts Receivable: 365/Accounts Receivables Turnover Rate days Inventory Turnover Rate: Cost of Goods Sold/Average Inventory Avg. Inv. times Days to Sell Average Inventory: 365/Inventory Turnover Rate days Free Cash Flow: Net Cash from Operating Activities - Net Cash from Investing Activities - Dividends Return o LONG-TERM CREDIT RISK: Debt Ratio: Trend in Net Cash from Operating Activities: Interest Coverage Ratio: Total Liabilities/Total Assets From the Statement of Cash Flows 2016 2017 A = L + SE 2018 Income before Interest and Taxes/Interest Expense times PROFITABILITY: Percentage Changes in Net Sales and Net Income or Loss: From our Trend/Horizontal Analysis % Change in Net Sales % Change in Net Income Operating Expense Ratio: Operating expenses / Net sales Operating Income or Loss: From Income Statement Net Income or Loss as a % of Net Sales Net Income or Loss/Net sales (a.k.a. Profit Margin or Loss): Basic Earnings per Share: Found at bottom of Income Statement Return on Assets: Operating Income or Loss/Average Total Assets Avg. TA Return on Equity: Net Income or Loss/Average Total Stockholders' Equity Avg SE Summary of Significant Accounting Policies Summary of Significant Accounting Policies [Abstract] Summary of Significant Accounting Policies 12 Months Ended Dec. 30, 2018 (1) Summary of Significant Accounting Policies Preparation of Consolidated Financial Statements The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and notes thereto. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of Hasbro, Inc. and all majority-owned subsidiaries ("Hasbro" or the "Compan y"). Investments representing 20 % to 50 % ownership interests in other companies are accounted for using the equity method. For those majority-owned subsidiaries that are not 100% owned by Hasbro, the interests of the minority owners are accounted for as n oncontrolling interests. At December 30, 2018, the Company had no majorityowned subsidiaries. All intercompany balances and transactions have been eliminated. Fiscal Year Hasbro's fiscal year ends on the last Sunday in December. The fiscal years ended December 30, 2018 and December 25, 2016 were fifty-two week periods while the year ended December 31, 2017 was a fifty-three week period. Cash and Cash Equivalents Cash and cash equivalents include all cash balances and highly liquid investments pu rchased with an initial maturity to the Company of three months or less. Marketable Securities Included in marketable securities are investments in private investment funds. These investments are included in prepaid expenses and other current assets in the accompanying consolidated balance sheets, and, due to the nature and business purpose of these investments, the Company has selected the fair value option which requires the Company to record the unrealized gains and losses on these investments in the consolidated statements of operations at the time they occur. Marketable securities also include common stock in a public company arising from a business relationship. This type of investment is also included in prepaid expenses and other current assets in the accompanying consolidated balance sheets; however, due to its nature and business purpose, the Company records unrealized gains and losses in accumulated other comprehensive loss in the consolidated balance sheets until it is sold or the decline in value is deemed to be other than temporary, at which point the gains or losses will be recognized in the consolidated statements of operations. Accounts Receivable and Allowance for Doubtful Accounts Credit is granted to customers predominantly on an u nsecured basis. Credit Revenue Recognition Revenue Recognition [Abstract] Revenue Recognition 12 Months Ended Dec. 30, 2018 (2) Revenue Recognition In addition to the required disclosures below, please see further discussion of the Company revenue recognition policy in note 1. As of December 30, 2018, the Company did not have any material future performance commitments for film streaming or television orders that have not yet been delivered. Contract Assets and Liabilities A contract asset is defined as an entity's right to con sideration for goods or services that the entity has transferred to a customer. A contract liability is defined to occur if the customer's payment of consideration precedes the entity's performance and represents the entity's obligation to transfer goods or services to a customer for which the entity has received consideration. The Company occasionally will require payment from customers for finished product in advance of the customer receiving control of the finished product. In these situations, the Co mpany defers revenue on the advanced payment until the customer has control of the finished product, generally within the next month. Within our Entertainment and Licensing segment, the Company may receive royalty payments from licensees in advance of the licensees’ subsequent sales to their customers, or in advance of the Company’s performance obligation being satisfied. The Company defers revenues on these advanced payments until its performance obligation is satisfied. The aggregate deferred revenues are recorded as liabilities and were $ 50,759 , and $ 7,549 as of December 30, 2018 and December 31, 2017, respectively, and the changes in deferred revenues are not material to the Company’s consolidated statement of operations for the years ended December 3 0, 2018 and December 31, 2017. The Company records contract assets in the case of minimum guarantees that are being recognized ratably over the term of the respective license periods. At December 30, 2018 and December 31, 2017, these contract assets were not material to the Company’s consolidated balance sheets. Accounts Receivable and Allowance for Doubtful Accounts The Company’s accounts receivable on the c onsolidated balance sheets as of December 30, 2018 and December 31, 2017 are primarily from contracts with customers. In the year ended December 30, 2018, the Company recorded a bad debt charge of approximately $ 49,000 related to Toys“R”Us. In the year en ded December 31, 2017, the Company recorded a bad debt charge of approximately $ 18,000 related to Toys“R”Us. The Company had no other mate rial bad debt expense in the years ended December 30, 2018, December 31, 2017 or December 30, 2016. Disaggregation of revenues The Company Other Comprehensive Earnings Other comprehensive earnings (loss) [Abstract] Other Comprehensive Earnings (Loss) 12 Months Ended Dec. 30, 2018 (3 ) Other Comprehensive Earnings (Loss) Components of other comprehensive earnings (loss) are presented within the consolidated statements of comprehensive earnings. The following table presents the related tax effects on changes in other comprehensive earnings (loss) for each of the three fiscal years ended December 30, 2018. 