Given that Toys “R” Us has declared bankruptcy, what are its current, quick, and debt ratios?

Toys “R” Us (see https://www.toysrusinc.com/investors) declared Chapter 11 bankruptcy protection in September 2017, for its US operations. The toy retailer is seeking to restructure or remove some of its debts. Toys “R” Us is also looking to take similar actions for its Canadian operations.

Here are the two most recent Toys “R” Us balance sheets.

Image of balance sheet; see separate Excel file in blog post for accessible version

 

You can also download the Excel file of this image.

Discussion Questions

  1. Calculate the Toys “R” Us current ratio for the most recent two years. Interpret these ratios.
  2. Calculate the Toys “R” Us quick ratio for the most recent two years. Interpret these ratios. How does the quick ratio compare to the current ratio?
  3. Calculate the Toys “R” Us debt ratio for the most recent two years. Interpret these ratios.
  4. Why is total stockholders’ equity negative?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

  • Student handout (pdf) (word) (contains entire blog posting + discussion questions)
  • PowerPoint file (brief article overview + discussion questions)

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

About Dr. Wendy Tietz, CPA, CMA, CGMA

Dr. Wendy Tietz is a professor of accounting at Kent State University in Kent, Ohio, USA. She is also a textbook author with Pearson Prentice-Hall.

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