...Tootsie Roll Vs Hershey The purpose of this financial analysis is to compare Tootsie Roll and Hershey Inc to the industry average financial ratios to determine which company will be the best investment opportunity. This analysis will evaluate and compare the company’s liquidity, solvency and profitability ratios from 2004. Tootsie Roll, Inc. and Hershey Inc are both companies well known for the selling of confectionary goods. Hershey is publicly traded under NYSE: HSY, Tootsie Roll under NYSE: TR. Both are listed under SIC 2064, Candy and other Confectionary products. • Liquidity Liquidity ratios measure the short-term ability a company to pay its obligations and meet unexpected needs of cash. These numbers can be found by analyzing the company’s balance sheet. The company that closely matches or exceeds the industry averages in liquidity is Tootsie Roll. Tootsie Roll’s current ratio of 2.34 exceeds that of the industries 1.29. They also have a lower cash to debt ratio 1.05 (2.37 industry, days in inventory 63.98 (industry 72.7) and a quicker inventory turnover 5.7 (industry 6.05). The only ratio were Hershey exceeds Tootsie Roll is receivables turnover ratio. Hershey collects more of its receivables but Tootsie Roll collects faster. Tootsie Roll is better suited to collect cash quickly to pay its obligations and meet unexpected cash needs. • Solvency Solvency ratios measure a company’s ability to last over an extended period of time, or how a...
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...Tootsie Vs. Hershey Tootsie Roll Insustries Ratio The Hershey Company Ratio Interpretation and comparsion between the two companies' ratio Earnings Per Share $0.94 $0.96 EPS measures the net income earned on each share of common stock. Hershey's earning per share appers to be $0.02 higher than Tootsie's earnings per share as a result of more effective and effitient management. Current Ratio 3.45 0.88 Tootsie Roll Industries shows higher current ratio for 2.57 which means that it is more liquid than The Hershey Company. This company has more ability to pay its maturing obligations and meet unexpected needs for cash. Gross Profit Rate 0.34 (34%) 0.33 (33%) Tootsie Roll Industries has 1% higher gross profit rate compared to The Hershey Company. That shows higher gross profit margin for this company. Profit Margin Ratio 10.37% 4.33% Tootsie Roll Industries has 6.04% higher profit margin ratio. This company has 10.37% of each dollar of sales that results in net income. Higher gross profit rate results in higher profit margin for the company. Inventory Turnover Ratio 5.71 5.52 The numbers show that Tootsie Roll Industries has higher Inventory Turnover Ratio than The Hershy Company for 0.19. That means that Tootsie Roll Industries sell their goods faster and their average inventory turns 1.03 times/year faster than The Hershey Company's Inventory. Days in Inventory 64 66 The numbers show that Tootsie Industries helds its inventory an average of 64 days which is 2 days less...
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...Hershey’s Company and Tootsie Roll Industries are both makers of confectionary products, mainly chocolate and other candies. Both companies have been making these products since the early to middle 1890’s and market their products worldwide. Hershey’s is the larger company of the two. To show perspective of how much larger Hershey’s is, they had a net sale of over 5 billion dollars in 2008. Tootsie Roll’s net sales in 2008 were $492 million. However, I will be looking at and comparing their financial data from 2002 to 2004 to each other and to the 2004 industry average. Accounting ratios I will be looking at include liquidity ratios, solvency ratios, and profitability ratios. Liquidity ratios show the ability of a company to pay back their short-term obligations. A few examples of these ratios are the current ratio, current cash debt coverage ratio, accounts receivable turnover ratio, average collection period, inventory turnover ratio, and days in inventory. Starting with the current ratio, I found that Hershey’s Co. did quite well in 2002 and 2003 but fell sharply in 2004. This was due to a large increase in liabilities in 2004 compared to the other years. The industry average for 2004 was .90 and their current ratio that year was .92 so they are just slightly above it. Tootsie Roll fared much better in all 3 years with its current ratio never going below 2.34. Companies with ratios over 2.0 are considered to be very stable in their short-term financial standing. Another good...
