Tootsie Roll Industry Analysis

Tootsie Roll Industries, Inc. has been engaged in the manufacture and sale of confectionery products for 113 years. Our products are primarily sold under the familiar brand names: Tootsie Roll, Tootsie Roll Pops, Caramel Apple Pops, Child’s Play, Charms, Blow Pop, Blue Razz, Cella’s chocolate covered cherries, Tootsie Dots, Tootsie Crows, Junior Mints, Junior Caramels, Charleston Chew, Sugar Daddy, Sugar Babies, Andes, Fluffy Stuff cotton candy, Dubble Bubble, Razzles, Cry Baby, Nik-L-Nip and EI Bubble.

Tootsie Roll Industries Inc., wish to increase their production capacity and improve efficiency. As the company wishes to take pout a plan which will increase total liabilities by 10%, if there are total liabilities of $174,495, the plan is to raise a further $17,445. To undertake this strategy it is necessary to demonstrate that the firm can afford to increase their debt. The first stage is to look at the financials with the use of a ratio analysis to assess whether the debt is affordable.

Tootsie Roll will allocate funds to the following areas, expansion, marketing, and retirement. Tootsie Roll aspires to remain the brand highly recognized across all classes of trade (Kimmel, Weygandt, & Kieso, 2009). Tootsie Roll can use additional funding to expand and penetrate United States and foreign markets successfully while improving its products. Tootsie Roll continues to offer products that are accessible, affordable, and customer-centered. Using targeted consumer and trade promotions to create value in the product will also increase distribution and sales, and yield a faster return on

Tootsie Roll Industries, Inc., a niche candy maker, has often been voted one of Forbes magazine’s “200 Best Small Companies of America.” A top quality producer and distributor of Tootsie Rolls and other candy, Tootsie Roll Industries maintains a 50% market share of the taffy and lollipop segment of the candy industry, and sales have increased each year for the past nineteen years. The world’s largest

Tootsie Roll Industries, Inc. has been successful in the manufacturing and sales of confectionery products since the year 1896. We maintain a diverse and notably recognizable brand portfolio that remains popular across all trade channels. We continue to maintain a conservative financial posture in the deployment and management of our assets. One of our company 's priorities is to keep the production and distribution facilities as efficient as possible, support evolving distribution patterns, improve quality and promote growing product lines. Moving forward, Tootsie Roll Industries, Inc. seeks to establish further itself as an industry leader and maintain its high level of satisfaction to its customers. Securing a loan would help to ensure goals are met and even exceeded. We have prepared a detailed package to ensure that all requirements are met to your satisfaction, to help ensure the securing of a loan.

Tootsie Roll’s highest selling period was Halloween (which is common for most candy manufacturers) and focused on promotional programs to target consumers. Also, they changed up their packaging to adapt to the trends of the consumers and catch their eyes.

Overall Tootsie Roll has better liquidity. Liquidity measures the short-term ability to pay obligations as they are expected to be due within the next year.

Conclusion: Tootsie Roll is the safer investment when you examine the liquidity and solvency ratios; however, Hershey has the edge for two significant profitability ratios. These ratios are return on common stockholders' equity and the payout ratio. The stock market also is more optimistic about the future of Hersheys. That said, I would invest in Tootsie Roll because of their fiscal strength.

When looking at profitability from 2006 to 2007, the ratios show that performance suffered. Profit margin, return on assets, and earnings per share have all dropped. However, net cash provided by operations exceeds 2006 amounts and almost matches that of 2005. Taking all of these ratios into account, Tootsie Roll’s financial standing is strong but could be improved by taking on a loan and investing wisely.

Fred Flintstone has just become the product manager for Yabba Dabba Doo, a consumer packaged product with a retail price of $2.00. Retail margins on the product are 33%, while wholesalers take a 12% margin. Yabba and its direct competitors sell a total of 40 million units annually, and Yabba has 24% market share of this total. Variable manufacturing costs for Yabba are $0.09 per unit. Fixed manufacturing costs are $1,800,000. The advertising budget for Yabba is $1,000,000. The product manager’s salary and expenses total $70,000. Salespeople are paid entirely by a 10% commission. Shipping costs, breakage, insurance, and other

1.) Break-even ticket sales increased from 4533 in 2003, to 4998 in 2004 and 7491 in 2006. Break-even point in Sales Dollars has changed from $7,285 in 2003, to $7,617 in 2004 and $11,634 in 2006. (Table 1) The margin of safety has changed from $1,298 in 2003, to $485 in 2004, and a loss of $923 in 2006. (Table 2) There is a decrease from 2003 to 2006. Fixed cost per month attributed to stores relocation and subsequent renovations caused a decrease from 2003 to 2006. Other factors contributing to the 2003-2006 decrease are as follows: • 1% increase in Cost of Goods Sold (COGS) totaling $81,000 • Decrease in sales of $481,000 • Increase in salaries totaling $60,000 • Increase in miscellaneous expenses of

Despite lower sales, gross profit for FY2017 increased $162k to $2.3M or 35.9% of sales compared with 2.2M or 32.2% of sales in FY2016. Material cost savings throughout the year, increased revenues stemming from improved scrap pricing and lower labor costs due to reduced production levels and headcount contributed to the improved gross margin.

| The annual report of Tootsie Roll Industries, Inc.appears in Appendix A at the end of this textbook. Use this report to answer the following questions: a. What is the total dollar value of the company 's financial assets for the most current year reported? b. Does the company report any investments in marketable securities? If so, how does it report unrealized gains and losses? c. What is the company 's allowance for uncollectible accounts for the most current year reported? d. On average, for how many days do the company 's accounts receivable remain outstanding before collection?

Due to these decreases, the company did not meet net income expectations and instead income took a nosedive. The company’s gross margin will be impacted greatly if it continues to reduce these product prices. These price reductions may render the company a “cheap” retailer to consumers as well.

  1. The Nicholson will be able to reduce the Cost of Goods Sold from 69% to 65% of Total Net Sales as efficiency in manufacturing and inventory can be achieved.