Mattel Financial Statement Analysis

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Date Submitted: 03/18/2009 10:31 AM

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Mattel Inc. designs, manufactures and distributes numerous lines of toys, games and books worldwide. It is presently number one in the Toys and Games industry which belongs to the Consumer Goods sector. On December 31, 2007 Mattel reported revenues of $5,970,090,000, which was an increase from the revenues reported in 2006 despite its numerous product recalls for 2007. The company was born in 1945 by Ruth & Elliot Handler and Harold “Matt” Matson. In 1960 it became a publicly owned company and in 1963 its common stock was listed on the New York Stock Exchange. Revenue tops $100 million in 1965 and Mattel joins the Fortune 500. Presently Mattel’s main competitors are Hasbro Inc., JAKKS Pacific Inc. and LEGO Holding which is privately held.

Company Beta and Portfolio

S&P 500 Calculations

Sum of Returns 44.43%

Average return (monthly) 0.7406%

∑(r -¯r)2 4.0785%

(∑(r - ¯r)2)/n-1 0.0691%

Standard deviation (monthly) 2.6292%

Coefficient of Variation 3.5503

Mattel Calculations

Sum of Returns 1.7744%

Average return (monthly) 0.0296%

∑(r - ¯r)2 28.0321%

[∑(r - ¯r)2]/n-1 0.4751%

Standard deviation (monthly) 6.8929%

Coefficient of Variation 233.0723

Covariance Calculations

Covariance (rS&P500, rMATTEL) = (∑(rS&P500 ¯r S&P500)(rMATTEL ¯r MATTEL))/n

n 60

∑(rS&P500 ¯r S&P500)(rMATTEL ¯rMATTEL) 2.7952%

Covariance between Mattel and S&P 500 0.000465869

Beta Calculations

To calculate beta a regression is run on returns of Mattel stocks on the Y axis and returns on the S&P500 on the X axis. Then a regression line is plotted so that it best fits the plot of returns. The slope of this regression line is the beta coefficient, and it was found to be 0.6854. The name of this line is called the characteristic line. The equation of the line is:

rMATTEL = 0.6854rS&P500 - 0.0048

The market risk in terms of the sensitivity of the stock relative to the average stock is represented by the slope of the...