Hershey and Tootsie

Hershey and Tootsie

  • Submitted By: jeverroad
  • Date Submitted: 02/19/2009 1:36 PM
  • Category: Business
  • Words: 780
  • Page: 4
  • Views: 1355

Running head: FINANCIAL STATEMENT ANALYSIS PROJECT

Financial Statement Analysis Project –
Hershey Corporation and Tootsie Roll Industries

February 19, 2009

Abstract

I am considering investing in one of two companies. The companies are Hershey Corporation and Tootsie Roll Industries. A ratio analysis has been prepared evaluating and comparing Hershey’s and Tootsie Roll’s overall financial liquidity, solvency, and profitability. After the analysis I have decided to invest in Hershey Corporation.  

Financial Statement Analysis Project –
Hershey Corporation and Tootsie Roll Industries

Liquidity Analysis

Liquidity Ratio Hershey Tootsie
1. Current Ratio 0.92 2.34
2. Working Capital (102,842) 110,376
3. Current Cash Debt Coverage Ratio 0.62 0.93
4. Receivables Turnover Ratio 10.85 18.04
5. Average Collection Period 33.64 20.24
6. Inventory Turnover Ratio 5.10 4.66
7. Days in Inventory 71.52 78.27

The liquidity of Tootsie is much better than that of Hershey. The current ratio is 2.34 as compared to 0.92 for Hershey. This implies that Tootsie has $2.34 in current assets to pay for each $ of current liability while Hershey has only $0.92 in current assets and has a negative working capital since the current liabilities are higher than current assets. The current cash debt coverage ratio for Tootsie is greater implying that the cash flow from operating activities will pay for a higher proportion of current liabilities for Tootsie as compared to Hershey. Tootsie is also more efficient in collecting receivables and has an average collection period of 20.2 days as compared...

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