Ratio Tootsie Roll Industries

Earnings per Share $0.94

Current Ratio =$199,726/$57,972 = 3.45

=($492,742-$327,695)/$492,742 =
Gross Profit Rate 33.50%

Profit Margin Ratio =$51,625/$497,717 = 10.37%

=$327,695/($37,031+$20,371) =
Inventory Turnover Ratio 5.71

Days in Inventory (Average Age of Inventory) =365 days/5.71 = 64 days

Payout ratio =$0.32/$0.94 = 34%

Return on Common Stockholders' Equity Ratio =$51,625/$625,110 = 8.26%

=$90,064+$358-$59,132 =
Free Cash Flow $31,290

=$90,064/[($62,211+$57,972)/2] =
Current Cash Debt Coverage ratio 149.88%

= ($90,064-$17,542)/$174,495 =
Cash Debt Coverage ratio 41.56%

Price/Earnings Ratio =$27.42/$0.94 = 29.17

 Hershey Company

$0.96

=$1,426,574/$1,618,770 = 0.88

=($4,946,716-$3,315,147)/
$4,946,716 = 32.98%

=$214,154/$4,946,716 = 4.33%

=$3,315,147/$600,185 = 5.52

= 365 days/5.52 = 66 days

=$1.135/$0.96 = 118%

=$214,154/$189,698 = 40.25%

=$778,836+$76,201+$189,698 =
$665,339

= $778,836/[(1,453,538+
$1,618,770)/2] = 50.70%

= ($778,836-$$252,263)/
$3,623,593 = 14.53%

=$39.4/$0.96 = 41.04
 Detailed Comments
Hershey's management appears to be more efficient and effective in
generating additional value for owners

Tootsie Roll Industries is much more liquid than Hershey. This could
mean that the company has better working capital management.

Tootsie Roll has a slightly higher markup for its products than Hersheys
The higher gross profit rate of Tootsie Roll resulted to a higher net profit
margin for the company
In spite of its higher gross profit, Tootsie roll was still able to manage its
inventory more efficiently than Hersheys.
The average days in inventory for Tootsie Roll freed up cash which can
be more profitably invested elsewhere, hence the higher profit margin
ratio.

For the year, Hersheys paid dividends at an amount that is higher than
earnings per share. This can indicate that management failed to look
for profitable opportunities for the organization.
In spite of its lower profitability ratios, Hershey's managed to provide
significantly higher return on stockholders' equity which affected the
company's valuation in the stock market.

Hersheys has a higher free cash flow to the firm which could be the
reason why the company paid out dividends at 118% of earnings.

Hersheys has a lower currect cash debt coverage ratio, hence short
term lenders might be unwilling to extend lines of credit to the
organization while they are very willing when it comes to Tootsie Roll

Tootsie Roll has higher debt coverage. Hence, for creditors, the
company can be a better investment than Hersheys

Regardless of the higher profitability ratios for Tootsie Roll, investors

are still willing to pay much more for Hersheys. This could be a result of
differing future expectations for both organizations.