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Annual Reports For Two Rivalry U.S. Public Companies Term Paper

Annual reports for two rivalry U.S. Public companies have selected two public companies from the chocolate industry, Tootsie Roll and Hershey. Tootsie Roll was founded at the end of the 19th century by an Austrian emigre who started producing a chocolate, chewy candy named after his five- year- daughter. The company expanded and today it is one of the largest candy companies in the United States. Headquartered in Chicago, it has operations in Massachusetts, New York, Tennessee, Wisconsin and Mexico and total net sales at the end of 2002 of $393 million.

Hershey, on the other hand, is considered to be the leading North American manufacturer of chocolate, with brands such as Almond Joy and Mounds candy bars and Cadbury Creme Eggs or Hershey's Cookies 'n' Creme candy bars. Hershey's operations are divided into two main divisions: Hershey Chocolate North America and Hershey International. The former is the leading producer of chocolate products in North America, while the latter exports to over 90 countries worldwide.

In order to evaluate DuPont's ratio, we need to find the required indicators from the Financial Statements. In Hershey's case, these are as follows:

in thousands of dollars)

Net Income

Sales

Assets

Equity

As such, we are now able to compute DuPont's ratio for 2002 and 2001 and compare the ratios obtained.

In 2002, ROE = 29%, while in 2001, ROE = 18%.

As we know, the DuPont system basically shows how much of a dollar made from sales have increased...

As we can clearly see from the data here above, the Return On Equity indicator has increased by 11% from 2001 to 2002. If we closely examine the data, we will see that this increase is based mainly on the Net Income that has almost doubled during this period.
For Tootsie Roll, the necessary data is presented in the table below:

in thousands of dollars)

Net Income

Sales

Assets

Equity

In 2002, ROE = 12.6%, while in 2001, ROE = 12.9%.

If we look at these figures, we will see that the company has encountered a slight decrease in its Return On Equity indicator. However, this is not significant and does not affect the company's performance.

If we compare the two company's, we will notice that the 2001 ROE was only several percentages apart, which is quite a performance for Tootsie, given the fact that its net income and sales have been almost ten times smaller than Hershey's. However, in 2002, Hershey's ROE has increased at a higher pace that Tootsie's. It is interesting to note that Hershey has had an overall decrease in total sales from 2001 to 2002, while Tootsie's indicator has shown a steady increase.

In order to evaluate each company's short- term solvability, it is useful to have a look at the liquidity ratios, notably at the current ratio and the quick ratio. The table below presents the two ratios for both companies in 2001 and 2002.

Tootsie

Hershey

Current Ratio

Quick…

Sources used in this document:
bibliography for the company's websites.
Cite this Document:
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