Toys R Us closing all US stores in 2018 5 billion in debt Spending 400 million per year for interest Sales revenue 112 billion per year before takeover in 2005 Sales in most recent year 111 billion ID: 744878
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Slide1
What impact did Toys “R” Us debt have on its bankruptcy?Slide2
Toys “R” Us closing all US stores in 2018
$5 billion in debt
Spending $400 million per year for interest
Sales revenue $11.2 billion per year before takeover in 2005; Sales in most recent year $11.1 billion
Net loss for 2017 was approximately $953 million
Did not have cash in 2017 to make upgrades to technology and its storesSlide3
Question 1
Did Toys “R” Us have declining sales revenues over the past 13 years since it was taken private?Slide4
Question 2
Why might the private equity buyers have chosen to issue bonds (debt) in 2005 to purchase Toys “R” Us rather than issue stock?Slide5
Question 3
People often claim that Toys “R” Us was a victim of online retailers such as Amazon.com. Do you agree? What do you think is the major reason that Toys “R” Us had to file for bankruptcy?Slide6
Question Recap
Did Toys “R” Us have declining sales revenues over the past 13 years since it was taken private?Why might the private equity buyers have chosen to issue bonds (debt) in 2005 to purchase Toys “R” Us rather than issue stock?
People often claim that Toys “R” Us was a victim of online retailers such as Amazon.com. Do you agree? What do you think is the major reason that Toys “R” Us had to file for bankruptcy?Slide7
For additional news stories to use
in the accounting classroom, see the Accounting in the Headlines blog at http://accountingintheheadlines.com/ Questions or comments? Dr. Wendy Tietz at wtietz@kent.edu