Question: The financial statements of The Hershey Company
The financial statements of The Hershey Company are presented in Appendix B, following the financial statements for Tootsie Roll Industries in Appendix A.
Appendix A:
Appendix B:
Instructions:
(a) Based on the information contained in these financial statements, compute the current ratio for 2011 for each company. What conclusions concerning the companies’ liquidity can be drawn from these ratios?
(b) Based on the information contained in these financial statements, compute the following 2011 ratios for each company.
(1) Debt to assets ratio.
(2) Times interest earned. (Hershey’s total interest expense for 2011 was $94,780,000. See Tootsie Roll’s Note 6 for its interest expense.) What conclusions about the companies’ long-run solvency can be drawn from the ratios?
Transcribed Image Text:
2011 $528,369 4,136 532,505 365,225 1,038 366,263 163,144 3,098 166,242 108,276 For the year ended December 31, 2010 $517,149 4,299 521,448 349,334 1,088 350,422 167,815 3,211 171,026 106,316 2009 $495,592 3,739 499,331 319,775 852 320,627 175,817 2,887 178,704 103,755 14,000 60,949 2,100 63,049 9,892 53,157 Net product sales Rental and royalty revenue Total revenue Product cost of goods sold Rental and royalty cost Total costs Product gross margin Rental and royalty gross margin Total gross margin Selling, marketing and administrative expenses Impairment charges Earnings from operations Other income (expense), net Earnings before income taxes Provision for income taxes Net earnings 57,966 2,946 60,912 16,974 $ 43,938 64,710 8,358 73,068 20,005 $ 53,063 Net earnings Other comprehensive earnings (loss) Comprehensive earnings $ 43,938 (8,740) $ 35,198 $ 53,063 1,183 $ 54,246 $ 53,157 2,845 56,002 Retained eamings at beginning of year Net earnings Cash dividends Stock dividends $135,866 43,938 (18,360) (47,175) $114,269 $147,687 53,063 (18,078) (46,806) $135,866 $144,949 53,157 (17,790) (32,629) $147,687 Retained eamings at end of year Earnings per share %24 0.76 0.90 0.89 Average Common and Class B Common shares outstanding 57,892 58,685 59,425 THE HERSHEY COMPANY CONSOLIDATED STATEMENTS OF INCOME For the years ended December 31, In thousands of dollars except per share amounts Net Sales... 2011 2010 2009 $6,080,788 $5,671,009 $5,298,668 Costs and Expenses: Cost of sales... Selling, marketing and administrative.. Business realignment and impairment (credits) charges, net Total costs and expenses ... 3,548,896 3,255,801 3,245,531 1,208,672 1,477,750 1,426,477 (886) 83,433 82,875 4,537,078 5,025,760 4,765,711 1,055,028 92,183 Income before Interest and Income Taxes. 905,298 96,434 761,590 Interest expense, net ..... Income before Income Taxes Provision for income taxes. Net Income... 90,459 962,845 333,883 $ 628,962 $ 509,799 $ 435,994 808,864 299,065 671,131 235,137 Net Income Per Share-Basic-Class B Common Stock.. 2.58 $ 2.08 $ 1.77 Net Income Per Share-Diluted-Class B Common Stock ... 2.56 $ 2.07 $ 1.77 Net Income Per Share-Basic-Common Stock 2.85 S 2.29 $ 1.97 Net Income Per Share-Diluted-Common Stock 2.74 S 2.21 S 1.90 Cash Dividends Paid Per Share: Common Stock .... $ 1.3800 $1.2800 $ 1.1900 1.1600 Class B Common Stock.. 1.2500 1.0712
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