ACC/219 Week 5 Wiley Plus

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Condensed financial data of Odgers Inc. follow.

ODGERS INC. Comparative Balance Sheets December 31
Assets	2014		2013
Cash	$ 131,704		$ 78,892
Accounts receivable	143,114		61,940
Inventory	183,375		167,646
Prepaid expenses	46,292		42,380
Long-term investments	224,940		177,670
Plant assets	464,550		395,275
Accumulated depreciation	(81,500	)	(84,760	)
Total	$1,112,475		$839,043

Liabilities and Stockholders’ Equity
Accounts payable	$ 166,260		$ 109,699
Accrued expenses payable	26,895		34,230
Bonds payable	179,300		237,980
Common stock	358,600		285,250
Retained earnings	381,420		171,884
Total	$1,112,475		$839,043

ODGERS INC. Income Statement Data For the Year Ended December 31, 2014
Sales revenue		$633,190
Less:
Cost of goods sold	$220,800
Operating expenses, excluding depreciation	20,228
Depreciation expense	75,795
Income tax expense	44,466
Interest expense	7,710
Loss on disposal of plant assets	12,225	381,224
Net income		$ 251,966

Additional information:

1.		New plant assets costing $163,000 were purchased for cash during the year.
2.		Old plant assets having an original cost of $93,725 and accumulated depreciation of $79,055 were sold for $2,445 cash.
3.		Bonds payable matured and were paid off at face value for cash.
4.		A cash dividend of $42,430 was declared and paid during the year.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

ODGERS INC. Statement of Cash Flows For the Year Ended December 31, 2014

		$
Adjustments to reconcile net income to

	$























		$

Problem 12-10A

Condensed financial data of Odgers Inc. follow.

ODGERS INC. Comparative Balance Sheets December 31
Assets	2014		2013
Cash	$ 151,904		$ 90,992
Accounts receivable	165,064		71,440
Inventory	211,500		193,358
Prepaid expenses	53,392		48,880
Long-term investments	259,440		204,920
Plant assets	535,800		455,900
Accumulated depreciation	(94,000	)	(97,760	)
Total	$1,283,100		$967,730

Liabilities and Stockholders’ Equity
Accounts payable	$ 191,760		$ 126,524
Accrued expenses payable	31,020		39,480
Bonds payable	206,800		274,480
Common stock	413,600		329,000
Retained earnings	439,920		198,246
Total	$1,283,100		$967,730

ODGERS INC. Income Statement Data For the Year Ended December 31, 2014
Sales revenue		$730,305
Less:
Cost of goods sold	$254,665
Operating expenses, excluding depreciation	23,331
Depreciation expense	87,420
Income taxes	51,286
Interest expense	8,892
Loss on disposal of plant assets	14,100	439,694
Net income		$ 290,611

Additional information:

1.		New plant assets costing $188,000 were purchased for cash during the year.
2.		Old plant assets having an original cost of $108,100 and accumulated depreciation of $91,180 were sold for $2,820 cash.
3.		Bonds payable matured and were paid off at face value for cash.
4.		A cash dividend of $48,937 was declared and paid during the year.

Further analysis reveals that accounts payable pertain to merchandise creditors. Prepare a statement of cash flows for Odgers Inc. using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

ODGERS INC. Statement of Cash Flows For the Year Ended December 31, 2014

		$
:
	$




















		$

Problem 13-2A


	Your answer is partially correct. Try again.

The comparative statements of Osborne Company are presented here.

OSBORNE COMPANY Income Statements For the Years Ended December 31
	2014	2013
Net sales	$1,897,463	$1,757,423
Cost of goods sold	1,065,463	1,012,923
Gross profit	832,000	744,500
Selling and administrative expenses	506,923	485,923
Income from operations	325,077	258,577
Other expenses and losses
Interest expense	23,448	21,448
Income before income taxes	301,629	237,129
Income tax expense	93,448	74,448
Net income	$ 208,181	$ 162,681

