The Hershey Company engages in the manufacture

The Hershey Company engages in the manufacture - The...

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The Hershey Company engages in the manufacture, marketing, distribution, and sale of various types of chocolate and confectionery, refreshment and snack products, and food and beverage enhancers in the United States and internationally. The Hershey Company sells its products through sales representatives and food brokers, primarily to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, department stores, and natural food stores. The company was founded in 1894 and is based in Hershey, Pennsylvania. The Hershey Company went public on the New York Stock Exchange (NYSE) in 1922 (http://finance.yahoo.com/q/pr?s=HSY). Tootsie Roll Industries, Inc., through its subsidiaries, engages in the manufacture and sale of confectionery products. The company sells its products under the registered trademarks. It distributes its products through candy and grocery brokers to wholesale distributors of candy and groceries, supermarkets, variety stores, dollar stores, chain grocers, drug chains, discount chains, cooperative grocery associations, warehouse and membership club stores, vending machine operators, the U.S. military, and fund- raising charitable organizations. Tootsie Roll Industries operates in the United States, Canada, and Mexico. The company was founded in 1896 and is based in Chicago, Illinois. The Tootsie Roll Industries, Inc. went public on the NYSE in 1927 (http://finance.yahoo.com/q/pr?s=TR). The Hershey Company and the Tootsie Roll Company both are companies in confection industry; they specialize in a wide variety of chocolate candy products. I compared both companies for the years 2002, 2003, and 2004 against each other and against the industry averages in order to make a decision about which company investors would choose to invest in. The comparisons I used to make this decision were ratios for liquidity, solvency, and profitability. As a result of my analyses, I have chosen the Hershey Company. 1. LIQUIDITY RATIOS Liquidity ratios “measure short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash” (Kimmel Weygandt, & Kieso, 2007, p. 74). The higher ratio value is the higher company’s ability to cover short term debts. In analyzing both Hershey and Tootsie Roll I used: current ratio, current cash debt coverage ratio, accounts receivable turnover ratio, average collection period (average age of receivables), inventory turnover, and days in inventory (average age of inventory). 1) Current Ratio is “a measure used to evaluate a company's liquidity and short-term debt-paying ability; computed as current assets divided by current liabilities” (Kimmel Weygandt, & Kieso, 2007, p. 73). A current ratio of 1.0 means the company could theoretically survive for one year, even if it made no sales. Hershey’s current ratio went down from being 2.3 in 2002 and 1.9 in 2003 to 0.9199 in 2004, which is
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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.

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The Hershey Company engages in the manufacture - The...

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