...Proceeds and Affects from the Loan The Tootsie Roll Industries, Inc. has chosen to allocate the funds from the loan to critical departments that will contribute to the growth of the company. The loan will permit Tootsie Roll to acquire new updated equipment for better production such as robotics to increase productivity. The allocation of these funds will open up research, and development, to produce healthier and cheaper ingredients for products. However, acquiring new robotic production machines or equipment will require a decrease in manpower, wages, and salaries. Approval of the loan will positively affect Tootsie Roll by the way products are manufactured and distributed. The loan acquisition will increase the productivity of the company because of the acquisition of new assets to benefit production. Through the downturn in the economy, Tootsie Roll Industries, Inc. has adjusted product prices or package weights to offset the higher costs (Kimmel, Weygandt, & Kieso, 2011). During the first quarter of 2009, the Tootsie Roll Industries, Inc. adopted the authoritative guidance for disclosures about hedging activities derivative instruments. It requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of derivative instruments, and related gains and losses (Kimmel, Weygandt, & Kieso, 2011). It also required disclosures about related credit-risk features in derivative agreements (Kimmel...
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...Tootsie Roll Industries Inc. Loan Request Patricia Duncan, Sean Duncan, Heidi Oppegard, and Michelle Rodriguez Accounting ACC/561 January 7, 2012 Jared Jones Tootsie Roll Industries Inc. Loan Request Tootsie Roll Industries is a confectionery products manufacturer that has been in business for 111 years. The company makes a variety of products including a) Tootsie Roll, b) Tootsie Roll Pops, c) Caramel Apple Pops, d) Charms, e) Blow Pops and a number of other sweet treats. The company believes in hiring and retaining quality personnel while maintaining a professional yet open family atmosphere. Tootsie Roll Industries is looking to expand the business; therefore, the business is requesting a loan to successfully implement the expansion. Discussed below is detailed information regarding Tootsie Roll Industries current financial position, how Tootsie Roll Industries plans to implement the funds from the loan, and how the funds will promote future company growth. Financial Statement Summary….Michelle (~375 words) (due Jan 7th) A General financial statement summary is important when requesting a loan for expansion or any other reason like inventory purchases or debt retirement. The Tootsie Roll Company has four important financial statements that reflect important information in order to obtain their loan. Ahead I will explain the details relevant to the Tootsie Roll Company in relation to their revenues, retained...
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...target market, Tootsie Roll Industries must have an understanding of their customer’s demographic traits and a defined market size included in the business plan. The company states that its brands resonate strongly among every age group, culture, and demographic; for every occasion and event (Tootsie Roll Industries, Inc., 2013). To further provide a visual for their targeted market, Tootsie has a picture on their website of a child who is excitedly holding an unopened bag of delicious candy ready to be eaten. As the company plans on continued expansion, the targeted market must include a broader demographic of people. The company must first understand the buying patterns of the targeted market. This includes if the product appeals to customers more at a certain time of the year, how affordable the product is, where the customer first heard of the product, and the customer’s motivation for continued purchases. According to Abrams, R. (2003), “When assessing the size of the market, you will find demographic and geographic information easiest to locate. Much of this data is available from U.S. Census Bureau reports, local governmental agencies, real estate brokerages, chambers of commerce, and business directories.” With a reachable and definable target market, Tootsie will continue to expand its customer base as well as the company itself. Competition Benchmarking, analysis of internal operations, and predicting future competition are all strategic steps that Tootsie Roll Industries...
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...Tootsie Roll offers a combination of having a “family-run corporate culture with a progressive management style that embraces an entrepreneurial spirit, Tootsie sets the industry standard at delivering the highest quality product at the lowest possible price, a robust yet efficient operations model” (Tootsie.com) The Tootsie Roll has strong Business Conduct and Ethics to guide its employees and officers, and directors to obey the law and act ethically. The code principles of its Business Conducts and Ethics include: Compliance with the law, rules, and regulation, prohibition against insider trading, conflict of interest, corporate opportunities, confidentiality, fair dealing, safety and environment, protection and proper use of company assets,...