2018 2017 2016 Other comprehensive earnings (loss), tax effect: Tax benefit (expense) on unrealized holding gains $ 581 221 (94) Tax (expense) benefit on cash flow hedging activities (930) 4,850 1,340 Tax benefit (expense) on unrecognized pension and postretirement amounts 6,085 (2,363) 12,945 Reclassifications to earnings, tax effect: Tax expense (benefit) on cash flow hedging activities 817 (4,881) 4,098 Tax benefit on amortization of unrecognized pension and postretirement amounts reclassified to the consolidated statements of operations (2,729) (3,482) (3,038) Total tax effect on other comprehensive earnings (loss) $ 3,824 (5,655) 15,251 Changes in the components of accumulated other comprehensive earnings (loss), net of tax are as follows: Unrealized Gains Holding Gains Foreign Total Accumulated Pension and (Losses) on on Available Currency Other Postretirement Derivative for-Sale Translation Comprehensive Amounts Instruments Securities Adjustments Earnings(Loss) 2018 Balance at December 31, 2017 $ (110,971) (32,827) 1,034 (96,661) (239,425) Adoption of ASU 2018-02 (18,065) (3,660) 222 — (21,503) Current period other comprehensive (23,763) 36,107 (2,000) (55,524) (45,180) earnings (loss) Reclassifications from AOCE to earnings 9,665 1,929 — — 11,594 Balance at December 30, 2018 $ (143,134) 1,549 (744) (152,185) (294,514) 2017 Balance at December 25, 2016 $ (118,401) 51,085 1,424 (128,678) (194,570) Current period other comprehensive 1,555 (90,302) (390) 32,017 (57,120) earnings (loss) Reclassifications from AOCE to earnings 5,875 6,390 — — 12,265 Balance at December 31, 2017 $ (110,971) (32,827) 1,034 (96,661) (239,425) 2016 Balance at December 27, 2015 $ (102,931) 79,317 1,258 (123,645) (146,001) Current period other comprehensive (20,829) 25,748 166 (5,033) 52 earnings (loss) Reclassifications from AOCE to earnings 5,359 (53,980) — — (48,621) Balance at December 25, 2016 $ (118,401) 51,085 1,424 (128,678) (194,570) Gains (Losses) on Derivative Instruments At December 30, 2018, the Company had remaining net deferred gains on foreign currency forward contracts, net of tax, of $ 20,861 in AOCE. These instruments hedge payments related to inventory purchased in the fourth quarter of 2018 or forecasted to be purchased from 2019 through 2022 , Property, Plant and Equipment Property, Plant and Equipment [Abstract] Property, Plant and Equipment 12 Months Ended Dec. 30, 2018 (4) Property, Plant and Equipment 2018 2017 Land and improvements $ 3,243 3,350 Buildings and improvements 191,096 193,940 Machinery, equipment and software 446,628 405,209 640,967 602,499 Less accumulated depreciation 462,710 422,052 178,257 180,447 Tools, dies and molds, net of accumulated depreciation 78,216 79,263 Total property, plant and equipment, net $ 256,473 259,710 Expenditures for ma intenance and repairs which do not materially extend the life of the assets are charged to operations as incurred. In 2018, 2017 and 2016 the Company recorded $ 139,255 , $ 143,018 and $ 119,707 , respectively, of depreciation expense . Goodwill and Intangibles Goodwill and Intangibles [Abstract] Goodwill and Intangibles 12 Months Ended Dec. 30, 2018 (5 ) Goodwill and Intangibles Goodwill Changes in the carrying amount of goodwill, by operating segment, for the years ended December 30, 2018 and December 31, 2017 are as follows: Entertainment U.S. and Canada International and Licensing Total 2018 Balance at December 31, 2017 $ 296,978 170,699 105,386 573,063 Impairment during the period — — (86,253) (86,253) Foreign exchange translation — (338) (591) (929) Balance at December 30, 2018 $ 296,978 170,361 18,542 485,881 2017 Balance at December 25, 2016 $ 296,978 169,833 103,744 570,555 Foreign exchange translation — 866 1,642 2,508 Balance at December 31, 2017 $ 296,978 170,699 105,386 573,063 A portion of the Company's goodwill and other intangible assets reside in the Corporate segment of the business. For purposes of the goodwill impairment testing, these assets are allocated to the reporting units within the Company's operating segments. The Company performs an annual impairment assessment on goodwill. This annual impairment assessment is performed in the fourth quarter of the Company's fiscal year. In addition, if an event occurs or circumstances change that indicate that the carrying val ue may not be recoverable, the Company will perform an interim impairment test at that time. During the fourth quarter of 2018 the Company adopted (ASU 2017-04), Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The standard eliminates the requirement to measure the implied fair value of goodwill by assigning the fair value of a reporting unit to all assets and liabilities within that unit (“the Step 2 test”) from the goodwill impairment test. Instead, if the carr ying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited by the amount of goodwill in that reporting unit. During the fourth quarter of 2018, the Company took a number of actions t o react to a rapidly changing mobile gaming industry that resulted in a modification to the Company’s long-term plan for its Backflip business. These modifications included organizational actions and related personnel changes, the extension of launch dates for game currently in or planned for development and the addition of partners for the development of future game s releases. The modifications resulted in changes to the long-term projections for the Backflip business. The goodwill impairment analysis involved comparing the Backflip carrying value to its estimated fair value, which was calculated based on the Income Approach. Discounted cash flows serve as the primary basis for the Income Approach. The Equity Method Investment Equity Method Investment [Abstract] Equity Method Investment 12 Months Ended Dec. 30, 2018 (6) Equity Method Investment The Company owns an interest in a joint venture, Discovery Family Channel (the "Network"), with Discovery Communications, Inc. ("Discovery"). The Company has determined that it does not meet the control requirements to consolidate the Network and accounts for the investment using the equity method of accounting. The Network was established to create a cable television network in the United States dedicated to high-quality children's and family entertainment. In October 2009, the Company purchased an initial 50 % share in the Network for a payment of $ 300,000 and certain future tax payments based on the value of certain tax benefits expected to be received by the Company. On September 23, 2014, the Company and Discovery amended their relationship with respect to the Network and Discovery increased its equity interest in the Network to 60 % while the Company retained a 40% equity ...
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Running head: FINANCIAL STATEMENT ANALYSIS

