Question for acccounting.

Title Page

Profiles

Ratios

Summary

Bibliography

project_template_comparing_tootsie_roll__hershey.xlsx

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				Complete one paragraph profiling each company's business including information, such as a brief history, where they are located, number of employees, the products they sell, etc. Please reference any websites you used for the Profiles on the Bibliography tab.
				Tootsie Roll Industries began in a small candy store in New York in 1896. Tootsie Roll is now headquartered in Chicago with operations throughout North America and with distribution channels in over 75 countries. According to Yahoo Finance, Tootsie Roll has 2,200 full-time employees. Tootsie Roll sells the following branded candy: Tootsie Roll, Tootsie Roll Pop, Charms Blow Pop, Mason Dots, Andes, Sugar Daddy, Charleston Chew, Double Bubble, Razzles, Caramel Apple Pop, and Junior Mints. Tootsie Roll had 2011 net product sales of $528 million.
				Hershey Company was founded by Milton S. Hershey in 1893 and is headquartered in Hershey, Pennsylvania. According to Yahoo Finance, Hershey had 12,100 full-time employees. Hershey is famous for the Hershey Bar, Hershey's Kisses, Hershey's Bliss, Reese's, Twizzlers, Almond Joy, Kit Kat, and Ice Breakers. Hershey had net product sales of $6 billion for 2011.

Use this Excel spreadsheet to compute ratios; show your computations for all ratios on this tab and also include your commentary.
The financial statements used to calculate these ratios are available in Appendix A and Appendix B of your textbook.
		Tootsie			Hershey's			Interpretation and comparison between the two companies' ratios (reading the Appendix of Chapter 13 will help you prepare the commentary).
								The comparison of the ratios is an important part of the project. A good approach is to briefly explain what the ratio tells us. Indicate whether a higher or lower ratio is better. Then compare the two companies on this basis. Remember—each ratio below requires a comparison.
Earnings per share (basic - common)	As given in the income statement			$ 0.76			$ 2.85
Current ratio	Current assets	$212,201	=	3.64	$2,046,558	=	1.74
	Current liabilities	$58,355			$1,173,775
Gross profit ratio	Gross profit	$166,242	=	31.2%	$2,531,892	=	41.6%
	Net Sales	$532,505			$6,080,788
Profit margin ratio	Net Income	$43,938	=	8.3%	$628,962	=	10.3%
	Net Sales	$532,505			$6,080,788
Inventory turnover	Cost of Goods Sold	$365,225		5.7	$3,548,896		6.0
	Average Inventory	$64,206		times	$591,288		times
Days in inventory	365 days	365	=	64	365	=	61
	Inventory turnover	5.7		days	6.0		days
Receivable turnover ratio	Net credit sales	$532,505	=	13.4	$6,080,788	=	15.4
	Average Net Receivables	$39,645			$394,780
Average collection period	365	365	=	27.2	365	=	23.7
	Receivable Turnover Ratio	13.4		days	15.4		days
Assets turnover ratio	Net Sales	$532,505	=	0.62	$6,080,788	=	1.40
	Average Total Assets	$857,908			$4,342,466
Return on assets ratio	Net Income	$43,938	=	5.1%	$628,962	=	14.5%
	Average Total Assets	$857,908			$4,342,466
Debt to total assets ratio	Total Liabilities	$191,921	=	22.4%	$3,539,551	=	80.2%
	Total Assets	$857,856			$4,412,199
Times interest earned ratio	Net Income + Int Expense + Tax Expense	$61,033	=	504.4	1,055,028	=	11.4
	Interest Expense	$121			92,183
Payout ratio	Cash dividend declared on common stock	$18,407	=	41.9%	$304,083	=	48.3%
	Net income	$43,938			$628,962
Return on common stockholders' equity	Net income - Preferred stock dividend	$43,938	=	6.6%	$628,962	=	69.5%
	Average common stockholders' equity	666,671.50			$905,125
Free cash flow	Cash provided by operations minus capital expenditures minus cash dividends paid	$15,632	=	$15,632	($47,177)		$ (47,177)
						=
Current cash debt coverage ratio	Cash provided by operations	$50,390	=	0.86	$580,867	=	0.47
	Average current liabilities	$58,430			$1,236,310
Cash debt coverage ratio	Cash provided by operations	$50,390	=	0.26	$580,867	=	0.17
	Average total liabilities	$191,236			$3,437,341
Price/earnings ratio	12/31/11	$23.67	=	31	$61.78	=	22
	EPS as of 12/31/2011	$0.76			$2.85

