Hershey and Tootsie Roll Finanical Analysis

Hershey and Tootsie Roll Financial Analysis

2007

Hershey and Tootsie Roll Financial Analysis

This analysis concerns the liquidity , solvency , and profitability ratios of the Hershey and Tootsie Roll companies . One website , Value Based Management (VBM ) considered the Cash Ratio Formula as a means of measuring Liquidity . This formula is as follows

Cash Ratio (CR Cash Equivalents Cash /Current Liabilities Cash Equivalents Cash /Accruals Accounts Payable Notes Payable (VBM 2007 . Results of the Liquidity Ratio analysis for both companies are listed in the chart

Hershey

2002 Hersh

2004

July Hershey Ratios Tootsie

2002 Tootsie

2004 Tootsie Ratios 2002

Cash 297 ,743 19 ,475 Liquidity

Ratio 2002 105 ,507 56 ,989 Liquidity

Ratio 2002

AR 370 ,976 256 ,657 CR 0 .544 22 ,686 28 ,456 CR 1 .672

Inventory 503 ,291 721 ,503 Profitability Ratios 2002 43 ,645 58 ,777 Profitability Ratios 2002

TL

2 ,108 ,848 3607829 Profit Margin 0 .098 19 ,340 241 ,574 Profit Margin 0 .169

FA

1 ,486 ,055 1670862 ROA 0 .116 128 ,869 178 ,750 ROA 0 .295

Net Sales

4120317

1906777 Return on Net Worth 0 .294 393 ,185 420 ,110 Return on Net Worth 0 .629

To . Asset

3 ,480 ,551 3607829

224 ,948 371 ,443

NPAT 403 ,578 147 ,217 Hershey Solvency Ratios 2002 66 ,388 129 ,869 Hershey Solvency Ratios 2002

Cash AR / CL Quick Ratio 1 .223

Quick Ratio 2 .032

Current Assets (CA / Current Liab (CL ) Current Ratio 2 .311

Current Ratio 2 .742

Current Liabilities / Net Worth (NW ) CL /NW 0 .399

CL /NW 0 .597

Current Liabilities (CL / Inven . CL /Inventory 1 .087

CL /Inventory 1 .446 TL /NW 1 .130

Fixed Assets (FA / Net Worth (NW ) FA /NW 1 .083

FA /NW 1 .220 (Hershey .com 2002 A-23-A-26 (Hershey .com 2004 6-11 (Toostie .com 2002 10-11 (Toostie .com 2004 10-11

It was said that Profitability ratios measure how well a company is performing by analyzing how profit was earned relative to sales , assets and net worth ' `D B uses three key financial business ratios to measure a company 's efficiency (qtd . in Profitability Ratios 2007 Return on Sales (Profit Margin ) Ratio Net Profit After Taxes /Net Sales . High returns help a company when things begin to plummet due to adverse conditions (Profitability Ratios 2007 . Return on Assets (ROA Ratio Net Profit After Taxes /a high return , it is better for the company (Profitability Ratios 2007 Return on Net Worth Ratio Net Profit After Taxes /Net Worth (Profitability Ratios 2007 . This information is listed in the chart above as well as demonstrated below

Also , Solvency ratios measure the financial soundness of a business and how well the company can satisfy its short- and long- term obligations ' `D B uses six key financial business ratios to measure a company 's solvency (qtd . in Solvency Ratios 2007 . Quick Ratio Cash Accounts Receivables /Current Liabilities . Current Ratio Current Assets /Current Liabilities . Current Liabilities to Net Worth Ratio Current Assets /Net Worth . Anything in excess of 80 means the business...