Financial Statement Analysis
Name
Course
Tutor
Date

1

FINANCIAL STATEMENT ANALYSIS

2

Financial Statement Analysis
The financial statements provide data on the performance of the company. One should
conduct an analytic review of the way a business fared. Vertical, horizontal, and ratio
analysis offers such data. One may evaluate both the vertical and horizontal analysis based on
both the income and the balance sheet. A comparative study of this performance with that of
the rival company is considered. This paper evaluates the performance of Hasbro Inc. as
compared to that of its rival, Mattel Inc. and its subsidiary.
Income statement
Horizontal analysis
The horizontal analysis considers the change in the income statement from one
financial year to the other. The income statement shows the revenues, costs, and the profits
generated by a company. One notes that the revenues declined by 12%. The cost of sales also
reduced by 9% while the total expense declined by 3%. Its operating profits fell by 59%, the
financial cost by 8% while the net earnings decreased by 44%. Its competitor posted similar
results. Its net sales reduced by 8%, COGS by 11%, total expenses by 19%, and operating
income by 30%. It also registered a net earnings reduction of 32%. One notes that the rival
company recorded the highest reduction in the total expenses. Such rates show that Mattel
Inc. is doing a great job at cost control. It also registered a lower decrease in net profit as
compared to Hasbro Inc. Operating profits show that Hasbro had a decline of 59% while
Mattel Inc. had 30%. The management should work on increasing the operating profits. The
horizontal analysis shows that Mattel performed better as compared to Hasbro.