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...Liquidity Ratios: Overall Tootsie Roll has better liquidity. Liquidity measures the short-term ability to pay obligations as they are expected to be due within the next year. When working capital is a positive number, there is a higher likelihood that the company will be able to pay it liabilities. Is this case Tootsie Roll is more likely to be able to pay their liabilities because they have a positive working capital and Hershey’s is negative. The current ratio indicates the ability to pay on maturing obligations and to be able to meet unexpected cash needs. Again in this case Tootsie Roll has a higher probability of being able to pay their obligation and meet their unexpected cash needs. They have a $2.34:1 ratio compared to Hershey’s $0.92:1 Current cash debt coverage is considered a better representation of the ability of a business to meet its immediate obligations on the average day. The text explains if below 0.40 more investigation in the company’s liquidity should be done. Both Tootsie Roll and Hershey are above 0.40; however Tootsie Roll still shows a higher ability to meet their immediate obligations. Inventory turnover ratio shows how quickly the company sells its products. Although a high inventory ratio means the company is tying up little funds in inventory, it also means they could be losing out on sales opportunities due to inventory shortages. In this case Hershey sells their product faster, but they may be losing out on sales due...
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...Three Case Study Questions Trina G. Stevens trinagstevens@bellsouth.net Part III of the Course Project for PM598 Nov10 Contract and Project Management Presented to Instructor Robert Davy of DeVry University December 5, 2010 RUHLING MANUFACTURING COMPANY QUESTIONS Question # 1: Why might negotiation be favored over competitive bidding in certain procurement situations? A buyer or a procurement section of an organization, or business might choose negotiation over competitive bidding when a project is small, not planned, or an emergency. There are some situations in which a buyer would favor negotiation rather than competitive bidding. For example, when the buyer is contracting for part of the seller’s services rather than a product. Also when there are ambiguities involved with the project. Another reason to use negotiation is when cost and risk cannot be correctly identified early within the project. Negotiation is used a lot when there are new, or unexpected ideas introduced to solve a problem within the project. Negotiation is usually cheaper and quicker than competitive bidding. Question # 2a: Considerations of Epsilon's alternative proposal: a. What is the applicability of a requirements contract from Ruhling’s point of view? - Assume that Epsilon will still make a profit resulting from economics of long runs and learning curves The applicability of a requirement contract from Ruhling’s point of view is that they would agree...
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...08/23/2008 Hershey Company & Tootsie Roll Company Company History Both the Hershey Company and the Tootsie Roll Company specialize in a wide variety of chocolate candy products. "The Hershey Company is a leading snack food company and the largest North American manufacturer of quality chocolate and non-chocolate confectionery products, with revenues of over $4 billion and more than 13,000 employees worldwide". The Hershey Company originated with the candy manufacturer Milton Hershey. In 1894 Milton Hershey wanted to design a sweet coating for his already existing caramels, thus his new enterprise, the Hershey Chocolate Company began. The Hershey Company went public on the New York Stock Exchange (NYSE) in 1922. The Tootsie Roll Industries, Inc. was established in 1896. "The round piece of chewy, chocolatey candy that delights Americans today still looks and tastes amazingly like the first Tootsie Roll, made over 109 years ago". The Tootsie Roll "still sells for one penny, the original price, even though the company now offers candy packages priced up to $6.99. The first penny candies to be individually wrapped in paper, Tootsie Rolls are protected today". The Tootsie Roll Industry produces more than 60 million Tootsie Rolls per day and is also the world's largest lollipop supplier, producing 20 million lollipops daily. The Tootsie Roll Industries, Inc. went public on the NYSE in 1927. New York Stock Exchange Company Information The Hershey Company (Hershey) and Tootsie...