You all get the chance to play the role of financial analyst below. The summary should be a comparison of each company's performance for each major category of ratios (liquidity, solvency, and profitability) listed below. Focus on major differences as you compare each company's performance. A nice way to conclude is to state which company you feel is the better investment and why.

Liquidity: Tootsie Roll has the advantage for the current ratio and current cash debt coverage ratio. Tootsie Roll has $3.64 in current assets for every dollar in current liabilities while Hershey has only $1.74 in current assets for every dollar in current liabilities. Hershey has the advantage for inventory turnover (6.0 to 5.7) and accounts receivable turnover (15.4 to 13.4).

Solvency: Tootsie Roll has the advantage for each of the solvency ratios. Tootsie Roll can cover their interest expense 504 times with income before interest and taxes while Hershey can only cover their interest expense 11 times with their income before interest and taxes. Tootsie Roll has positive free cash flow of $15.6 million while Hershey has negative free cash flow of $47 million . Free cash flow can be used to undertake acquisitions, pay additional dividends, pay down debt, or by back stock.

Profitability: Hershey has the advantage for each of the profitability ratios with the exception of the Price-Earnings ratio. Hershey has a significant edge in return on common stockholders' equity with a 69.5% return on common stockholders' equity as compared to Tootsie Roll's 6.5% return on common stockholders' equity. Hershey also has a higher gross profit rate (41.6% to 31.2%) and higher profit margin ratio (10.3% to 8.3%).

Conclusion: Microsoft Corp has shown incredible returns to share holders, as compare to Oracle. But when it comes to the current ratio of both companies, Oracle is more stable in this regard and it shows that Oracle has

more liquidity availble to cover the current liabilities and will not face any liquidity issues in future or will not be in need of raising debt.

Again Microsoft has earned more profits than the Oracle, It gives edge to microsoft corp.

Assets turn over is again in favor of Oracle where they have shown a good control over the utilisation.

There is a concern related to Oracle as there is more debt over its books which makes it less attractive for the investors and gives edge to Microsoft, Inventry cycle is more in favor of Oracle as compare to Microsoft.

But as per the investor's point of view that we can rely more on Microsft as it is a good and less risky option which is also generating more returns as compare to Oracle.

Go to Doc Sharing for the detailed Course Project instructions and grading rubric.

Complete your Title page on this tab.

Please include your name, the course, the date,

your instructor's name, and the title for the project.

The Appendices of your textbook and any information you use to profile the companies should be cited as a reference below.

Big Charts for Hershey (2013). Retrieved August 13, 2013 from http://bigcharts.marketwatch.com/historical/default.asp?symb=hsy&closeDate=12%2F30%2F11&x=0&y=0

Big Charts for Tootsie Roll (2013). Retrieved August 13, 2013 from http://bigcharts.marketwatch.com/historical/default.asp?symb=tr&closeDate=12%2F30%2F11&x=0&y=0

Hershey's (2013). Retrieved August 13, 2013 from http://www.hersheys.com/pure-products.aspx

HSY Profile (2013). Retrieved August 13, 2013 from http://finance.yahoo.com/q/pr?s=HSY+Profile

Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2013). Financial accounting: Tools for business decision making, 7th ed. Danvers, MA: John Wiley & Sons, Inc.

Tootsie Roll Industries (2013). Retrieved August 13, 2013 from http://www.tootsie.com/

TR Profile (2013). Retrieved August 13, 2013 from http://finance.yahoo.com/q/pr?s=TR+Profile