Hasbro designs, manufactures, and markets toys and games for children and adults
Hasbro designs, manufactures, and markets toys and games for children and adults in the United States and in international markets. Hasbro’s portfolio of brands and products contains some of the most well-known toys and games under famous brands such as Playskool, Tonka Trucks, Milton Brad-ley, and Parker Brothers and includes such classic games as Scrabbleâ, Monopolyâ, and Clueâ. Assume that sales during 2015 totaled \$4,448 million. Also assume that accounts receivable totaled \$1,095 million at the beginning of 2014 and \$1,218 million at the end REQUIRED a. Use the average balance to compute the accounts receivable turnover ratio for Hasbro for 2015. b. Assume that Hasbro’s sales will grow at a 13.0% rate each year for Year þ1 through Year þ5 and that the accounts receivable turnover ratio each year will equal the ratio com-puted in Requirement a for 2015. Project the amount of accounts receivable at year-end through Year þ5 based on the accounts receivable turnover computed in Requirement a. Also compute the percentage change in accounts receivable between each of the year-ends through Year þ5. c. Does the pattern of growth in your projections of Hasbro’s accounts receivable seem rea-sonable considering the assumptions of smooth growth in sales and steady turnover? Explain. d. The changes in accounts receivable computed in Requirement b display the sawtooth pattern depicted in Exhibit 10.4. Smooth the changes in accounts receivable by comput-ing the year-end accounts receivable balances for Year þ1 through Year þ5 using the compound annual growth rate in accounts receivable between the end of 2015 and the end of Year þ1 from Requirement b. e. Smooth the changes in accounts receivable using the compound annual growth rate in accounts receivable between the end of 2015 and the end of Year þ4 from Requirement b. Apply this growth rate to compute accounts receivable at the end of Year þ1 through Year þ5. Why do the amounts for ending accounts receivable using the growth rate from Requirement d differ from those using the growth rate from this requirement? f. Compute the accounts receivable turnover for 2015 by dividing sales by the balance in accounts receivable at the end of 2015 (instead of using average accounts receivable as in Requirement a). Use this accounts receivable turnover ratio to compute the projected balance in accounts receivable at the end of Year þ1 through Year þ5. Also compute the percentage change in accounts receivable between the year-ends for Year þ1 through Year þ5