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...Tootsie Roll Industries Ratio The Hershey Company Ratio Interpretation and comparison between the two companies' ratios Earnings per Share 0.94 1.35 The Hershey Company had a 2007 Earnings per share of 1.35, compared to the Tootsie roll company with a earnings per share of .94. Current Ratio 3.45 0.88 The Hershey company current ratio is .88 compared to 3.45 from the Tootsie Roll company. The Hershey company has much more assets and liabilities than the Tootsie roll company. Gross Profit Rate 0.34 0.33 The gross profit rate from the companies were very close in number. Tootsie roll .34 and the Hershey company .33 Profit Margin ratio 0.1 0.04 The profit margin ratio for Tootsie is .10 and .33 for the Hershey company Inventory Turnover Ratio 5.41 5.31 When comparing the inventory turnover ratio for the companies, the numbers were not too far off Days in Inventory 67.47 68.74 Tootsie Roll's merchandise is in inventory less days than Hershey company,which is a very good factor. Receivable Turnover Ratio 14.61 9.79 The Tootsie Roll receivable turnover ratio of 14.61 is much higher than The Hershey Company at 9.79 Average Collection Period 24.98 37.28 The average collection period of The Hershey Compnay is about 37 day, about 13 days more than Tootsie Industries Asset Turnover Ratio 0.61 1.18 The Hershey Company Asset Turnover ratio is higher than Tootsie Roll Industry at 0.61 Return on Asset Ratio 0.06 0.05 The Return on Asset Ratio for both companies were very close in number...
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...Hershey’s and Tootsie Rolls Company with respect to Liquidity, Solvency and profitability, we will use data from the financial statements of both the company of the year end December 31st 2008. Among all the three ratios provided in the data sheet i.e. Liquidity, Solvency and Profitability, to invest in a company I will choose to see the profitability ratio of a company. According to 2008 financial statements of both the company and looking at the ratios I will choose Tootsie Rolls Corporation. I will invest in Tootsie Rolls Corporation I would like to answer the question, why did I select Tootsie Rolls Corporation and not Hershey Corporation. As you know and I know Hershey is a big company and over the year this company has proven its investors and creditors that its one of the big companies all over the world. Big don’t means better? Even a medium size company like Tootsie Rolls generate a good amount of money not in million but in thousands. So what it has a good return ratio? Yes. Liquidity Ratio Analysis: - What does Liquidity Ratios mean? A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts. Comparing Tootsie Rolls and Hershey Corporation for the year end December 31st 2008. Looking at the Current Ratio of both the companies Tootsie Rolls has about 3.0...
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...Microsoft 2007 Annual net income = Average Stock Holders Equity= Preferred Stock Divendends= Weighted Average Common Shares Outstanding= Total Current Liabilities= Common Stock Cash Dividends= Stock Holders Equity (Beginning of the period)= Stock Holders Equity (End of the period)= Average Stock Holders Equity= Net Cash from Operation(income)= Capital Expenditures= Total Assets= Cash Dividends Paid= Free Cash Flow= Average Current Liabilities= Average Total Liabilities= Earning Per Share (Basic)A/B= Earning Per Share (Diluted)A/C= Average Market Price Per Share June 31, 2007= Price Per Earning Ratio= Gross Profit= Net Sales= Cost of Goods Sold= Average Inventory= 2007 Ending Inventory= 2007 Beginning Inventory= Inventory Purchases= (IN MILLIONS) $14,065.00 $62.00 $9,380.00 $23,754.00 $3,937.00 $59,005.00 $60,557.00 $59,781.00 $17,796.00 $39,417.00 $63,171.00 ‐$29,460.00 $7,839.00 $66,384.00 Oracle 2007 Annual net income = Average Stock Holders Equity= Preferred Stock Divendends= Weighted Average Common Shares Outstanding= Total Current Liabilities= Common Stock Cash Dividends= Stock Holders Equity (Beginning of the period)= Stock Holders Equity (End of the period)= Average Stock Holders Equity= Net Cash from Operation(income)= Capital Expenditures= Total Assets= Cash Dividends Paid= Free Cash Flow= Average Current Liabilities= Average Total Liabilities= Earning Per Share (Basic)A/B= Earning Per Share (Diluted)A/C= Average Market Price Per Share June 31, 2007= Price Per Earning Ratio=...