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...Tootsie Roll Industries, Inc. has been engaged in the manufacture and sale confectionery products since 1896 when Austrian-born Leo Hirshfield opened a tiny candy shop in New York City. Hirshfield handcrafted a variety of products, including an individually wrapped, oblong, chewy, chocolate candy that quickly became a customer favorite. The hand wrapping – believed to be an industry first – enabled Hirshfield’s product to stand out among the competitor’s candy-counter offerings, which were sold by the scoop from jars (St. James Press, 1996). Sold at a penny apiece and affectionately named after Hirshfield’s five-year old daughter, Clara, whose nickname was “Tootsie,” Tootsie Rolls propelled Hirshfield’s modest corner store into burgeoning candy enterprise that has evolved in little more than a century into the multinational corporation, Tootsie Roll Industries. The Tootsie Roll Industry main head quarter and production plant is located in Chicago, Illinois. Its operations are also in Illinois; Massachusetts; Tennessee; Wisconsin; Mexico City, Mexico; and Concord, Ontario. Today they employee around 2200 employees. The company’s website is www.tootsie.com. Its three top competitors are listed as The Hershey Company (Ticker Symbol HSY), Nestle S.A. (shares are traded at SIX Swiss Exchange symbol NESN.VX (Nestle , 2011), and Mars Inc (privately held company). The board of Directors has appointed PricewaterhouseCoopers LLC as the independent registered public accounting firm for...
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...the sign next to me. Tootsie Roll Industries Company. What does that mean? In inhaled. The sensational smell of fruit and chocolate overwhelmed me. I seem to stretch for miles and miles. However, I was only three inches thick! Being stretched on the conveyer belt is relaxing, taking in the sights, smells, and noises. Although the Tootsie Roll Industries Company factory is musty, gray, and dirty, it is also very beautiful. There are endless rows of conveyor belts with other lollipops on it. Who cares about those pops? I’m about to turn into a Tootsie Pop! I inhaled again. Caramel! I thought. That must be my flavor! Down and down the conveyer belt, an endless line of machinery. I can see a turn...
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...employee hiring. There are three types of ratios that are commonly used to make sound decisions. The three ratios are liquidity ratios, solvency ratios, and profitability ratios. Liquidity ratios “measure the short-term ability of the company to pay its maturing obligations and meet unexpected needs for cash” (Kimmel, Weygandt, & Kieso, 2009, p. 673). The liquidity of Tootsie Roll Industries has a positive amount of working capital and a favoring current ratio in both 2006 and 2007. The Tootsie Roll Company has the ability to pay off its liabilities. When a manager views the liquidity of the Tootsie Roll Company, the current ratio shows that for every dollar of liabilities in 2007, there was $3.45 worth of current assets. Liquidity 2007 2006 2005 Working Capital $141754 $128706 NA Current ratio 3.45 3.07 NA Current cash debt coverage 1.50 0.93 1.37 Chapter 13 states, “Profitability ratios measure the income or operating success of a company for a given period of time” (Kimmel, Weygandt, & Kieso, 2009, p.674). Profitability for Tootsie Roll Industries has declined from 2005 to 2007. The profit margin...
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...Explain the company plans for using the loan and how a loan approval will impact the company; conclusion of the business plan Tootsie Roll Industries has a future plan to expand the company and increase production, in order to do this the company will need to obtain a loan that will allow the company the financial support to add a new building to their current location. The company has opted to expand to another building that will offer already upgraded machinery that will allow an increase in productivity and new product. The positive effects of being approved for a loan, the company will purchase the new building within a short period of obtaining the funds from the loan. The building is better location that is a great benefit the majority of the company's suppliers for shipping and receiving. The loan will allow the company to purchase new equipment as needed for upgrades to continue the growth of productivity. The approval of the loan will allow the company to continue to increase productivity by allowing the company to have a greater deal of manufactured goods and styles of manufacturing can be altered when needed. The company will be able to purchase new robotics that will replace employee labor, that will allow for a decrease in employee wages. The company will be able to add new and improved technology that can be upgraded regularly and improved with allocated funds. The loan will also allow the company to add new web-based marketing programs, 99% of the population...
