Tootsie Roll Industries Loan Package

1614 Words Jan 23rd, 2012 7 Pages
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
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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
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