Hasbro,
Inc.

Horizontal
analysis

Vertical
analysis

Dec. 31,
2018

201
8

201
7

MATTEL, INC.
AND
SUBSIDIARIES

Horizontal
analysis
2018

Vertical
analysis
201
8

201
7

FINANCIAL STATEMENT ANALYSIS
Net
revenues,
external
Cost of
sales
Total
expenses
Operating
profit
Interest
Expense
Net
earnings

-12%
-9%
-3%

100
%
40
%
52
%

3

100
Net Sales
%
39
%
45
%
16
%

-8%

100
%

100
%

60
%
45
%

63
%
44
%

Cost of sales

-11%

Total expenses

-19%

Operating (Loss)
Income

-30%

5%

7%

73%

4%

2%

-32%

13
%

18
%

-59%

7%

-8%

2%

2% Interest expense

-44%

5%

8% Net earnings

Vertical analysis
The vertical analysis equates everything in terms of sales revenues. Hasbro had a
COGS margin of 39% in 2017 and 40% in 2018, while Mattel had proportions of 63% in
2017 and 60% in 2018. Each company had total expenses proportion averaging 45%. They
also had a similar financial cost proportion of two percent in each of the years under review.
One notes that Hasbro had a net income margin of 8% in 2017 and 5% in 2018. In contrast,
Mattel Inc. had a net profit margin of -18% in 2017 and -18% in 2018. Such results show that
Hasbro posted profits as compared to its competitor that registered losses.
Balance sheet
Horizontal analysis
The horizontal analysis evaluates the changes in assets, liabilities, and equity from
one financial year to the other. Hasbro Inc.'s total current assets declined by 15%. This rate
was lower than the 24% posted by its rival. Its total assets also decreased by one percent as
compared to the 16% registered by Mattel Inc. Besides, the current liabilities and total
liabilities increased by 2% and 1%, respectively. The competitor registered a decline of 23%
and 28% on the current and total obligations, respectively. One also notes that Hasbro Inc.

FINANCIAL STATEMENT ANALYSIS

4

equity decreased by 4%, whereas shareholders' equity declined by 47%. A decrease in equity
shows that the rival made more losses hence reducing its shareholders' wealth.
Horizonta
l analysis

Vertical
Analysis

Hasbro, Inc.

Dec. 31,
2018

2018

Total current
assets

-15%

59%

Total assets

-1%

100%

0.10%

32.20
%

Total current
liabilities

2%

24%

Total liabilities

1%

67%

-4%

33%

Long-term debt

Total
shareholders'
equity

MATTEL,
INC. AND
2017 SUBSIDIARI
ES
Total current
69%
assets
100
Total Assets
%
32.0 Long-term
0% debt
Total current
24%
liabilities
Total
65%
liabilities
Total
35% stockholders’
equity

Horizonta
l analysis

Vertical
Analysis

2018

2018

2017

-24%

45%

50%

-16%

100%

100%

-1%

54%

46%

-23%

24%

26%

-28%

87%

80%

-47%

13%

20%

Vertical analysis
Vertical analysis equates items in the balance sheet in terms of the total assets. Hasbro
Inc. had a total current asset to total assets of 69% in 2017 and 59% in 2018. Its competitor
registered 50% in 2017 and 45% in 2018. This performance indicates that the business kept
more of current assets as compared to its competitor. An investment in long term assets
increases the productivity and the sales revenues of any business. One notes that Hasbro had
a debt to assets ratio of 65% in 2017 and 67% in 2018. Its competitor posted a result of 80%
in 2017 and 87% in 2018. Such performance shows that the company has kept the little
amount of debt as compared to its rival. Hasbro also had equity to assets ratio of 35% and
33% in 2017 and 2017. Its competitor maintained a rate of 20% in 2017 and 13% in 2018.
There is a need for the management of Mattel to work on increasing the equity value of the
business.

FINANCIAL STATEMENT ANALYSIS

5

Different performance
Leverage ratios
Leverage ratios gauge the amount of debt and borrowings in a business. ...

CASIMIR (26387)
Carnegie Mellon University

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