Report on the Financial Analysis of Hasbro Inc
Hasbro Inc. is presently the second largest toy making company in the United States. The company manufactures and designs various lines of toy products and associated items throughout the world, including electronic, traditional board games and interactive puzzles, CD_ROM games, infant products and plush products. Hasbro also licenses a number of property rights, trade names for the use in connection for the sale to customers for noncompeting toys and non-toy products. The purpose of this paper is to interpret internal and external financial reports and statements. While using the financial reports and statements for decision-making, I will assess the financial activities and their effects on organizational performance. This information will assist in making the decision of whether or not I would become a shareholder and buy the company’s stock. Lastly, the information would assist me with the decision if I would work with the company if they had a position that fit my job description.
Evaluation of Internal and external financial statements
Hasbro Inc is one of the leading toy making company in the world . Hasbro Inc is engaged in designing , manufacturing and marketing of games and toys. It offers various different types of games including hand-held electronic, role-playing, DVD games as well as traditional board , learning aids and puzzles. The company markets its products and services to various customers including wholesalers, retailers, chain stores, discounts stores, mail orders houses , catalogue stores and so on . The company also license some of its trademark , characters and other property rights to third parties for use in connections with consumer for promotions and sale of its non competing toys and games . The company operates in the, South America, Asia Pacific ,North America and European regions. The headquarter is located in Pawtucket, Rhode Island, and employs about 5,900 people.
Hasbro has a long-standing loyalty in conducting business in a mood which abides by highest ethical and legal standards. Ethical behavior and Compliance are core values of the Company, and are built by regular communications from the other senior officials and Chief Executive Officer.
Hasbro’s Guide to Corporate Conduct, which implements to all employees globally as well as to Board of Directors, furnishes specific guidance to the Company’s outlook. The Guide is strengthened by a fully built training program, and a well-demonstrated processes by which employees in all locations and positions can report suspected ethical and legal issues, and do so anonymously if they so prefer.
Violations in any of the provisions in the Guide will allow and subject employees to potentially upon discipline and including termination of employment.
In the areas of environment safety and health at both the industry and corporate levels, Hasbro has a strong commitment to sustainability.
Hasbro has rich plan in hand for many years and continues to incorporate sustainability objectives into Company’s activities and operations, including a well-established Health and safety management system. The company will seek options to reduce waste, increase efficiency of water, and promote recycling and so on.
Affects of external and internal factors –
The internal analysis of an organisation deals with an investigation into its strenght and weaknesses by focussing on the factors that are specific to it. The size of the organisation affects the quality of appraisal. The external factocts are the factors in the outside enviroment that includes compititors and opportunities . The external enviroment is dynamic in nature so the slight change in the level of compitition and opportunities arising have an important impact on the functioning of the company.
1) Strengths –
a) Solid brand loyalty
b)Long standing commitments
c) Proud tradition in supporting children worldwide through a variety of philanthropic programs.
d)Product safety being the top priority
Alike Hasbro, Mattel also commercialises toys in Girls' and Boys' segment, including its renowned Barbie dolls and accessories for girls as well.
Like Hasbro's royalty relationships with the Marvel, Star Wars, and Transformers franchises to market toys , Mattel has alliances with several profitable franchises, including Disney Classics, High School Musical, Batman, Kung Fu Panda, and Dora the Explorer.
Less innovations and product range as compared to its compititors.
Hasbro Inc. is betting that iPod and iPhone users want 3-D viewing on the go.
The Hub, the multi-platform joint venture between Hasbro, Inc.and Discovery Communications will come up with new programmes which intends to entertain, enlighten, educate children and empower their families.
Partnerships with the U.S. government to develop climate change and waste reduction strategies by our Charter membership in the U.S. Environmental Protection Agency (EPA) Climate Leaders and U.S. EPA WasteWise programmes .
Competing directly with Hasbro's Playskool core products, Mattel's Fisher-Price and Sesame Street brands focus on developmental and educational toys targeted toward parents of infant and preschool-aged children.
Hasbro has managed to beat out earnings prospects and expectations despite a 15% fall in earnings to$0.89 per share.
Financial Analysis and Evaluation
Financial diagnostic categories
1.) Liquidity of short-term assets
2.) Long-term debt-paying ability
-Debt-equity ratio- 40
-Net income/sales (profit margin)-8.0(5 years)
-Net income/assets (ROA)-10.5%
-Net income/shareholder equity (ROE)-28.5%
-Net income/sales (profit margin)-12.10
-Net income/assets (ROA)-12.8%
-Net income/shareholder equity (ROE)-25.9%
4.) Asset utilization/ management efficiency
-Total asset turnover-1.0x
-Inventory turnover measures-4.0x
-Accounts receivable turnover-3.5x
-Total asset turnover-1.1 x
-Inventory turnover measures-4.1x
-Accounts receivable turnover-3.8x
5.) Market measures
-Earnings per common share-1.57
-Earnings per common share-1.50
Results of Evaluation
Hasbro Inc. Mattel Inc is a growing company in the consumer non-durables sector and is expected to significantly surpuss the market over the next six months with less risk may be less than average.
According to the statement of financials such as balance sheet, statement of income and loss and cash flow statement, the following interpretations are :
As the results and results of financials statements the gross profit in dollars showed an increase from last five years from 2005 to 2010 at the rate of 1.6%. The gross profit in terms of net revenue went upto 70 basis point to 21.0 in the three months ended sept 2010.
The amount of revenue generated from the net income for five years increased to an annual average exhibiting 32.60.
The revenue increased at an average of 13% yearly in the year 2007-2009. In the same year earnings grew by an average of 18% annually.
