Tootsie Roll Industries Loan Package Tootsie Roll Industries is one of America’s most recognized confectionary companies and has been in business for more than 111 years, manufacturing and selling some of the most popular candies in the world. Tootsie Roll wants to secure a loan that will help increase the company’s total liabilities by 10% in the tune of $2.5 million. This loan package is attached to an updated business plan that provides the lender with the company’s history, a vision statement, its market, products, services, management, how the loan will impact the business, and the method of repayment. This paper will detail different ratio analyses, loan justification, and how the company plans to use the proceeds. Solvency Ratios …show more content…
This means that for every dollar of liabilities, Tootsie Roll Company has $3.50 or $3.10 in current assets. In both instances, the current ratio is more than 1, so the company will have very little trouble with liquidity should the need arise. Current Ratio = (Current Assets) / Current Liabilities 2007: 199726/57972 = 3.445 = 3.45 = 3.45:1 2006: 190917/62211 = 3.068 = 3.1 = 3.1:1 The current cash debt ratio only measures the ability of a firm 's cash, along with investments easily converted into cash, to pay its short-term obligations. In 2007, the company has a current cash debt ratio greater than 1 and is in better financial shape than in 2006, when the ratio was less than 1. Cash Ratio = (Cash Operations) / (Average Current Liabilities) 2007: 90064/57972 = 1.55 2006: 55656/62211 = 0.89 Loan Justification Tootsie Roll Industries is financially strong and with this loan plans to expand its brand, and reach a larger customer base. Tootsie Roll Industries plans to create new flavors that will set the company aside from competitors and increase its market share. The loan will allow the company to research, develop, successfully market, and launch new candies. Specifically, we plan to expand the ‘Healthy Living’ section of our company where candies are gluten-free, fat-free, peanut-free, and nut-free. Research has shown that food allergies are on the rise
Tootsie Roll faces a number of key issues concerning its strategy. One of such strategic issues relates to how it can maintain its marketplace success and sustain its competitive advantages, in light of (i) the company’s growth prospects in U.S. and foreign markets, (ii) intensity of the competition, and (iii) the fact that the two key leaders of the company are not getting any younger.
Keeping Cost of Goods Sold at a minimum is just as vital as Marketing and Advertising. Maximum value for both customers and shareholders rely on the company’s operations being as lean as possible and its raw materials prices as low as possible. Tootsie Rolls Industries continually upgrades its plant assets to add capacity, improve quality, or increase efficiency. The company manages cost of raw materials through competitive bidding and using commodities futures
Tootsie Roll’s total PP&E at the end of 2015 was $499.535 million and their accumulated depreciation was $314.949 million, so the net PP&E was $184.586 million.
Peyton Approved was formed a little over a year ago in the kitchen of the owner of a wonderful Airedale named Peyton. Peyton has severe allergies and cannot eat dog treats from the store. Peyton Approved sells homemade dog treats that are all natural and hypoallergenic. The company’s president (also Peyton’s owner) started selling these treats out of her home to other dog owners who wanted all natural dog treats for their dogs. Due to more demand of the all natural, hypoallergenic dog treats, Peyton Approved needs more room to make the treats and reach more dog owners. Peyton approved feels moving into a storefront will reach more dog owners who want their dogs to have all natural dog treats. Financing will provide Peyton Approved the
Tootsie Roll Industries, Inc. has been engaged in the manufacture and sale of confectionery products for 113 years. Our products are primarily sold under the familiar brand names: Tootsie Roll, Tootsie Roll Pops, Caramel Apple Pops, Child’s Play, Charms, Blow Pop, Blue Razz, Cella’s chocolate covered cherries, Tootsie Dots, Tootsie Crows, Junior Mints, Junior Caramels, Charleston Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff cotton candy, Dubble Bubble, Razzles, Cry Baby, Nik-L-Nip and EI Bubble.
A comparison of 2004 Hershey’s and Tootsie Roll, questions needed to determine which company is better off:
TOOTSIE ROLL INDUSTRIES INC. LOAN PACKAGE Tootsie Roll Industries Inc. Loan Package The financial statement of Tootsie Roll Industries provides insightful details into the
Tootsie Roll Industries Inc., wish to increase their production capacity and improve efficiency. As the company wishes to take pout a plan which will increase total liabilities by 10%, if there are total liabilities of $174,495, the plan is to raise a further $17,445. To undertake this strategy it is necessary to demonstrate that the firm can afford to increase their debt. The first stage is to look at the financials with the use of a ratio analysis to assess whether the debt is affordable.
Tootsie Roll Industries, Inc., a niche candy maker, has often been voted one of Forbes magazine’s “200 Best Small Companies of America.” A top quality producer and distributor of Tootsie Rolls and other candy, Tootsie Roll Industries maintains a 50% market share of the taffy and lollipop segment of the candy industry, and sales have increased each year for the past nineteen years. The world’s largest
This strategy of acquiring and improving upon unique brands helps the company avoid the first pitfall of utilizing a differentiation strategy as brands cannot be easily or quickly copied. However, the obsession with reputable and older, recognized brands makes this maneuvering come off as defensive. Coupled with Tootsie Roll’s lack of recent innovation both in products and marketing, as well as staying within the confectionary industry and not making attempts to experiment outside of this sector, causes the company to seem antiquated and
I have reviewed the past two years liabilities and stockholders’ equity sections of Tootsie Roll Industries, Inc. and compared the balance sheets using Debt to Equity Ratio and Times Interest Earned. The calculations presented in thousands:
First of which, is the current ratio. It has been rapidly declining since 2000. To me this indicates that there is a liquidity issue. Each year their trade debt increase exceeds the increase of net income for the company. As a result, the working capital has taken a nosedive from $58,650 in 2002 to only $5,466 in 2003.
The current ratio indicates the ability to pay on maturing obligations and to be able to meet unexpected cash needs. Again in this case Tootsie Roll has a higher probability of being able to pay their obligation and meet their unexpected cash needs. They have a $2.34:1 ratio
In week three, Learning Team E presents a loan package for public held company, Tootsie Roll Industries, Inc., in business for over 100 years. Tootsie Roll is a manufacturer of confectionery products. In addition to sales in the United States, Tootsie Roll’s profits grew in Mexico, Canada, Europe, Asia, South and Central America. This loan package consists of three sections: Financial Ratios, Corporate Strategy-2008 Project: Capital Expenditure, and Loan Approval’s Effect on Tootsie Roll Industry, Inc. Financials.
As the creditors’ view, they prefer the high current ratio. The current ratio provides the best single indicator of the extent, which assets that are expected to be converted to cash fairly quickly cover the claims of short-term creditors. However, consider the current ratio from the perspective of a shareholder. A high current ratio could mean that the company has a lot of money tied up in nonproductive assets.