Tootsie Roll Industries Ratios (pg 732) The Hershey Company Ratio Interpretation and comparison between the two companies' ratios Earnings per Share Current Ratio Hershey had net sales close to ten times those of (4,946,716 (51,625 Earnings / Tootsie Roll, however their outstanding shares were Earnings / 492,753 54,296 Outstanding also an order of magnitude greater than those of Outstanding Shares) = $0. 95 Tootsie Roll. Although earnings are greater for Shares) = $0. 96 Hershey, the EPS indicates that Tootsie Roll is as effective at providing value per share as Hershey. Tootsie Roll's ability to pay liabilities should it have to liquidate assets is 3. 92 times as great as that of Hershey. Hershey's ratio is less than one which indicates it has more current liabilites than current ($1,426,574 assets. Should Hershey have to liquidate, it would not ( $199,726 Current Current Assets / $1,618,770 be able to pay off all of its current dates. Tootsie Assets / $57,972 Current Liabilities) = Current Liabilities ) Roll's ability to pay debt is much greater than that of 3. 45 = 0. 88 Hershey. $497,717 Sales $327,695 COGS)/ $492,742 Sales = $168,673 Gross Profit/ $497,717 Net Sales = 33. 89% ( 4,946,716 Sales 3,315,147 COGS)/ $4,946,716 Sales = $1,631,569 Gross Profit/$4,946,716 = 32. 98% Gross Profit Rate (pg 241) Both companies have similar gross profit margins which indicates that neither business can leverage its size to boost the bottom line. This calculation is not as valuable to the investor as the profit margin ratio. Tootsie Roll's ability to keep its overhead low allows the company to retain a proportionally larger amount of profits versus sales. Hershey's profit argin ratio is ( $214,154 Gross half of that of Tootsie Roll's. This indicates that ( $51,625 Gross Profit / $4,946,716 despite Hershey's far greater sales, the company's Profit / $497,717 Profit Margin Net Sales) x 100 = Net Sales) x 100 = overhead prevents it from retaining more of its revenue. 4. 33 Ratio (pg 244) 10. 37% ( $3,315,147 Product ($327,695 Product COGS)/(($600,185 COGS)/(($121,359)/ + $648,820 )/2 Inventory turnover time is similar for both companies, Average 2) Average Inventory)=$3,315, although Hershey turns over a far greater quantity of Inventory) = $327,695/$60,679. 47/$624,502. 50= inventory per year. Both comapanies are roughly as Inventory efficient at turning over their product as the other. 5. 31 Turnover Ratio 50 = 5. 40 On average, both companies will hold on to their inventory for roughly the same amount of time. Both days in 365 days / 5. 40 = 365 days / 5. 31 = companies are roughly as effective as the other in Inventory 67. 59 68. 74 converting their inventory to cash.
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