Tootsie Roll

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Tootsie Roll Industries Inc. Loan Package

Tootsie Roll Industries Inc. and its branches makes and sells candy including “Andes mints, Junior Mints, Charleston Chew, Mason Dots, Sugar Daddy, and the ever popular Tootsie Roll, which has been made from the same formula for over a 100 years” (Hoovers Academics, 2012) Tootsie Roll Industry’s customers include a wide variety of supermarkets, dollar stores, discount warehouse clubs, fund-raising charitable organizations, and the United States Military (Reuters, 2012). Team “A” studied various financial statements, such as the income statements, statements of cash flows and performed a ratio analysis to look at the Financial Condition of Tootsie Roll Industries. A ratio analysis helps explain the relations between the different statements to help manage the company’s opportunity for improvement when looking at each individual financial statement (Kimmel, Weygandt, & Kieso, 2009). The financial review revealed that “product sales have decreased 2.8% from the previous year in the first quarter and cost of goods sold as a percentage of net sales increased from 64.3% to 67.1%” (Tootsie Roll Industries Inc. 10-Q, 2008). As a result of higher total costs from an increase on the costs of ingredients, packaging material costs, and the Canadian dollar foreign exchange rate Fair Value of financial assets of Tootsie Roll Industries (expressed in thousands) for fiscal year 2007 was reported at $73,928. The company has tried to reduce the use of raw materials by using derivative hedging instruments to reduce the market price exposure, to swings, and increase their net profit (Tootsie Roll Industries, Inc. Financial position, 2008).

Tootsie Roll Industries Inc. affronts various risks in the market including the fluctuations in prices for the ingredients to make its’ candies and the cost of packaging and fuel for delivery of its products. The Canadian Dollar exchange rate increases the company’s total costs. The...
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