Reference no: EM133327308
The December 31, 2022 10-K filing for Fantastic Frisbee Company provides the following footnote information for purchase obligations for the next five years:
Unconditional Purchase Obligations
During the normal course of its business, the Company enters into agreements to purchase goods and services, including purchase commitments for production materials, endorsement agreements with professional golfers and other endorsers, employment and consulting agreements, and intellectual property licensing agreements pursuant to which the Company is required to pay royalty fees. It is not possible to determine the amounts the Company will ultimately be required to pay under these agreements as they are subject to many variables including performance-based bonuses, reductions in payment obligations if designated minimum performance criteria are not achieved, the Company's sales levels, and severance arrangements. As of December 31, 2022, the Company has entered into many of these contractual agreements with terms ranging from one to six years. The minimum obligation that the Company is required to pay under these agreements is $158,436,000 over the next six years. In addition, the Company also enters into unconditional purchase obligations with various vendors and suppliers of goods and services in the normal course of operations through purchase orders or other documentation or that are undocumented except for an invoice. Such unconditional purchase obligations are generally outstanding for periods less than a year and are settled by cash payments upon delivery of goods and services and are not reflected in this total. Future purchase commitments as of December 31, 2022, are as follows (in thousands):
|
2023
|
|
$
|
100,194
|
|
2024
|
|
|
48,918
|
|
2025
|
|
|
6,726
|
|
2026
|
|
|
1,786
|
|
2027
|
|
|
812
|
|
Thereafter
|
|
|
-
|
| |
|
|
|
| |
|
$
|
158,436
|
No amounts are listed on Fantastic Frisbee's balance sheet for commitments and contingencies. On its 2022 balance sheet, Fantastic Frisbee reported total liabilities and stockholders' equity of $1,275,272,000 and total stockholders' equity of $482,562,000.
Question: If Fantastic Frisbee reported the unconditional purchase obligations in its balance sheet, how would its debt-to-equity ratio change? (Ignore discounting.)