Question

Why was carrying so much debt a problem for Toys 'R' Us?
• It forced them to move to smaller retail space.
• Managers were unaware of how much debt there was.
• It could not afford adequate marketing due to the debt.
• The interest payments were using up a substantial amount of revenue.

Answer 1

All of the above factors contributed to why carrying so much debt was a problem for Toys 'R' Us. The burden of debt made it difficult for the company to invest in necessary marketing efforts, resulted in the need to downsize retail locations, prevented managers from fully understanding the financial situation, and used up a substantial amount of revenue on interest payments. Ultimately, the weight of the debt played a significant role in the company's downfall.