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Unformatted text preview: Financial Statement Analysis Project--Hershey Corp. & Tootsie Roll Industries Liquidity Based on the ratio analysis performed, it appears that the Hershey Companys liquidity is sufficient to meet cash needs and current obligations. The current ratio and current debt coverage ratios were decreasing from 2002 through 2004, which corresponds to an increase in short-term debt and a decrease in cash on the Companys balance sheet over the same periods. Hershey attributes the increase in debt to corporate consolidations, capacity expansion, and modernization and efficiency improvements. Outside of the increase in debt, accounts receivable turnover and average days collections appear to be steady, which indicates that Hershey is able to effectively manage its receivables and employs effective credit policies. The Companys inventory ratios also indicate stable levels of inventory size and turnover. Despite the fact that Hershey appears to be shifting to reliance on short-term debt to fund current liquidity needs, the Companys overall liquidity position appears to be stable. As of 2008, the Companys liquidity position had improved and is showing ratios above industry average. Hersheys current ratio and cash debt coverage have improved since 2004. I ts accounts receivable management has remained consistent and inventory management has improved. Over time Hershey has increased its ability to meet current obligations and is out-performing competitors in this area. Tootsie Roll Industries current ratio and debt coverage ratios fluctuated between 2002 and 2004, with an overall small decrease. The Companys financial statements indicate a decrease in cash and investments, as well...
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This note was uploaded on 07/28/2011 for the course GM 591 taught by Professor Jimlot during the Spring '09 term at Keller Graduate School of Management.
- Spring '09