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...Bushra Accounting 153 Term Paper I. Tootsie Roll Company Overview • Tootsie Roll is one of the largest candy companies within our country • Their confectionary products are distributed to over 75 countries worldwide • Their largest customer is Walmart; their market mainly consists of retailers and candy distributors • Tootsie Roll employs about 2,200 people II. Liquidity Ratios • Working Capital Year Tootsie Roll Hershey 2011 $153,846 $872,783 2010 $176,662 $706,372 2009 $155,812 $474,806 2008 $129,967 $74,733 • Current Ratio Year Tootsie Roll Hershey 2011 3.64:1 1.74:1 The industry average is 2010 4.02:1 1.54:1 1.50:1 2009 3.78:1 1.52:1 2008 3.22:1 1.06:1 Both Tootsie Roll and Hershey have good liquidity ratios. Tootsie Roll’s working capital shows that the company should be able to pay off its’ liabilities or debts. Tootsie Roll is performing at above the industry average, which shows that the company has great liquidity. Based on the liquidity ratios, I would lend Tootsie Roll the $10 million short term note III. Solvency Ratios • Debt to Total Assets Ratio Year Tootsie Roll Hershey 2011 22% 80% The industry average is 57% 2010 22% 78% 2009 22% 79% 2008 22% 90% 2007 21% 85% Tootsie Roll has been consistent within the last couple years. Compared to Hershey, Tootsie Roll has great solvency. Tootsie Roll should not have a problem with future debts...
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...of Hershey and Tootsie Roll Keller University ACCT-504 Instructor: Financial Analysis of Hershey and Tootsie Roll Introduction Tootsie Roll and Hershey are two similar companies with a similar product offering, but they operate on entirely different scales. In an effort to determine the better investment of the two companies we will utilize multiple financial analysis ratios to gauge the health of the respective companies in terms of liquidity (the ability to pay short-term liabilities and respond to opportunities), solvency (the long-term viability of the company) and profitability (the efficiency at which the can turn it’s resources into profits). However, the snapshot picture of health that a single years worth of financial statements provide is not enough. Below we have offered a horizontal analysis of the respective companies to show the change in their health from 2012 to 2013 and analyzed the two companies against each other to show why we recommend Hershey as the better investment. Liquidity and Solvency Current Ratio The current ratio is defined as the current assets divided by the current liabilities for a given period. This ratio is important because it helps measure a company’s ability to pay their current liabilities with their current assets. This shows helps determine the liquidity of the companies and their ability to respond to market opportunities. Tootsie Roll has...
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...Current ratio Tootsie Roll Industries much higher than Hersheys Company, Tootsie Roll Industries current Ratios is 3.45， Hersheys Company Ratios is 0.88，it prove Tootsie Roll Industries has much stronger ability than Hersheys Company to pay short term obligations. Because Tootsie Roll Industries current assets more than current liabilities, low values for the current or quick ratios (values less than 1) indicate that a firm may have a little difficulty meeting current obligations, the company may not be efficiently using its current assets or its short-term financing facilities，it also indicate problems in working capital management. Generally, a current ratio of assets to liabilities of 2:1 or more is usually considered to be acceptable， Profit Margin Ratio Tootsie Roll Industries Profit Margin Ratio is 10.37%，Hersheys Company Ratios is 4.33%，The profit margin is mostly, used for internal comparison，Hersheys Company Total Revenues is ten times than Tootsie Roll Industries’, Through the concrete data can be counted, Hersheys Company total expense is Total Revenues minus net income, the expense is very high, Tootsie Roll Industries sale each dollar of goods get more profitable.we can’t only consider revenues and net income 。 Receivable Turnover Ratio Tootsie Roll Industries Receivable Turnover Ratio is 14.61，Hersheys Company Ratios is 9.8，it used to quantify a firm's effectiveness in extending credit as well as collecting debts. The receivables turnover ratio is an activity...