OSBORNE COMPANY Balance Sheets December 31
Assets	2014	2013
Current assets
Cash	$ 60,100	$ 64,200
Debt investments (short-term)	74,000	50,000
Accounts receivable	124,723	109,723
Inventory	127,448	116,948
Total current assets	386,271	340,871
Plant assets (net)	662,194	533,494
Total assets	$1,048,465	$874,365
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$ 166,923	$152,323
Income taxes payable	44,948	43,448
Total current liabilities	211,871	195,771
Bonds payable	233,194	213,194
Total liabilities	445,065	408,965
Stockholders’ equity
Common stock ($5 par)	290,000	300,000
Retained earnings	313,400	165,400
Total stockholders’ equity	603,400	465,400
Total liabilities and stockholders’ equity	$1,048,465	$874,365

All sales were on account. Net cash provided by operating activities for 2014 was $223,760. Capital expenditures were $136,980, and cash dividends were $60,181. Compute the following ratios for 2014. (Round all answers to 2 decimal places, e.g. 1.83 or 12.61%.)

(a)	Earnings per share	$
(b)	Return on common stockholders’ equity		%
(c)	Return on assets		%
(d)	Current ratio		:1
(e)	Accounts receivable turnover		times
(f)	Average collection period		days
(g)	Inventory turnover		times
(h)	Days in inventory		days
(i)	Times interest earned		times
(j)	Asset turnover		times
(k)	Debt to assets		%
(l)	Current cash debt coverage		times
(m)	Cash debt coverage		times
(n)	Free cash flow	$

Broadening Your Perspective 13-2

The financial statements of The Hershey Company and Tootsie Roll are presented below.

THE HERSHEY COMPANY CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31,	2011		2010		2009
In thousands of dollars except per share amounts
Net Sales	$6,080,788			$5,671,009		$5,298,668
Costs and Expenses:
Cost of sales	3,548,896			3,255,801		3,245,531
Selling, marketing and administrative	1,477,750			1,426,477		1,208,672
Business realignment and impairment (credits) charges, net	(886	)		83,433		82,875
Total costs and expenses	5,025,760			4,765,711		4,537,078
Income before Interest and Income Taxes	1,055,028			905,298		761,590
Interest expense, net	92,183			96,434		90,459
Income before Income Taxes	962,845			808,864		671,131
Provision for income taxes	333,883			299,065		235,137
Net Income	$628,962			$509,799		$435,994
Net Income Per Share—Basic—Class B Common Stock	$2.58			$2.08		$1.77
Net Income Per Share—Diluted—Class B Common Stock	$2.56			$2.07		$1.77
Net Income Per Share—Basic—Common Stock	$2.85			$2.29		$1.97
Net Income Per Share—Diluted—Common Stock	$2.74			$2.21		$1.90
Cash Dividends Paid Per Share:
Common Stock	$1.3800			$1.2800		$1.1900
Class B Common Stock	1.2500			1.1600		1.0712
The notes to consolidated financial statements are an integral part of these statements and are included in the Hershey's 2011 Annual Report, available at www.thehersheycompany.com.

THE HERSHEY COMPANY CONSOLIDATED BALANCE SHEETS
December 31,	2011		2010
In thousands of dollars
ASSETS
Current Assets:
Cash and cash equivalents	$693,686			$884,642
Accounts receivable—trade	399,499			390,061
Inventories	648,953			533,622
Deferred income taxes	136,861			55,760
Prepaid expenses and other	167,559			141,132
Total current assets	2,046,558			2,005,217
Property, Plant and Equipment, Net	1,559,717			1,437,702
Goodwill	516,745			524,134
Other Intangibles	111,913			123,080
Deferred Income Taxes	38,544			21,387
Other Assets	138,722			161,212
Total assets	$4,412,199			$4,272,732
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$420,017			$410,655
Accrued liabilities	612,186			593,308
Accrued income taxes	1,899			9,402
Short-term debt	42,080			24,088
Current portion of long-term debt	97,593			261,392
Total current liabilities	1,173,775			1,298,845
Long-term Debt	1,748,500			1,541,825
Other Long-term Liabilities	617,276			494,461
Total liabilities	3,539,551			3,335,131
Commitments and Contingencies	—			—
Stockholders’ Equity:
The Hershey Company Stockholders’ Equity
Preferred Stock, shares issued: none in 2011 and 2010	—			—
Common Stock, shares issued: 299,269,702 in 2011 and 299,195,325 in 2010	299,269			299,195
Class B Common Stock, shares issued: 60,632,042 in 2011 and 60,706,419 in 2010	60,632			60,706
Additional paid-in capital	490,817			434,865
Retained earnings	4,699,597			4,374,718
Treasury—Common Stock shares, at cost: 134,695,826 in 2011 and 132,871,512 in 2010	(4,258,962	)		(4,052,101	)
Accumulated other comprehensive loss	(442,331	)		(215,067	)
The Hershey Company stockholders’ equity	849,022			902,316
Noncontrolling interests in subsidiaries	23,626			35,285
Total stockholders’ equity	872,648			937,601
Total liabilities and stockholders’equity	$4,412,199			$4,272,732

