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.
Complete one paragraph, profiling each company's business, including
information such as brief histories, where each company is located, number
of employees, the products each company sells, and so forth. Please
reference any websites that 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 and primarily sells its products
in the United States, Canada, and Mexico. According to Yahoo! Finance,
Tootsie Roll has 2,000 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 2014 net product
sales of $539.9 million.

Hershey Company was founded by Milton S. Hershey in 1893 and is

headquartered in Hershey, Pennsylvania. According to Yahoo! Finance,
Hershey has 20,800 full-time employees. Hershey is famous for Good &
Plenty, Hershey Bar, Hershey's Kisses, Hershey's Bliss, Reese's, Rolo,
Twizzlers, Almond Joy, Kit Kat, and Ice Breakers. Hershey had net product
sales of $7.4 billion for 2014.
Use this Excel spreadsheet to compute ratios; show your computations for all ratios on this tab, and also include your commentary.
The 2014 financial statements used to calculate these ratios are available in the Investor Relations sections of the Tootsie Roll and Hershey websites.

Interpretation and comparison between the two companies' ratios (reading

Tootsie Roll Hershey 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 that
each ratio below requires a comparison.

Earnings per Share of Common Stock (basic - common) As given in the income statement $ 1.05 $ 3.91

Current Ratio Current Assets $264,621 = 4.11 $2,247,047 = 1.16

Current Liabilities $64,459 $1,935,647

Gross (Profit) Margin Percentage Gross Margin $198,962 = 36.9% $3,336,166 = 45.0%
Net Sales $539,895 $7,421,768

Rate of Return (Net Profit Margin) on Sales Net Income $63,298 = 11.7% $846,912 = 11.4%
Net Sales $539,895 $7,421,768

Inventory Turnover Cost of Goods Sold $340,933 5.2 $4,085,602 5.6

Average Inventory $66,118 times $730,289 times

Days' Inventory Outstanding (DIO) 365 Days 365 = 71 365 = 65

Inventory Turnover 5.2 days 5.6 days

Accounts Receivable Turnover Net Credit Sales $539,895 = 12.9 $7,421,768 = 13.8
Average Net Accounts Receivable $41,987 $537,426

Days' Sales Outstanding (DSO) 365 365 = 28.4 365 = 26.4

Receivable Turnover Ratio 12.9 days 13.8 days

Asset Turnover Net Sales $539,895 = 0.60 $7,421,768 = 1.35

Average Total Assets $899,398 $5,493,502

Rate of Return on Total Assets (ROA) Rate of Return on Sales times Asset Turnover = 7.0% = 15.4%

Debt Ratio Total Liabilities $219,250 = 24.1% $4,109,986 = 73.0%

Total Assets $910,386 $5,629,516

Times Interest–Earned Ratio Income From Operations $83,923 = 847.7 1,389,575 = 16.6
Interest Expense $99 83,532

Dividend Yield on Common Stock Dividend per Share of Common Stock (Yahoo Finance 12/24/2015) $0.36 = 1.1% $2.33 = 2.6%
(Please follow the Course Project instructions to calculate the current dividend yield.) Market Price per Share of Common Stock (Yahoo Finance 12/24/2015) $32.04 $90.32

Rate of Return on Common Stockholders' Equity (ROE) Net Income - Preferred Dividends $63,298 = 9.2% $846,912 = 54.0%
Average common stockholders' equity $685,721 $1,567,791

Free Cash Flow Net Cash Provided by Operating Activities minus Cash Payments = $ 492,274
$78,065
Earmarked for Investments in Plant Assets =

Price-Earnings Ratio (Multiple) Market Price as of 5/30/2014 for Nike and as of 12/31/2014 for Under Armour $30.65 = 29 $103.93 = 27
(Please see the Course Project instructions for the dates to use for this ratio.) EPS $1.05 $3.91
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 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.

Measuring Ability to Pay Current Liabilities: Tootsie Roll has the advantage for the current ratio. Tootsie Roll
has $4.11 in current assets for every dollar in current liabilities, while Hershey has only $1.16 in current assets
for every dollar in current liabilities.

Measuring Turnover: Hershey has the advantage for the inventory turnover and accounts receivable turnover
ratios. Hershey turns over its inventory 5.6 times to Tootsie Roll's 5.2 times, and Hershey turns over its
accounts receivable 13.8 times to Tootsie Roll's 12.9 times.

Measuring Leverage - Overall Ability to Pay Debts: Tootsie Roll has significantly less debt than Hershey as
evidenced by Tootsie Roll's 24.1% debt-to-asset ratio as compared to Hershey's 73% debt-to-asset ratio. Tootsie
Roll can cover its interest expense 847.7 times with income before interest and taxes, while Hershey can only
cover its interest expense 16.6 times with their income before interest and taxes. Tootsie Roll has the advantage
for each of these ratios.

Measuring Profitability: Hershey has the advantage for 4 of the 5 profitability ratios. Hershey has a significant
edge in return on common stockholders' equity, with a 54% return on common stockholders' equity, as
compared to Tootsie Roll's 9.2% return on common stockholders' equity. Hershey has a higher gross profit rate
(45.0%–36.9%), while Tootise Roll has a higher net profit margin ratio (11.7%–11.4%). Hershey also has a
significant advantage for asset turnover (1.35–.60) and rate of return on total assets (15.4%–7.0%).

Analyzing stock as an investment: Hershey returns a 2.6% dividend yield to its investors, while Tootsie Roll's
yield is 1.1%. Hershey has positive free-cash flow of $492.2 million, whereas Tootsie Roll has positive free-cash
flow of $78.1 million. Free-cash flow can be used to undertake acquisitions, pay additional dividends, pay down
debt, or buy back stock.

Conclusion: Tootsie Roll is the safer investment when you examine the ability to pay current liabilities and
overall liabilities, but Hershey has the advantage for the turnover and profitability ratios. For the conservative
investor, Tootsie Roll looks like the way to go because of its strong current and times interest–earned ratios.
For the growth-oriented investor, Hershey is the way to go because of its stronger profitability ratios and large
amount of free-cash flow.
Your textbook and any information that you use to profile the companies should be cited as a reference below.

Big Charts for Hershey. (2014, December 31). Retrieved from http://bigcharts.marketwatch.com/historical/default.asp?
symb=hsy&closeDate=12%2F31%2F14&x=0&y=0
Big Charts for Tootsie Roll. (2014, December 31). Retrieved from http://bigcharts.marketwatch.com/historical/default.asp?
symb=tr&closeDate=12%2F31%2F14&x=0&y=0

Harrison, W. T., Horngren, C. T., & Thomas, C. W. (2015). Financial accounting (10th ed.). Upper Saddle River, NJ: Pearson Ed
Hershey's 2014 Annual Report. (2015). Retrieved from http://www.thehersheycompany.com/pdfs/PDF_Proxy%20Statement_20
HSY profile. (2015). Retrieved from http://finance.yahoo.com/q/pr?s=HSY+Profile
HSY stock price. (2015). Retrieved from http://finance.yahoo.com/q?s=hsy&ql=1
Tootsie Roll Industries 2014 Annual Report. (2015). Retrieved from http://tootsie.com/financials/
TR profile. (2015). Retrieved from http://finance.yahoo.com/q/pr?s=TR+Profile
TR stock price. (2015). Retrieved from http://finance.yahoo.com/q?s=TR&ql=1