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...Tootsie Roll Industries The Hershey Company Interpretation and comparison between the two companies' ratios Ratios (pg 735) Ratio Receivable Turnover Ratio (Net Sales/(Average Accounts Receivable) $497,717/ (($32,371+$35,075)/ 2) = 14.76 $4,946,716/(($487,285+$522,673)/ 2) = 9.80 This ratio compares net sales divided by the average accounts reciavable. Tootsie Roll has far less sales but has to extend less credit on average to collect the full amount owed. By placing purchases in accounts recievable a business is able to generate more sales but does so by offering in essence an interest free loan to the customer. The accounts recievable indicates that both businesses are able to collect on their debts quickly. Since Tootsie has a higher percentage recievable turnover ratio they often have a relatively higher amount of cash on hand for running the business. Average Collection Period (365/Recievables turn over ratio) page 402 365/14.76 = 24.7 days 365/9.80 = 32.2 days The average collection period indicates that Tootsie Roll is able to convert an accounts reviable item into cash just under 8 days faster than Hershey Company. Tootsie has a greater likelihood of meeting its financial obligations since it is more likely to promptly recieve payment. One factor that may influence the interpretation of this result is the terms by which each business extends credit. For example if both companies extend credit under net 30 terms, Tootsie is more likely...
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...Tootsie Roll Industries Inc. Hope Benites, Daniel Hardesty, Derrick King, Muna Al Waidh ACC/561 June 25, 2012 Larry Key Tootsie Roll Industries Inc. Tootsie Roll Industries has been an American favorite for well over 100 years. “Beginning in a modest New York candy store with the Tootsie Roll's introduction in 1896, the Chicago-based company has grown to become one of the country’s largest candy companies, with operations throughout North America and with distribution channels in more than 75 countries.” The brand is successful with a diverse group, which allowed there superb taste and style in candy assortments to reach all demographics, including all ages and origins. This appeal has led to the growth and continuous success of the brand. Looking at current times, Tootsie Roll Industries strives to stay current and competitive in an international setting, with Mexico as its biggest international partner while maintaining steady growth in the United States. Examples of this include product diversification; new flavors (sour products), shapes (mini tootsies, square tootsies, etc.), sizes, gluten free, and kosher products. Despite the financial achievements of the company in past decades, ownership is seeking financing to support new ideas to further grow the company. In the past, particularly 2006 to 2007 the company experienced an overall decline. This decline was caused...
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...and Management Tootsie Roll Tootsie Roll Industries The Hershey Company Interpretation and comparison between the two companies' ratios Ratios (pg 735) Ratio Receivable Turnover Ratio (Net Sales/(Average Accounts Receivable) $497,717/ (($32,371+$35,075)/ 2) = 14.76 $4,946,716/(($487,285+$522,673)/ 2) = 9.80 This ratio compares net sales divided by the average accounts reciavable. Tootsie Roll has far less sales but has to extend less credit on average to collect the full amount owed. By placing purchases in accounts recievable a business is able to generate more sales but does so by offering in essence an interest free loan to the customer. The accounts recievable indicates that both businesses are able to collect on their debts quickly. Since Tootsie has a higher percentage recievable turnover ratio they often have a relatively higher amount of cash on hand for running the business. Average Collection Period (365/Recievables turn over ratio) page 402 365/14.76 = 24.7 days 365/9.80 = 32.2 days The average collection period indicates that Tootsie Roll is able to convert an accounts reviable item into cash just under 8 days faster than Hershey Company. Tootsie has a greater likelihood of meeting its financial obligations since it is more likely to promptly recieve payment. One factor that may influence the interpretation of this result is the terms by which each business extends credit. For example if both companies extend credit under net 30 terms, Tootsie is more likely...
