Hershey Company is one of the world’s leading producers of chocolates, candies, and confections. The company sells chocolates and candies, mints and gums, baking ingredients, toppings, and beverages. Hershey’s consolidated balance sheets for 2009 and 2010 follow: Hershey: Consolidated Balance Sheets (millions) 2009 2010 Assets Current Assets Cash and Equivalents $ 253.6 $ 884.6 Accounts Receivable, Trade 410.4 390.1 Inventories 519.7 533.6 Deferred Income Taxes 39.9 55.8 Prepaid Expenses and Other Assets 161.8 141.1 Total Current Assets 1,385.4 2,005.2 Property, Plant, and Equipment, net 1,404.8 1,437.7 Goodwill and Intangible Assets 571.6 524.1 Other Intangible Assets 125.5 123.1 Deferred Income Taxes and Other Assets 187.7 182.6 Total Assets $3,675.0 $ 4,272.7 Liabilities and Shareholders’ Equity Current Liabilities Accounts Payable $ 287.9 $ 410.7 Accrued Liabilities and Taxes 583.4 602.7 Short-Term Debt 24.1 24.1 Current Portion of Long-Term Debt 15.2 261.4 Total Current Liabilities 910.6 1,298.9 Long-Term Debt 1,502.7 1,541.8 Other Long-Term Liabilities 501.4 494.4 Total Liabilities 2,914.7 3,335.1 Shareholders’ Equity Common Stock 359.9 359.9 Additional Paid-In Capital 394.7 434.9 Retained Earnings 4,148.3 4,374.7 Treasury Stock (3,979.6) (4,052.1) Accumulated Other Comprehensive Loss (202.9) (215.1) Noncontrolling Interests 39.9 35.3 Total Shareholders’ Equity 760.3 937.6 Total Liabilities and Shareholders’ Equity $3,675.0 $ 4,272.7 Additional information for 2010: Total sales $5,671.0 Costs of goods sold $3,255.8 Net income $ 509.8 REQUIRED: 1. Compute the common-size balance sheet for 2010 and the rate of change balance sheet for 2010. 2. Compute the following ratios for 2010. a. Return on common equity b. Debt-to-assets c. Debt-to equity d. Current e. Quick f. Inventory turnover days g. Accounts receivable turnover days h. Accounts payable turnover days i. Operating cycle (in days) j. Total asset turnover

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter4: The Balance Sheet And The Statement Of Shareholders' Equity

Section: Chapter Questions

Problem 17P

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Hershey Company is one of the world’s leading producers of chocolates, candies, and confections.
The company sells chocolates and candies, mints and gums, baking ingredients, toppings, and
beverages. Hershey’s consolidated balance sheets for 2009 and 2010 follow:
Hershey: Consolidated Balance Sheets
(millions) 2009 2010
Assets
Current Assets
Cash and Equivalents $ 253.6 $ 884.6
Accounts Receivable, Trade 410.4 390.1
Inventories 519.7 533.6
Deferred Income Taxes 39.9 55.8
Prepaid Expenses and Other Assets 161.8 141.1
Total Current Assets 1,385.4 2,005.2
Property, Plant, and Equipment, net 1,404.8 1,437.7
Goodwill and Intangible Assets 571.6 524.1
Other Intangible Assets 125.5 123.1
Deferred Income Taxes and Other Assets 187.7 182.6
Total Assets $3,675.0 $ 4,272.7
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts Payable $ 287.9 $ 410.7
Accrued Liabilities and Taxes 583.4 602.7
Short-Term Debt 24.1 24.1
Current Portion of Long-Term Debt 15.2 261.4
Total Current Liabilities 910.6 1,298.9
Long-Term Debt 1,502.7 1,541.8
Other Long-Term Liabilities 501.4 494.4
Total Liabilities 2,914.7 3,335.1
Shareholders’ Equity
Common Stock 359.9 359.9
Additional Paid-In Capital 394.7 434.9
Retained Earnings 4,148.3 4,374.7
Treasury Stock (3,979.6) (4,052.1)
Accumulated Other Comprehensive Loss (202.9) (215.1)
Noncontrolling Interests 39.9 35.3
Total Shareholders’ Equity 760.3 937.6
Total Liabilities and Shareholders’
Equity $3,675.0 $ 4,272.7
Additional information for 2010: Total sales $5,671.0
Costs of goods sold $3,255.8
Net income $ 509.8

REQUIRED:
1. Compute the common-size balance sheet for 2010 and the rate of change balance sheet for
2010.
2. Compute the following ratios for 2010.
a. Return on common equity
b. Debt-to-assets
c. Debt-to equity
d. Current
e. Quick
f. Inventory turnover days
g. Accounts receivable turnover days
h. Accounts payable turnover days
i. Operating cycle (in days)
j. Total asset turnover

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