Mohammadkhani_Final - Shahin Mohammadkhani Tootsie Roll...

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Shahin Mohammadkhani week3 Page 1 Interpretation and comparison between the two companies' ratio Earnings per Share $0.94 $0.96 Current Ratio 3.45 0.88 Gross Profit Rate 33.50% 32.98% Profit Margin Ratio 10.48% 4.33% Inventory Turnover 5.40 5.31 Days in Inventory 67.59 68.76 Calculation Earnings per Share Current Ratio Gross Profit Rate (Total Revenue - COGS) / Net Sales = Gross Profit Rate Profit Margin Ratio Inventory Turnover COGS/[(Current Inv. + Past Inv.)/2] = Inventory Turnover Days in Inventory Tootsie Roll Industries Ratio The Hersey Company Ratio Hershey has a higher earning per share which means it earns more per share. Their performance decreased from the previous year which reflected in their Net Income. Even though their Sales remained somewhat the same their Total expenses increases. This can be a factor why Hershey's EPS is lower than previous years. Nevertheless, based solely on comparing the EPS, Hershey Company is a good company to invest in. Tootsie Roll has a higher current ratio than Hershey, which means Tootsie Roll is more liquid. Hershey cannot pay its current liabilities with their current assets. However, Tootsie's current liabilities are covered by their current assets for 3.45 times. They are a more solid company which I would be invest in. Tootsie has a higher Gross Profit rate which reflects a higher efficiency rate in their production and distribution of goods. Tootsie's profitability is higher. They make 10.48 cents of profit on the dollar in sales where Hersey only makes 4.3 cents. I would purchase Tootsie. Tootsie's Inventory turnover is higher which means they sell their products faster than Hershey. A low turnover could mean poor sales and, therefore, excess inventory. A high ratio implies either strong sales or ineffective buying. Hershey has a higher Days in Inventory which is correlated to their Inventory Turnover Rate. This shows that Hershey is not selling their products as fast as Tootsie or that they might have too much inventory. Net Income / Weighted Avg. Common Shares Current Assets/Current Liabilities Gross Profit / Net Sales Gross Profit = Total Revenue - COGS Net Income / Total Revenue COGS/Avg. Inventory Period Avg inv = (Current Inv. + Past Inv) / 2 365/Inventory Turnover
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Shahin Mohammadkhani week3 Page 2 √∂∂
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Shahin Mohammadkhani week5 Page 3 Receivable Turnover Ratio 14.61 9.80 Average Collection Period 24.98 37.26 Assets Turnover Ratio 0.61 1.18 Return on Assets Ratio 6.44 5.10 Debt to Total Assets Ratio 0.21 0.85 Times Interest Earned Ratio 144.70 3.69 Equations Receivable Turnover Ratio Average Collection Period Assets Turnover Ratio Net Sales / Average Total Assets Return on Assets Ratio Debt to Total Assets Ratio Total Liabilities / Total Assets Times Interest Earned Ratio Data Net Income 51625 214154 Net Credit Sales 492742 4946716 Average Accounts Receivable 33723 504979 Average Total Assets 802182 4202339 Interest Expense 537 126450 Total Assets 812725 4247113 Total Liabilities 174495
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Mohammadkhani_Final - Shahin Mohammadkhani Tootsie Roll...

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