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...Tootsie Roll can make a major capital investment in new, energy efficient equipment. According to the tax assessor’s office, the average life of candy making machinery and equipment is fifteen years (Personal Property Manual, 2010). Taking a look at the depreciation taken by the company, it can be assumed that most of the equipment is much older than this. Energy is the biggest expense for a company outside of raw resources. As the price of energy increases, it becomes more important for a company to reduce energy usage. Every dollar saved by energy conservation is cost avoided. This can result in a more profitable business in the long term. Retrofitting plants with more energy efficient technology will help Tootsie Roll to stay profitable even with high energy cost peaks. The return on investment is around ten years depending on the price of energy. Software technologies can enhance the energy efficiency and reduce waste of raw products that could reduce this below ten years. Process controls give the operators the ability to increase production yield without wasting energy or resources. Asian company reduced the energy consumption of their site by twenty percent by retrofitting with energy improvement taken into consideration (Evans, 2003, p. 117). Tootsie Roll can benefit from process optimization which will propel the company into the future. References Evans, D. B. (2003). Saving Energy in Manufacturing with Smart Technology. Energy World, 6(2), 112-118. ...
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...Tootsie Roll Industry Financials Molly Matyka, Dalisa Santiago, Kevin Spalding, Denise Sudler, ACC/561 October 22, 2012 Karen Lascelle Loan Package for Tootsie Roll Industry In order to obtain a loan to help finance the Tootsie Roll Inc., whether it is through a banking institution or a private lender; a properly written loan package is needed to obtain the proper financing for the company’s future advancement. Each funding source is needed to be detailed to ensure the right financing is obtained and the best terms for Tootsie Roll Inc. to re-pay the loan back once it is obtained. Tootsie Roll Inc. has decided to modernize the organization and wants to improve its technology to be compatible with other business organizations. Additional capital is needed to help the company transition through this phase of growing the business as well as updating system regarding technology growth and renovations. This report contains a customized loan package detailing the financial aspects of Tootsie Roll Industry business operations, its ability to repay the loan as well as its funding and operation costs to support future expansion and growth of the business. The Need for the Loan Package In an effort to remain profitable in these economic times, it is essential for Tootsie Roll, Inc. to strive for efficiency in production. To enable this quest for maximum efficiency, an investment into the production facilities is necessary. Tootsie Roll Inc. strives...
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...Tootsie Rolls are on a Roll Did you know Frank Sinatra loved Tootsie Rolls so much he was buried with them? These miracle working pieces of candy, Tootsie rolls, are lifesaving, non-perishables that give energy for anything, and that still taste good for the common population. Tootsie Rolls are great for many rolls. These candies have saved more lives than an average lifeguard. They might seem simple, but these chocolate caramel delights are something to behold. They’ve saved a platoon of soldiers surrounded by enemy troops by being chewed up they covered their broken tank pipes, and they rode to safety. These delicious sugar cubes can help even individuals trapped in the desert with broken car...
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...Bushra Accounting 153 Term Paper I. Tootsie Roll Company Overview • Tootsie Roll is one of the largest candy companies within our country • Their confectionary products are distributed to over 75 countries worldwide • Their largest customer is Walmart; their market mainly consists of retailers and candy distributors • Tootsie Roll employs about 2,200 people II. Liquidity Ratios • Working Capital Year Tootsie Roll Hershey 2011 $153,846 $872,783 2010 $176,662 $706,372 2009 $155,812 $474,806 2008 $129,967 $74,733 • Current Ratio Year Tootsie Roll Hershey 2011 3.64:1 1.74:1 The industry average is 2010 4.02:1 1.54:1 1.50:1 2009 3.78:1 1.52:1 2008 3.22:1 1.06:1 Both Tootsie Roll and Hershey have good liquidity ratios. Tootsie Roll’s working capital shows that the company should be able to pay off its’ liabilities or debts. Tootsie Roll is performing at above the industry average, which shows that the company has great liquidity. Based on the liquidity ratios, I would lend Tootsie Roll the $10 million short term note III. Solvency Ratios • Debt to Total Assets Ratio Year Tootsie Roll Hershey 2011 22% 80% The industry average is 57% 2010 22% 78% 2009 22% 79% 2008 22% 90% 2007 21% 85% Tootsie Roll has been consistent within the last couple years. Compared to Hershey, Tootsie Roll has great solvency. Tootsie Roll should not have a problem with future debts...
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