Tootsie Roll Industries Loan Package
Tootsie Roll Industries Loan Package
Tootsie Roll Industries is one of America’s most recognized confectionary companies and has been in business for more than 111 years, manufacturing and selling some of the most popular candies in the world. Tootsie Roll wants to secure a loan that will help increase the company’s total liabilities by 10% in the tune of $2.5 million. This loan package is attached to an updated business plan that provides the lender with the company’s history, a vision statement, its market, products, services, management, how the loan will impact the business, and the method of repayment. This paper will detail different ratio analyses, loan justification, and how the company plans to use the proceeds.
Solvency Ratios Solvency ratio is the process of analyzing the company’s capacity to pay its obligations while keeping the business going (Martin, 2009). Total assets are measured in terms of percentage against total liabilities:
Solvency = Total Assets/Total Liabilities
The ratio of at least 1.0 or greater shows a good financial standing and long range financial solvency. During 2007, Tootsie Roll’s total assets were $812,725 against total liabilities of $174,495 or a solvency ratio of 4.656. The company has assets four times of liabilities including cash investments with maturity of three months or less, the investments are marketable securities, and not actively traded (Tootsie Roll Body, 2008). A negative change in valuation of investments if sold is immaterial to affect liquidity ratio for 2007. In 2006, the company had a solvency ratio of 4.818 derived from total assets of $791,639 and total liabilities of $160,958. The ratio trends prove that Tootsie Roll is financially healthy.
Profitability Ratios Profitability ratios measure the company 's success over a period. These ratios help investors assess the company 's ability to repay loans. Three important ratios to assess are the profit margin ratio, the gross profit rate, and
Tootsie Roll Industries is one of America’s most recognized confectionary companies and has been in business for more than 111 years, manufacturing and selling some of the most popular candies in the world. Tootsie Roll wants to secure a loan that will help increase the company’s total liabilities by 10% in the tune of $2.5 million. This loan package is attached to an updated business plan that provides the lender with the company’s history, a vision statement, its market, products, services, management, how the loan will impact the business, and the method of repayment. This paper will detail different ratio analyses, loan justification, and how the company plans to use the proceeds.
Solvency Ratios Solvency ratio is the process of analyzing the company’s capacity to pay its obligations while keeping the business going (Martin, 2009). Total assets are measured in terms of percentage against total liabilities:
Solvency = Total Assets/Total Liabilities
The ratio of at least 1.0 or greater shows a good financial standing and long range financial solvency. During 2007, Tootsie Roll’s total assets were $812,725 against total liabilities of $174,495 or a solvency ratio of 4.656. The company has assets four times of liabilities including cash investments with maturity of three months or less, the investments are marketable securities, and not actively traded (Tootsie Roll Body, 2008). A negative change in valuation of investments if sold is immaterial to affect liquidity ratio for 2007. In 2006, the company had a solvency ratio of 4.818 derived from total assets of $791,639 and total liabilities of $160,958. The ratio trends prove that Tootsie Roll is financially healthy.
Profitability Ratios Profitability ratios measure the company 's success over a period. These ratios help investors assess the company 's ability to repay loans. Three important ratios to assess are the profit margin ratio, the gross profit rate, and
References: Bryant, Shannon (2011). Gluten-free foods, beverages become more mainstream as part of healthy lifestyle Kimmel, P.D., Weygandt, J.J., & Kieso, D.E. (2009). Accounting: Tools for business decision making (3rd ed.) LUBICOM Marketing Consulting, LLC. (2011). Statistics. Retrieved from http://www.lubicomkosher.com/industry/179/ Martin, L.L. (2001). Financial Management for Human Service Administrators. Retrieved from: https://ecampus.phoenix.edu/content/eLibrary2/content/eReader.aspx?assetMetaid Tootsie Roll Industries, Inc. (2011). Orthodox Union approves placement of Kosher symbol on package of Tootsie Roll Industries candy. Retrieved from http://www.tootsie.com/comp_news.php Voiland, A