Tootsie Roll Industries is a confectionery products manufacturer that has been in business for 111 years. The company makes a variety of products including a) Tootsie Roll, b) Tootsie Roll Pops, c) Caramel Apple Pops, d) Charms, e) Blow Pops and a number of other sweet treats. The company believes in hiring and retaining quality personnel while maintaining a professional yet open family atmosphere. Tootsie Roll Industries is looking to expand the business; therefore, the business is requesting a loan to successfully implement the expansion.
Discussed below is detailed information regarding Tootsie Roll Industries current financial position, how Tootsie Roll Industries plans to implement the funds from the loan, and how the funds will promote future company growth. Financial Statement Summary…. Michelle (~375 words) (due Jan 7th) A General financial statement summary is important when requesting a loan for expansion or any other reason like inventory purchases or debt retirement. The Tootsie Roll Company has four important financial statements that reflect important information in order to obtain their loan.
Ahead I will explain the details relevant to the Tootsie Roll Company in relation to their revenues, retained earnings, cash inventories and cash flows. Each of these statements show important information and ahead I will point out certain numbers that are worth highlighting. Annexed at the end of this paper are the Tootsie Roll Statements. One of the first statements that the Tootsie Roll Company will need to have evaluated is their Income Statement. This statement as we know reports the success or failure of a company’s operations for a period of time. Tootsie Roll’s income statement reports total revenues in 2007 of $497,717,000.
After its expenses it reflects a net income of $51,625,000. This is a 21. 7% decrease of income from the previous year (Kimmel, Weygandt & Kieso, 2009, p. 19). Tootsie Rolls Retained Earnings Statement like any other statement of this kind is trying to show the amounts and causes of changes in retained earnings during a certain period. This time period is the same period as the income statement. The line titled “Retained earnings, December 31, 2006” the number, $169,233,000, agrees with the retained earnings balance from the December 31, 2006, balance sheet (Kimmel, Weygandt & Kieso, 2009, p.
19). As one continues to move down the retained earnings statement, the next figure is net income of $51, 625, 000. Tootsie Roll distributed dividends of $64,106,000. The ending balance of retained earnings is $156,752,000 on December 31, 2007 (Kimmel, Weygandt & Kieso, 2009, p. 20) Tootsie Roll’s balance sheet like every other company’s balance sheet is trying to report assets and claims to assets at a specific point in time. Tootsie Roll’s total assets increased from $791,639,000 on December 31, 2006, to $812,725,000 on December 31, 2007 (Kimmel, Weygandt & Kieso, 2009, p. 21).
“Tootsie Roll relies far more on equity financing than on debt, it has more than three times as much stockholders’ equity as it has liabilities (Kimmel, Weygandt & Kieso, 2009, p. 21). ” Finally the Statement of Cash flows will allow us to see the cash increase for the Tootsie Roll company. “Tootsie Roll’s balance sheet shows that cash was $55,729,000 at December 31, 2006, and $57,606,000 at December 31, 2007. Therefore, Tootsie Roll’s cash increased $1,877,000 during 2007 (Kimmel, Weygandt & Kieso, 2009, p. 21). Tootsie Roll generated $90,064,000 from its operating activities during 2007.
Its investing activities include capital expenditures as well as purchases and sales of investment securities (Kimmel, Weygandt & Kieso, 2009, p. 21). The net effect of its investment activities is an outflow of cash of $43,345,000. Its financing activities involve the repurchase of its own common stock and the payment of cash dividends (Kimmel, Weygandt & Kieso, 2009, p. 21) In all, the net effects of the cash generated from its operating and financing activities, less the cash used in its investing activities, was an increase in cash of $1,877,000 (Kimmel, Weygandt & Kieso, 2009, p.
21). Comprehensive Ratio Analysis…. Sean (~375 words) (due Jan 9th) Overall ratio analysis explanation…. Liquidity Ratios Solvency Ratios Profitability Ratios Reasonable Justification for Loan…. Patricia (~375 words) (due Jan 11th) We need to decide why Tootsie Roll wants the loan and justify from there….. Conclusion…Heidi (150-200 words) (due Jan 12th by 7 pm) References Kimmel, P. D. , Weygandt, J. J. , & Kieso, D. E. (2009). Accounting: Tools for business decision making (3rd ed. ). Hoboken, NJ: John Wiley & Sons Appendix A