Earnings mounted up 11% at Hasbro, to $0.29 a share, as analysts were expecting the toy maker's bottom line to fall from last year's $0.26 a share.
The company has a present dividend yield of about 1.25% with 15% yearly dividend growth over past couple of years.
From the period 2007-09, Hasbro has genereated the operating cash flow at an average of approximately 12% yearly.
Hasbro has a very nice balance sheet with total debt ratio of only 1.01
The ratio of Hasbro's price-to-earning ratio in multiple to its five-year growth rate is slightly above the average of all stocks.
Result of ratio analysis
Long term debt paying ability is to determine the proportion of debt in total financing. The debt ratio of Hasbro is 1.01 which means that the lenders have financed 40% of Hasbro’s net assets i.e. capital employed.The total debt equity ratio shows firms total debt in relation to the total dollar amount owners have invested in the firms.
The current ration shows the firms ability to meet the liabilities or the claims. The liquidity ratios which including the current ratio, quick ratio and the cash ratio of Hasbro is in a better position to meet the current claims. As the current ratio is showing more than one which indicates that the firm has more current assets than current liabilities.However, the the liquidity ratio of Mattel is slightly higher than Hasbro.
Profitability ratio indicate the firms ability to generate returns on its sales , assets and net profit margin. The net profit margin ratio is measured by dividing profit after tax by sales. Operating profit after tax to sales ratio is 8.0. Net profit margin ratio establishes a relationship between net profit and sales and management’s efficiency in manufacturing, administering and selling the products. The return on asset for Hasbro is 10.5% and for Mattel 12.8% which implies on the operating performance and ignores that how the firm is financed and taxed. The ROE for Hasbro and Mattel 28.5% and 25.9% respectively
The asset turnover ratio indicate how effeciently the fiem is utilising its assets to produce revenue and sales. Hasbro has a asset turnover of 1.0 times where Mattel has 1.1 times. Inventory turnover measure indicates whether the inventory is out of line in relation to the volume of sales when compare against industry norms. The Hasbro has 4.0 times and Mattel has 4.1 times which shows that Hasbro has more inventories in respect to the volume of sales.
The price earning ratio is the market price of the firm’s common stock divided by the annual earning per share.Comapring the P/E relative to that of the stock market as a whole or the firm’s competitors indicates the market’s perception of the true value of the company. The P/E for Hasbro and Mattel is 16.4 and 22.3 respectively.
Assessment of Financial activities and their effects on organisational performance
Hasbro Inc has promised to offer three -dimensional content which will offer a 360 degree experience in virtual travel experience, gaming and entertainment content. Hasbro is confident as it will and says it has teamed up with DreamWorks Animation, whose movie "Mega mind" hit theatres last weekend, to develop material.Hasbro has deluted its U.S. operations' greenhouse gas emissions by 43.4%. Moreover, 88% of currently generated waste at the operation sites is being recycled.
In work place, Hasbro is one of the first toy manufacturing company to develop and implement a code of conduct for their third party vendors. Today the company regularly check the vendors to make sureity that they are meeting the code so that they understand the company’s products are made in factories with legal, safe and fair conditions.
Eventually, in the segment of community relations, in the year 2007 the Company volantarily donated the amount which is close to $15 million dollars which in turn that helped more than six million children accross the glope. These in turn is just another another example of the companies coporate social responsibility and sustainability. The satellite and cable television network will broadcast original programmes as well as content from Discovery’s library of award-winning children’s educational programmes from Hasbro’s elite portfolio of entertainment and educational properties built during the past 90 years and from leading third-party producers worldwide.
The Hub will include live- animated action and series, specials and game shows and, and the network will extend its content through a rich and engaging online presence.
Final decision and Conclusion
Hasbro inc is 2nd largest toy makers in United States which has a multi-billion industry showing it has a huge market and demands for its products and services. Their commitments to make and introduce new more exiting products will bring more attention to its stock. Hasbro stock deals with debt and has less than prima 2009. I would definitely make an investment in the company as the industry where it operates is recession resistant. Celebration for the children’s will be going in spite of the downfall in the economy and the great festivals will always be celebrated throughout the year. The demand of the company will never go to nil. Moreover Hasbro has most suitable and steady dividends in the market.
Hasbro currently has a dividend yield of 2.65 percent . This may not seem to be make any huge difference .but 2.65 percent compounding quarterly for life will make the portfolio rich.
Hasbro has one of the best stocks to in the market so i can take the step to invest as far as growth is pertained. In other words, if you make bigger deal in Hasbro hoping for real growth, the worst outcome that can shape up is that you will have one of the world's best dividend stocks. Moreover, Hasbro may be equilibrated for growth as well. Hasbro is starting to gain revenue by signing profitable deals with Marvel and other entertainment companies. Marvel is yet another bigger company as well, and the deal which took place between Marvel and Hasbro will lead to greater rewards for both companies.
Standard and Poor's, currently rates Hasbro stock with four stars pointing that and considers it is a good stock to purchase at this time.
As far as the Question to work at Hasbor is concerned i would surely would like to join to the position fitting to my profile.
The Reason are as follows:-
1.Hasbro has healthy and safety working environments with good facilities and amenities.
2.The working hours and compensation are best in the industry.
3.Hasbro maintains a commitment in sound environmental programmes and various practices.
However , the company shall make strict rules for discrimination and subject to abuse, cruel or unusual disciplinary practices. It shall respect its employees and treat with dignity . The various employee’s benefits programme should be introduced to make a better and cultured working environment with best codes of conducts.
A good working environment with lucrative stock prices always attracts shareholders and people to render their best services.
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