Project_FM - Advanced Financial Statement Analysis...

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Advanced Financial Statement Analysis FINANCIAL STATEMENT ANALYSIS OF--HERSHEY CORP. & TOOTSIE ROLL INDUSTRIES Document No: 1 Version Number and Status: 2.0 Publication Date: Review Date: Table of Contents
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I. Objective of Research II. Research Methodology III. Literature IV. Financial Summary V. Ratio Analysis and Evaluation VI. Problems/Major Issues VII. Recommendations and Conclusion VIII. Limitations of the Research IX. References X. Financial Statements
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I. Objective of Research This project compares two confectionery companies: Hershey Foods Corporation and Tootsie Roll Industries in terms of their cash flow, profitability and return on invested capital, future prospects, and financial condition measured by various financial ratios. The confectionery industry is shown to be highly competitive, and the companies worthy of investment will be those that combine the abilities to maximize sales, minimize costs and maximize operating efficiencies. An analysis of their annual reports and financial statements is carried out to find out how profitable and viable they are, as well as how they manage and finance their operations. This will answers some of the questions investors interested in such as How the Corp.’s performance structure is varied compared to global benchmarks for the Sugar and Confectionery Products Manufacturing industry? Does it generally hold more cash and other short-term assets, or does it tend to concentrate its assets in physical plant and equipment? On the liability side, does Corp. typically have a higher percent of payables compared to the benchmarks, or does it hold a higher concentration of long-term debt? Does Corp. have a relatively higher cost of goods sold, operating costs, or income taxes compared to global benchmarks? Have Corp.'s returns on equity been higher or its profit margins greater? II. Research Methodology Financial ratios are an established, standard technique for assessing a firm's financial performance in comparison to other firms and with its own past results. Ratios are intended to show relationships between dollars, numbers, and percentages taken from balance sheets and/or income statements. An analysis of the transformed data from the financial statements makes it possible to draw inferences, make comparisons, and track long-term results. We examine how the company’s profitability, efficiency, and leverage are linked to its financial performance and as to whether the company’s financial health is likely to improve or deteriorate. The calculation of ratio analysis presented on this paper is based on the 10-K annual report presented by Hershey and Tootsie Roll Corporation filed under SEC for the years 2005 to 2007.
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III. Literature The Hershey Company , incorporated on October 24, 1927, is a manufacturer of chocolate and sugar confectionery products. The Company’s principal product groups include confectionery and snack products, gum and mint refreshment products, and food and beverage enhancers, such as baking ingredients, toppings and beverages. The
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Project_FM - Advanced Financial Statement Analysis...

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