A ratio analysis of the financial statements for Tootsie Roll Industries Inc., including several types of liquidity, solvency, and profitability ratios and an explanation of each ratio.
Management Discussion and Analysis
The management discussion and analysis (MD&A) section covers various financial aspects of a company, including its ability to pay near-term obligations, its ability to fund operations and expansion, and its results of operations. Management must highlight favorable or unfavorable trends and identify significant events and uncertainties that affect these three factors. This discussion obviously involves a number of subjective estimates and opinions. A brief excerpt from the MD&A section of Tootsie Roll`s annual report is presented in Illustration 1-10.
Tootsie Roll Industries Inc. Loan Package
Prepare a Ratio Analysis of the financial Statements of Tootsie Roll Industries, Inc. (1st Section of a loan package) of approximately 450 words to secure a loan for Tootsie Roll Industries Inc. that would increase the company`s total liabilities by 10%. Your loan package should include the following:
**A ratio analysis of the financial statements for Tootsie Roll Industries Inc., including several types of liquidity, solvency, and profitability ratios and an explanation of each ratio.
Use the financial statements for Tootsie Roll that is enclosed at the end. Do not use more current financial statements from the Internet or other sources.
The assignment says above to provide “an explanation of each ratio”. What you need to do is comment on the ratios themselves and the trend.
- For example, do you believe the company has adequate liquidity?
Comment on the debt ratios and the trends:
- Do you believe the company has too much debt?
What about the profitability ratios and the trends?
- Is the trend from one year to the next getting stronger or weaker for all of the ratios?
The ratio section is the first section of the paper. You also need to submit the spreadsheet as support for your ratio calculations.
Do Not:
-Put definitions of the ratios in the paper or in the spreadsheet--we all know the definitions.
-Do not include the financial statements of the company in the paper.
-Do not include any summary financial statement data other than balance sheet and income statement numbers in the spreadsheet to show how you calculated the ratios.
- At the end of this section, make an overall statement on the overall financial position of the company.
- A justification of the reason the company needs this loan; the purpose might be for expansion, inventory purchases, debt retirement, and so on
- An explanation of how the company plans use the proceeds from the loan and of how loan approval might affect the company
RE: Paul D. Kimmel, PhD, CPA; Jerry J. Weygandt, PhD, CPA; and Donald E. Kieso, PhD, CPA; Accounting, 4th Edition. ISBN-13 978-0-470-53478-6 - John Wiley & Sons, Inc., Hoboken, NJ, http://www.wiley.com
Loan Package at (http://www.sba.gov/) or on other websites, such as the SCORE website (http://www.score.org/). Research the specific loan package requirements of creditors, such as American Express, by reviewing their websites.
Cite your sources consistent with APA guidelines.