THE HERSHEY COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,		2011		2010		2009
In thousands of dollars
Cash Flows Provided from (Used by) Operating Activities
	Net income		$628,962			$509,799			$435,994
	Adjustments to reconcile net income to net cash provided from operations:
	Depreciation and amortization		215,763			197,116			182,411
	Stock-based compensation expense, net of tax of $15,127, $17,413 and $19,223, respectively		28,341			32,055			34,927
	Excess tax benefits from stock-based compensation		(13,997	)		(1,385	)		(4,455	)
	Deferred income taxes		33,611			(18,654	)		(40,578	)
	Gain on sale of trademark licensing rights, net of tax of $5,962		(11,072	)		—			—
	Business realignment and impairment charges, net of tax of $18,333, $20,635 and $38,308, respectively		30,838			77,935			60,823
	Contributions to pension plans		(8,861	)		(6,073	)		(54,457	)
	Changes in assets and liabilities, net of effects from business acquisitions and divestitures:
	Accounts receivable—trade		(9,438	)		20,329			46,584
	Inventories		(115,331	)		(13,910	)		74,000
	Accounts payable		7,860			90,434			37,228
	Other assets and liabilities		(205,809	)		13,777			293,272
Net Cash Provided from Operating Activities		580,867			901,423			1,065,749
Cash Flows Provided from (Used by) Investing Activities
	Capital additions		(323,961	)		(179,538	)		(126,324	)
	Capitalized software additions		(23,606	)		(21,949	)		(19,146	)
	Proceeds from sales of property, plant and equipment		312			2,201			10,364
	Proceeds from sales of trademark licensing rights		20,000			—			—
	Business acquisitions		(5,750	)		—			(15,220	)
Net Cash (Used by) Investing Activities		(333,005	)		(199,286	)		(150,326	)
Cash Flows Provided from (Used by) Financing Activities
	Net change in short-term borrowings		10,834			1,156			(458,047	)
	Long-term borrowings		249,126			348,208			—
	Repayment of long-term debt		(256,189	)		(71,548	)		(8,252	)
	Proceeds from lease financing agreement		47,601			—			—
	Cash dividends paid		(304,083	)		(283,434	)		(263,403	)
	Exercise of stock options		184,411			92,033			28,318
	Excess tax benefits from stock-based compensation		13,997			1,385			4,455
	Contributions from noncontrolling interests in subsidiaries		—			10,199			7,322
	Repurchase of Common Stock		(384,515	)		(169,099	)		(9,314	)
Net Cash (Used by) Financing Activities		(438,818	)		(71,100	)		(698,921	)
(Decrease) Increase in Cash and Cash Equivalents		(190,956	)		631,037			216,502
Cash and Cash Equivalents as of January 1		884,642			253,605			37,103
Cash and Cash Equivalents as of December 31		$693,686			$884,642			$253,605
Interest Paid		$97,892			$97,932			$91,623
Income Taxes Paid		292,315			350,948			252,230

