Tootsie Roll Case Study

The financial statements of Tootsie Roll Industries are presented in Appendix A. | |

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InstructionsAnswer the following questions. | (a) | What was the amount of net cash provided by operating activities for 2007? The amount of net cash provided by operating activities for 2007 was $ 90,064,000 For 2006? $ 55,656,000 What were some causes of any significant changes in cash from operations between 2006 and 2007? Include a change in Tootsie Roll’s account receivable and other receivables, prepaid expenses and other taxes, income taxes payable and deferred, and inventories from 2006 and 2007. | | (b) | What was the amount of increase or decrease in cash and cash equivalents for the year ended December 31, 2007? There was a $ 1,877 increase in cash and cash equivalents for the year ended December 31, 2007. | | (c) | Which method of computing net cash provided by operating activities does Tootsie Roll use? Tootsie Roll uses Indirect Method to compute net cash provided by operations. | | (d) |
From your analysis of the 2007 statement of cash flows, was the change in accounts receivable a decrease or an increase? There was a decrease in accounts receivable. Was the change in inventories a decrease or an increase? There was an decrease in inventories during 2007. Was the change in accounts payable a decrease or an increase? There was a decrease in accounts payable in 2007. | | (e) | What was the net cash used by investing activities for 2007? The net cash used by inventing activities for 2007 was $43,345,000 | | (f) | What was the amount of interest paid in 2007? The amount of interest paid in 2007 was $537,000 What was the amount of income taxes paid in 2007? The amount of income taxes paid in 2007 was $11,343,000 | | |

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BYP12-9 | In this chapter you learned that companies prepare a statement of cash flows in order to keep track of their sources and uses of cash and to help them plan for their future cash needs. Planning for your own short- and long-term cash needs is every bit as important as it is for a company. | | |

InstructionsRead the article “Financial ‘Uh-oh’?
No Problem,” at www.fool.com/savings/shortterm/02.htm, and answer the following questions. | (a) | Describe the three factors that determine how much money you should set aside for short term needs. Your willingness to take risk, Your needs, Your upcoming expensesYou willingness to take risk refers to if you are investing in the stock market and how risky you invest. The second factor that determines how much money you should set aside for short term needs is your needs. In order to determine your needs, you need to take into consideration the following questions: how much is your living expenses? How many people are depending on you? Example would be a single person who living expenses a month is $1000. The final factor is your upcoming expenses, which is what you hope to buy in the future. Example if next year you want to buy a car you will need to start saving for the down payment.
| | (b) | How many months of living expenses does the article suggest to set aside? The article suggest to set aside Three to six months' of living expenses for emergencies. | | (c) | Estimate how much you should set aside based upon your current situation. Are you closer to Cliff's scenario or to Prudence's? Based upon my current situation, I should set aside nothing. I live with my mother, she buys everything for me. I do not have to pay for anything. I am closer to Cliff’s scenario. | | |