Tootsie Roll Industries, Inc. is a well established company. The EPS ratio tells us that per share earnings have remained fairly steady over the last several years (1. 29 in 2003; 1. 26 in 2001; and 1. 45 in 2000), this helps us understand that Tootsie Roll is predictable and is a long-term growth company. The price-earnings in 2001 were 33. 06 so it has dropped slightly. Tootsie Roll is a company that does not have a great dependency on dept.
The working capital tells us that they have a great likelihood to pay off its liabilities, this relates to the current ratio. A good company would have a 2:1 ratio while Tootsie Roll has a 3. 57:1 ratio. This shows that the company can easily cover its liabilities. The debt to total assets ratio tells us that Tootsie Roll is not very dependent on creditors because only . 18 of every dollar in assets is provided by a creditor. The company’s current cash debt coverage and cash debt coverage are very good because they are well recommended coverage rates.
The gross profit rate is acceptable for the industry. It is important to not that ingredient costs were higher and the slow economy has caused a tight market, but Tootsie Roll’s staying power and strong core brands make then a prominent part of the market. This is also true for the profit margin. The company has a good inventory turnover ratio and by keeping inventory for about 70 days the company does not have excess inventory but it is able to keep up with demand.
By using the FIFO inventory cost flow assumption, the company may have an overstated gross profit. The receivables turnover ratio and average collection period are very good, the company has better results than other leading competitors in the industry. The company has strong assets and can cover liabilities and meet interest payments. By evaluating all the above information I believe Tootsie Roll Industries, Inc. is a strong company and worth investing in for the long-term.