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.

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.

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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

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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