Financial Analysis Hershey Corp. Tootsie Roll...

Financial Analysis: Hershey Corp. Tootsie Roll Industries Financial Analysis: Hershey Corp. Tootsie Roll Industries Hershey and Tootsie Roll are both companies in the confection industry. We compared both companies for the years 2004, 2005, and 2006 against each other and against the industry averages in order to make a decision about which company we would choose to invest in. The comparisons we used to make our decision were ratios for liquidity, solvency, and profitability. As a result of our analyses, we have chosen the Hershey Company. Liquidity Liquidity ratios measure short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash (Kimmel Weygandt, Kieso, 2007, p. 74). The†¦show more content†¦Inventory Turnover The inventory turnover ratio measures the number of times on average the inventory sold during the period; computed by dividing cost of goods sold by the average inventory during the period (Kimmel et al, 2007, p. 292). This indicates how quickly a company sells its goods and a high ratio suggests that management is reducing the amount of inventory on hand, relative to sales (Kimmel et al, 2007, p. 287). Hershey declined in all three years from 5.0907 in 2004 to 4.8872 in 2006. However, Tootsie Roll increased from 4.6632 in 2004 to 5.2191 in 2006. Both companies are above the industry average of 4.2. We have concluded that Tootsie Roll has a higher inventory turnover rate than Hershey. In addition, Tootsie Roll is reducing the amount of inventory on hand, relative to sales. Days in Inventory (Average Age of Inventory) Days in inventory is a measure of the average number of days inventory is held; calculated by dividing 365 by inventory turnover ratio (Kimmel et al, 2007, p. 292). Hershey increased over all three years from 71.6994 days in 2004 to 74.6856 days in 2006. Tootsie Roll declined from 78.2717 days in 2004 to 69.9356 days in 2006. Both companies are above the industry average of 52 days. However, we have concluded that Tootsie Roll is reducingShow MoreRelatedHershey vs. Tootsie Roll - Ratio Analysis1030 Words   |  5 PagesFinancial Statement Analysis Project--Hershey Corp. Tootsie Roll Industries Liquidity Based on the ratio analysis performed, it appears that the Hershey Company’s liquidity is sufficient to meet cash needs and current obligations. The current ratio and current debt coverage ratios were decreasing from 2002 through 2004, which corresponds to an increase in short-term debt and a decrease in cash on the Company’s balance sheet over the same periods. Hershey attributes the increase in debt toRead MoreAccounting 1-4 Chapter100452 Words   |  402 Pageschapter 1 INTRODUCTION TO FINANCIAL STATEMENTS ââ€"  the navigator ââ€"  ââ€"  ââ€"  ââ€"  âÅ"“ Scan Study Objectives Read Feature Story Scan Preview Read Text and Answer Do it! p. 5 p. 11 p. 18 p. 20 Work Using the Decision Toolkit Review Summary of Study Objectives Work Comprehensive Do it! p. 23 Answer Self-Test Questions Complete Assignments Go to WileyPLUS for practice and tutorials Read A Look at IFRS p. 42 study objectives After studying this chapter, you should be able to: 1 Describe the primaryRead MoreChapter 4 Income Statement14931 Words   |  60 Pages4 Income Statement and Related Information ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics 1. Income measurement concepts. Questions 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 18, 28, 31, 32, 33 1 1, 2, 7 Brief Exercises Exercises Problems Concepts for Analysis 3, 4, 5, 6, 8 2. Computation of net income from balance sheets and selected accounts. Single-step income statements; earnings per share. Multiple-step income statements. Extraordinary items; accounting changes; discontinued operations; prior