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Tootsie Roll Industries Inc. Loan Package
Tootsie Roll Industries Inc. Loan Package Tootsie Roll Industry Inc. needs to secure a loan to ensure the company’s growth for the future. To secure the loan the company must assemble a loan package to submit to the lender. In the loan package the company must include a ratio analysis of the company’s financial statements to show the financial stability and profitability of the company. The company must also provide a justification for the loan. In addition, the company must also provide a plan to show how the proceeds will be allocated. It is imperative that Tootsie Roll Industries, Inc. provides each component to receive the loan to grow the company. Ratio Analysis The ratio analysis consists of three categories: liquidity, solvency, and profitability. The liquidity of the company is important to determine the capability of the company to pay obligations and meet unexpected needs for cash. The solvency is important to determine the ability of the company to survive over a long period. Finally, the profitability is to measure the income and operating success of a company for a given period of time (Financial Analysis, University of Phoenix, 2012). This information is available in the balance sheet, cash flow statement, and the income statement. To determine the liquidity of Tootsie Roll Industries Inc. the working capital, current ratio, and the inventory turnover ratio was used. To determine the working capital subtract the current liabilities from the current assets. Tootsie Roll Industries Inc.’s working capital is $141, 754. To determine the current ratio the current assets are divided by the current liabilities, which equals a current ratio of 3.4 for Tootsie Roll Industries, Inc. Finally, the inventory ratio is found by dividing the cost of goods sold by the average inventory. Tootsie Roll
Tootsie Roll Industries Inc. Loan Package Tootsie Roll Industry Inc. needs to secure a loan to ensure the company’s growth for the future. To secure the loan the company must assemble a loan package to submit to the lender. In the loan package the company must include a ratio analysis of the company’s financial statements to show the financial stability and profitability of the company. The company must also provide a justification for the loan. In addition, the company must also provide a plan to show how the proceeds will be allocated. It is imperative that Tootsie Roll Industries, Inc. provides each component to receive the loan to grow the company. Ratio Analysis The ratio analysis consists of three categories: liquidity, solvency, and profitability. The liquidity of the company is important to determine the capability of the company to pay obligations and meet unexpected needs for cash. The solvency is important to determine the ability of the company to survive over a long period. Finally, the profitability is to measure the income and operating success of a company for a given period of time (Financial Analysis, University of Phoenix, 2012). This information is available in the balance sheet, cash flow statement, and the income statement. To determine the liquidity of Tootsie Roll Industries Inc. the working capital, current ratio, and the inventory turnover ratio was used. To determine the working capital subtract the current liabilities from the current assets. Tootsie Roll Industries Inc.’s working capital is $141, 754. To determine the current ratio the current assets are divided by the current liabilities, which equals a current ratio of 3.4 for Tootsie Roll Industries, Inc. Finally, the inventory ratio is found by dividing the cost of goods sold by the average inventory. Tootsie Roll
References: Kimmel, P.D., Weyhandt, J.J., & Kieso, D.E. (2009). Accounting: Tools for business decision making (3rd. ed). Hoboken, NJ: John Wiley & Sons. University of Phoenix. (2012). Financial Analysis: The Big Picture. Retrieved from University of Phoenix, ACC561-Accounting website.