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...Tootsie Roll Industries, Inc. and its subsidiaries manufacture and sell confectionery products in the United States, Canada, and Mexico. It sells its products under various names. The company markets its products to wholesale distributors of candy and groceries, supermarkets, variety stores, dollar stores, chain grocers, drug chains, discount chains, cooperative grocery associations, warehouse and membership club stores, vending machine operators, and the U. S. military and fund-raising charitable organizations. Tootsie Roll Industries was founded in 1896 and is based in Chicago, Illinois. The Hershey Company, together with its subsidiaries, engages in manufacturing, marketing, selling, and distributing various chocolate and confectionery products, pantry items, and gum and mint refreshment products worldwide. It offers various chocolate and confectionery products as well as various snack products, a line of refreshment products, such as mints, chewing gum, and bubble gum, and a line of pantry items. It sells its products through sales representatives and food brokers, primarily to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, department stores, and natural food stores. The company was founded in 1893 and is based in Hershey, Pennsylvania. Tootsie Roll Industries Ratios Hershey Foods Corporation Ratios Interpretation and Comparison between the...
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...other costs associated with running and growing a business. A company that has little gross profit has limited resources. Tootsie Roll and The Hershey Company both operate above the food processing industry average. Tootsie Roll operated at 36%, 5.6% higher than the industry average in 2009. The Hershey Company operated at 38.7%, 8.3% higher than the industry average and 2.7% higher the Tootsie Roll in 2009. Profit margin is very useful when comparing companies in similar industries. A higher profit margin indicates a more profitable company that has better control over its costs compared to its competitors. Tootsie Roll has Net Sales of $499,331 and a Net Income of $53,475 giving them a 10.7% Profit Margin Ratio resulting in 11 cents of every dollar of sales resulted in Net Income for 2009. The Hershey Company has Net Sales of $5,298,668 and a Net Income of $435,994 giving them a 8.2% Profit Margin Ratio resulting in 8 cents of every dollar of sales resulted in Net Income for 2009. Return-On-Assets tell you "what the company can do with what it's got", how many dollars of profits they can achieve for each dollar of assets they control. It's a useful number for comparing competing companies in the same industry. Tootsie Roll had an average of $625,886 of Total Assets and $53,475 in Net Income giving them a .06 Return-On-Assets. The Hershey Company had an average of...
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...Tootsie Roll Insustries Ratio The Hershey Company Ratio Interpretation and comparsion between the two companies' ratio Earnings Per Share $0.94 $0.96 EPS measures the net income earned on each share of common stock. Hershey's earning per share appers to be $0.02 higher than Tootsie's earnings per share as a result of more effective and effitient management. Current Ratio 3.45 0.88 Tootsie Roll Industries shows higher current ratio for 2.57 which means that it is more liquid than The Hershey Company. This company has more ability to pay its maturing obligations and meet unexpected needs for cash. Gross Profit Rate 0.34 (34%) 0.33 (33%) Tootsie Roll Industries has 1% higher gross profit rate compared to The Hershey Company. That shows higher gross profit margin for this company. Profit Margin Ratio 10.37% 4.33% Tootsie Roll Industries has 6.04% higher profit margin ratio. This company has 10.37% of each dollar of sales that results in net income. Higher gross profit rate results in higher profit margin for the company. Inventory Turnover Ratio 5.71 5.52 The numbers show that Tootsie Roll Industries has higher Inventory Turnover Ratio than The Hershy Company for 0.19. That means that Tootsie Roll Industries sell their goods faster and their average inventory turns 1.03 times/year faster than The Hershey Company's Inventory. Days in Inventory 64...
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