Interpreting Profitability Liquidity Solvency and P/E Ratios Mattel and Hasbro are the two

QUESTION

Interpreting Profitability, Liquidity, Solvency, and P/E RatiosMattel and Hasbro are the two biggest makers of games and toys in the world. Mattel sells nearly $6 billion of products each year while annual sales of Hasbro products exceed $4 billion. Compare the two companies as a potential investment based on the following ratios:RatioMattelHasbroGross profit percentage Net profit margin Return on equity EPS45.5% 6.5% 17.1% $ 1.0557.7% 7.3% 21.8% $ 2.18Receivables turnover ratio8.910.5Inventory turnover ratio Current ratio6.2 2.385.7 2.54Debt to assets0.310.35P/E ratio15.913.8Required:1. Which company appears more profitable? Describe the ratio(s) that you used to reach this decision.2. Which company appears more liquid? Describe the ratio(s) that you used to reach this decision.3. Which company appears more solvent? Describe the ratio(s) that you used to reach this decision.4. Are the conclusions from your analyses in requirements 13 consistent with the value of the two companies, as suggested by their P/E ratios? If not, offer one explanation for any apparent inconsistency
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