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data)
		For the year ended December 31,
		2011		2010		2009
	Net product sales	$528,369			$517,149		$495,592
	Rental and royalty revenue	4,136			4,299		3,739
	Total revenue	532,505			521,448		499,331
	Product cost of goods sold	365,225			349,334		319,775
	Rental and royalty cost	1,038			1,088		852
	Total costs	366,263			350,422		320,627
	Product gross margin	163,144			167,815		175,817
	Rental and royalty gross margin	3,098			3,211		2,887
	Total gross margin	166,242			171,026		178,704
	Selling, marketing and administrative expenses	108,276			106,316		103,755
	Impairment charges	—			—		14,000
	Earnings from operations	57,966			64,710		60,949
	Other income (expense), net	2,946			8,358		2,100
	Earnings before income taxes	60,912			73,068		63,049
	Provision for income taxes	16,974			20,005		9,892
	Net earnings	$43,938			$53,063		$53,157

	Net earnings	$43,938			$53,063		$53,157
	Other comprehensive earnings (loss)	(8,740	)		1,183		2,845
	Comprehensive earnings	$35,198			$54,246		$56,002

	Retained earnings at beginning of year.	$135,866			$147,687		$144,949
	Net earnings	43,938			53,063		53,157
	Cash dividends	(18,360	)		(18,078	)	(17,790	)
	Stock dividends	(47,175	)		(46,806	)	(32,629	)
	Retained earnings at end of year	$114,269			$135,866		$147,687

	Earnings per share	$0.76			$0.90		$0.89

	Average Common and Class B Common shares outstanding	57,892			58,685		59,425
(The accompanying notes are an integral part of these statements.)

CONSOLIDATED STATEMENTS OF Financial Position TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES (in thousands except per share data)
Assets		December 31,
			2011		2010
CURRENT ASSETS:
	Cash and cash equivalents		$78,612			$115,976
	Investments		10,895			7,996
	Accounts receivable trade, less allowances of $1,731 and $1,531		41,895			37,394
	Other receivables		3,391			9,961
	Inventories:
	Finished goods and work-in-process		42,676			35,416
	Raw materials and supplies		29,084			21,236
	Prepaid expenses		5,070			6,499
	Deferred income taxes		578			689
	Total current assets		212,201			235,167
PROPERTY, PLANT AND EQUIPMENT, at cost:
	Land		21,939			21,696
	Buildings		107,567			102,934
	Machinery and equipment		322,993			307,178
	Construction in progress		2,598			9,243
			455,097			440,974
	Less—Accumulated depreciation		242,935			225,482
	Net property, plant and equipment		212,162			215,492
OTHER ASSETS:
	Goodwill		73,237			73,237
	Trademarks		175,024			175,024
	Investments		96,161			64,461
	Split dollar officer life insurance		74,209			74,441
	Prepaid expenses		3,212			6,680
	Equity method investment		3,935			4,254
	Deferred income taxes		7,715			9,203
	Total other assets		433,493			407,300
	Total assets		$857,856			$857,959
Liabilities and Shareholders’ Equity		December 31,
			2011		2010
CURRENT LIABILITIES:
	Accounts payable		$10,683			$9,791
	Dividends payable		4,603			4,529
	Accrued liabilities		43,069			44,185
	Total current liabilities		58,355			58,505
NONCURRENT LIABILITES:
	Deferred income taxes		43,521			47,865
	Postretirement health care and life insurance benefits		26,108			20,689
	Industrial development bonds		7,500			7,500
	Liability for uncertain tax positions		8,345			9,835
	Deferred compensation and other liabilities		48,092			46,157
	Total noncurrent liabilities		133,566			132,046
SHAREHOLDERS’ EQUITY:
	Common stock, $.69-4/9 par value—120,000 shares authorized—36,479 and 36,057 respectively, issued		25,333			25,040
	Class B common stock, $.69-4/9 par value—40,000 shares authorized—21,025 and 20,466 respectively, issued		14,601			14,212
	Capital in excess of par value		533,677			505,495
	Retained earnings, per accompanying statement		114,269			135,866
	Accumulated other comprehensive loss		(19,953	)		(11,213	)
	Treasury stock (at cost)—71 shares and 69 shares, respectively		(1,992	)		(1,992	)
	Total shareholders’ equity		665,935			667,408
	Total liabilities and shareholders’ equity		$857,856			$857,959

TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF Cash Flows (in thousands)
					For the year ended December 31,
					2011		2010		2009
	CASH FLOWS FROM OPERATING ACTIVITIES:
		Net earnings		$43,938			$53,063			$53,157
		Adjustments to reconcile net earnings to net cash provided by operating activities:
			Depreciation		19,229			18,279			17,862
			Impairment charges		—			—			14,000
			Impairment of equity method investment		—			—			4,400
			Loss from equity method investment		194			342			233
			Amortization of marketable security premiums		1,267			522			320
			Changes in operating assets and liabilities:
			Accounts receivable		(5,448	)		717			(5,899	)
			Other receivables		3,963			(2,373	)		(2,088	)
			Inventories		(15,631	)		(1,447	)		455
			Prepaid expenses and other assets		5,106			4,936			5,203
			Accounts payable and accrued liabilities		84			2,180			(2,755	)
			Income taxes payable and deferred		(5,772	)		2,322			(12,543	)
			Postretirement health care and life insurance benefits		2,022			1,429			1,384
			Deferred compensation and other liabilities		2,146			2,525			2,960
			Others		(708	)		310			305
		Net cash provided by operating activities		50,390			82,805			76,994
	CASH FLOWS FROM INVESTING ACTIVITIES:
			Capital expenditures		(16,351	)		(12,813	)		(20,831	)
			Net purchase of trading securities		(3,234	)		(2,902	)		(1,713	)
			Purchase of available for sale securities		(39,252	)		(9,301	)		(11,331	)
			Sale and maturity of available for sale securities		7,680			8,208			17,511
			Net cash used in investing activities		(51,157	)		(16,808	)		(16,364	)
	CASH FLOWS FROM FINANCING ACTIVITIES:
			Shares repurchased and retired		(18,190	)		(22,881	)		(20,723	)
			Dividends paid in cash		(18,407	)		(18,130	)		(17,825	)
			Net cash used in financing activities		(36,597	)		(41,011	)		(38,548	)
	Increase (decrease) in cash and cash equivalents		(37,364	)		24,986			22,082
	Cash and cash equivalents at beginning of year		115,976			90,990			68,908
	Cash and cash equivalents at end of year		$78,612			$115,976			$90,990
	Supplemental cash flow information
			Income taxes paid		$16,906			$20,586			$22,364
			Interest paid		$38			$49			$182
			Stock dividend issued		$47,053			$46,683			$32,538
(The accompanying notes are an integral part of these statements.)

Based on the information in the financial statements, determine each of the following for each company:


	Your answer is correct.

The percentage increase (i) in net sales and (ii) in net income from 2010 to 2011. (Round answers to 1 decimal places, e.g. 15.2%. Enter negative amounts using either a negative sign preceding the number e.g. -15.2% or parentheses e.g. (15.2)%.)

	Hershey		Tootsie Roll
Percentage increase (decrease) in net sales		%		%
Percentage increase (decrease) in net income		%		%

SHOW SOLUTION

SHOW ANSWER


	Your answer is correct.

The percentage increase (i) in total assets and (ii) in total stockholders’ equity from 2010 to 2011. (Round answers to 1 decimal place, e.g. 15.2%. Enter negative amounts using either a negative sign preceding the number e.g. -15.2% or parentheses e.g. (15.2)%.)

	Hershey		Tootsie Roll
Percentage increase (decrease) in total assets		%		%
Percentage increase (decrease) in total stockholders’ equity		%		%

SHOW SOLUTION

SHOW ANSWER


	Your answer is incorrect. Try again.

The earnings per share for 2011. (Round answers to 2 decimal places, e.g. 15.25.)

		Hershey		Tootsie Roll
Earnings per share

3.52

21.64

1.82

8.73

41.81

1.98

1.10

.53

7.2

2.2

Loss on Disposal of Plant Assets

23.4

(17.2)

3.3

0.0

(6.9)

(0.2)

Increase in Accounts Payable

Increase in Accounts Receivable

Increase in Inventory

Increase in Prepaid Expenses

Net Cash Provided by Operating Activities

Cash Flows from Investing Activities

Purchase of Plant Assets

Net Cash used by Investing Activities

Payment of Cash Dividends

Redemption of Bonds

Net Cash used by Financing Activities

Cash at Beginning of Period

Cash at End of Period

Net Income