Calculate and compare the financial ratios
Using the financial statements for Tootsie Roll and Hershey located in Appendix A and B, respectively, you will calculate and compare the financial ratios listed below for the year ended in 2004.In Word, write a two-page analysis evaluating and comparing Hershey’s and Tootsie Roll’s overall liquidity, solvency, and profitability. In your two-page analysis, assume you are considering investing in one of these companies. The report should be organized into sections and paragraphs with appropriate headings to explain which company you would choose based on your analysis.
Financial Ratio Calculations*
A. Liquidity Ratio
Current ratio
Working Capital
Current Cash Debt Coverage ratio
Receivables Turnover Ratio
Average Collection Period (Average Age of Receivables)
Inventory Turnover Ratio
Days in Inventory (Average Age of Inventory)
B. Solvency Ratios
Debt-to-Total Assets ratio
Times Interest Earned (Interest Coverage) ratio
Cash Debt Coverage ratio
Free Cash Flow
C. Profitability Ratios
Gross Profit Rate
Profit Margin Ratio
Asset Turnover Ratio
Return-on-Assets (ROA)
Earnings per Share
Payout ratio
*Note: If you are unable to locate an item needed for a ratio, make an assumption and make sure you note your assumption in your work.