Tonka Corporation

23 Pages Posted: 30 May 2017

See all articles by Robert F. Bruner

Robert F. Bruner

University of Virginia - Darden School of Business

Casey Opitz

University of Virginia - Darden School of Business

Abstract

Acting as management, students determine the effects of different degrees of leverage and review this company's current leverage in light of inherent industry risks and company goals.

Excerpt

UVA-F-0774

Rev. Jun. 19, 2012

Tonka Corporation

Tonka Corporation, the fifth-largest toy company in the United States, had two of the most successful years in its history in 1985 and 1986. The company's sales of $ 293 million and profitability of $ 22 million were unprecedented; Tonka had also issued more than one million shares of common stock in December 1986 and had retired its long-term debt in January 1987, both of which contributed to its low leverage and high liquidity.

Becoming and remaining financially sound was a difficult task in the toy industry because of the typically short life spans and “hit-or-miss” nature of most products. Now, in February 1987, Tonka's management was undergoing a capital-structure policy review in an effort to determine whether the company could use its financial resources more efficiently and yet remain conservative.

The Toy Industry

. . .

Keywords: debt policy, financial policy, industry analysis, leverage, liability management, risk analysis

Suggested Citation

Bruner, Robert F. and Opitz, Casey, Tonka Corporation. Available at SSRN: https://ssrn.com/abstract=2974336 or http://dx.doi.org/10.2139/ssrn.2974336

Robert F. Bruner (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-3823 (Phone)
434-924-0714 (Fax)

HOME PAGE: http://faculty.darden.edu/brunerb/

Casey Opitz

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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