Question

Short answer response.

Toys "R" Us stores are closing nationwide in the US and the UK after the major industry retailer declared bankruptcy a couple weeks ago.

Please discuss this subject and tie in knowledge pertaining to any of the content covered in class (Intermediate Accounting 2). Please try and keep the answer relative to the field of accounting.

Edit: Major Store Retailer "X" is closing store nationwide after declaring bankruptcy (It doesn't matter the actual story or background). What kind of effects would this have, or how does an event *like* this tie in with accounting. How can accounting be relative to this type of situation? What kinds of topics relative to accounting are pertinent to the situation described above. What would accountants have to do facing this type of situation whether they were working for the retailer or working for a firm that had the retailer as a client? IMPORTANT - You don't have to answer all of these questions, just provide me with something that can tie in knowledge (a topic covered in accounting class) regarding the field of accounting to this subject.

Topics covered in class so far: Earnings per share, investments, stockholders equity, current liabilities and contingencies, long-term liabilities, accounting for leases, dilutive securities, accounting for income taxes, accounting for pensions

Answer 1

I read it somewhere: In the end nostalgia could not save ToysRus and it is so true.

ToysRus had huge debt (long term liabilities) which was delayed for sometime after buyout from private investors but the end was inevitable. Huuuge stores means higher rental expenses, packed with inventory means poor working capital, poor customer service resulted in poor satisfaction and hence market share dipped, no online experience...there are a number of reasons all contributing to its failure. It faced tough competition from giants like Amazon, Walmart.

However, ToysRus can still learn and can try to adapt as per the market demand. Let's cross our fingers and hope for the best!