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.
Since the company’s establishment in 1896, Tootsie Roll Industries Inc. has expanded to become one of the biggest candy companies in the United States. Tootsie Roll Industries Inc. is one of America’s most recognized candy companies through manufacturing and selling some of the most popular candies in the world. The company has an extensive amount of products sold in many venues including grocery stores, vending machines, and drugstores. Tootsie Roll Industries Inc. applies innovation consistently by developing new forms of presentation and creating more options for the consumer. In the first quarter of 2011
Another measure of a company’s ability to pay back loans, this time over a long period, measures solvency. Coca-Cola’s debt to total assets ratio is 35% in 2004 and 33% in 2005 compared to PepsiCo’s less attractive ratio of 52% in 2004 to 55% in 2005. Coca-Cola’s debts represent a healthy percentage of assets and in this case the lower the number the better. Coca-Cola’s debt to total assets ratio decreased by 2% from 2004 to 2005 while PepsiCo’s ratio increased by 3%. Were a potential lender or investor to look at these numbers alone they would prefer the performance of Coca-Cola over PepsiCo but there are still many calculations to be made and factors to consider.
4. Commercial bank: the matching industry is N. Similar to Advertising agency, it is a service firm, so its inventory is zero as well (only G and N are left which match the requirement), moreover, banks use a lot of “other peoples’ money” so that common total debt/total assets ratio is very high, i.e. N (total debt/total asset=0.88) fits this description.
As shown in the ratios chart, working capital has increased by $13M. Maturities of short-term investments and cash flow from operations are projected to be sufficient to sustain the company’s overall financing needs, including capital expenditures. The following corporate strategic plan identifies a project that needs financial backing.
A. Current Ratio: The ability for a company to pay short term obligations is measured by this ratio. In 2011 Company G moved from 1.86 to 1.77. Compared to the 1.9 Home Center Retail Benchmarks industry ratio, the numbers are below standards. Current Ratio represents values above 2 quartile industry benchmarks data (1.4 to 2.1). Current Ratio represents a weakness for Company G.
Tootsie Roll Industry Inc. will be preparing a loan package to maintain ultimate company performance, maximize the company’s profits, and increase the shareholder’s value. Tootsie Roll Industry Inc. will be applying for a loan that will increase the company’s total liability by $17,449.50. A perfect loan package includes a concise executive summary that focuses primarily on the ratio analysis of the financial statement, justification for the loan, and explanation of how the company intends to use loan. The corresponding ratio calculations are justified in the appendix.
The Current Ratio indicates if a company is capable of repaying its debits and liabilities. If the percentage of the ratio is less than 1 it suggests that the company will not be able to repay its debts, the higher the ratio is above 1, indicates that the company is in good health and will be able to repay its debts. It seems that CanGo is in a better position to pay of its debts compared to Amazon since Amazon’s Current Ratio is 1.33 and CanGo’s Ratio is 5.38. If a company cannot pay its debts, it does not necessarily mean that it file for
This is a contract entered into by Generation Leadz Etc. (hereinafter referred to as “the Provider”) and Barrington Commercial Lending (hereinafter referred to as “the Client”) on this date, Wednesday 2/15/2015
Additionally, the current ratio, the debt ratio, and the debt equity were also computed. The current ratio lets investors know Sprouts ability to pay short-term debt (Gibson, 2013). The ratio results for 2015 was 1.50 times, 2014 was 1.51 times and 2013 was 1.32 times. While the current strived for current ratio is 2.0 times many do meet this standard and Sprouts stability could be attributed to their ability to control the receivables and/or inventory (Gibson, 2013). Meanwhile, the debt ratio tells investors Sprouts ability to pay long-term debt and takes into account the total liabilities and the total assets (Gibson, 2013). In addition it tells creditors, in this case, how well they are or not protected in the event Sprouts is becomes insolvent, thus a lower percentage is desired.
Review of Financial Research Report: This assignment is an analysis of a US publicly-traded company; its common stock could be a prospective investment. The report is due in Week 10, in needs to be at least 5 pages, and it needs to cover the following topics:
As financial advisor I would urge Mr Wilson to take the loan, despite the fact of low liquidity and increase in debt throughout the last years. The loan from Suburban National bank is not sufficient for meeting the needs of Mr Wilsons company, furthermore, the debt continues to rise due to the buy-out of Mr Holtz; this also has increased the low liquidity of the company. However, the reasons why I would recommend taking the loan are:
Lawsons 2010 and 2011 current ratio are above the industry average (1.8:1) however in 2012 the current ratio falls below the industry average at 1.55:1 and than again in 2013 to 1.02:1. This indicates that the company’s ability to pay its debts is