Module 04 Course Project – Tootsie Roll Industries Inc. Statement of Cash Flows
Only do Module 04
Locate Tootsie Roll Industries Inc.’s most current SEC Form 10-K Annual Filing in the Tootsie Roll Industries Annual Report. Focus on the statement of cash flows, which Tootsie Roll Industries Inc. titles Consolidated Statements of Cash Flows.
Also, locate the audit report, which Tootsie Roll Industries Inc. titles Report of Independent Registered Public Accounting Firm.
Complete the required statement of cash flow items and address the questions located in the Module 04 tab of the Course Project Template.
Required: Complete the purple areas of the chart, and the questions in the text boxes below.
List the years in order of most recent as year 1, next most recent as year 2, etc. Example: If
the most recent fiscal year was 2015, then replace Year 1 with 2015, replace Year 2 with 2014,
and replace Year 3 with 2013.
In the References box, include an APA reference for all information retrieved, whether from the Tootsie Roll we
itself, specific forms (i.e. 10k) from the Tootsie Roll website, or other outside sources.
Instructions for citing a 10k or Annual Report: http://rasmussen.libanswers.com/faq/32821 For general APA he
visit the APA Guide: http://guides.rasmussen.edu/apa
Tootsie Roll Industries Inc.
Income Statement
Total Revenue
Product Cost of Goods Sold
Rental and Royalty Cost
Total Gross Margin
Selling, Marketing and Administrative Expenses
Earnings from Operations
Income Taxes
Net Earnings
2018
515.251
329.880
867
188.173
117.691
70.482
16.401
56.805
2017
515.674
326.411
972
191.906
121.484
70.422
3.907
80.654
Question 1: What is Tootsie Roll’s Gross Profit Margin? (Hint: Divide Total Gross Margin by Total Revenue). What
figure represent?
Gross profitr margin = (188,173/515,251)
= 36.52%
Question 2:What is Tootsie Roll’s Profit Margin? (Hint: Profit margin is calculated by dividing Net Earnings by Total Sales)
What does this figure represent?
Profit Margin = (56,805/515,251)
= 11.02%
Question 3: What are Tootsie Roll’s earnings per share in the three years presented? (Hint: Check the income statement
after Net Earnings for this information.)
The net earnings per share for the company are $0.89, $1.24, and $1.02 for 2018, 2017, and 2016 respectively.
Question 4: According to note 1 in the Notes to the Consolidated Financial Statements, how does Tootsie Roll Industries
recognize revenue?
Tootsie Roll Industries Inc. records its revenue using a five-step model in accordance with Accounting Standards Codifica
(“ASC”) Topic 606 which became effective January, 1, 2018
Question 5: Has Net Product Sales shown an increasing or decreasing trend over the past three years? Interpret this tren
Should this be a concern for the company? Why or why not?
The net product sales of the company slightly increased by 0.06% in 2017, however it registered a decline of 0.08% in 20
There has been some inconsistencies, however, this should not be a concern for the company as the changes are minima
Question 6: Has the Net Earnings shown an increasing or decreasing trend over the past three years? Interpret this trend
Should this be a concern for the company? Why or why not?
The net earnings has the same trend like that of sales. It increased by 19.78% in 2017, but a significant decline 29.72% wa
reported in 2018 as the company registered a lowest net earnings of $56,893,000 in absolute terms. This was the lowest
three years. The inconsistencies reported should worry the management as the variances are high. A detailed scrutiny on
company’s ncome statement should be carried out, with an empahisis on expenditure to ascertain the prime cause of th
inconsistencies.
Question 7: Compare the Net Product Sales trend and the Net Earnings trend. Are these two items trending the same?
Interpret any differences and infer what those may mean in relation to the company’s operating decisions over the past
three years.
The two items are trending the same however the degree of trend varies. There has been significant changes in net earni
compared to the net products sales over the three years. This implies that the company has not been consisten in its
expenditure as well as other net income over the three year period.
compared to the net products sales over the three years. This implies that the company has not been consisten in its
expenditure as well as other net income over the three year period.
Tootsie Roll Industries, Inc. (201). 2019 annual report. Retrieved from
https://last10k.com/sec-filings/tr#ITEM8FinancialStatementsandSupplementary
er from the Tootsie Roll website
/32821 For general APA help,
2016
517.373
320.869
1.019
199.212
107.979
91.233
30.593
67.319
Total Revenue). What does this
ng Net Earnings by Total Sales).
Check the income statement
d 2016 respectively.
w does Tootsie Roll Industries, Inc.
Accounting Standards Codification
hree years? Interpret this trend.
tered a decline of 0.08% in 2018.
any as the changes are minimal.
ree years? Interpret this trend.
a significant decline 29.72% was
ute terms. This was the lowest in
are high. A detailed scrutiny on the
scertain the prime cause of these
o items trending the same?
ating decisions over the past
ignificant changes in net earnings
s not been consisten in its
s not been consisten in its
Running head: Tootsie Roll Industries Inc. Balance Sheet
Tootsie Roll Industries Inc. Balance Sheet
Name of student.
Institution Affiliation.
Date.
Tootsie Roll Industries Inc.
Balance Sheet
Cash and Cash Equivalents
Investments
Accounts Receivable Trade
Inventory (Add: FG and WIP + RM & supplies lines)
Total Current Assets
Net Property, Plant and Equipment
Goodwill
Trademarks
Total Assets
Accounts Payable
Accrued Liabilities
Total Current Liabilities
Total Noncurrent Liabilities
Total liabilities (Add total current liab + total noncurrent)
Common Stock
Class B Common Stock
Retained Earnings
Treasury Stock
Total Equity
Total liabilities and Shareholders Equity
2018
110.899
75.140
49.777
54.524
292.358
186.101
73.237
175.024
726.720
11.817
42.849
54.666
135.473
190.139
26.767
17.767
33.767
-1.992
76.309
266.448
Question 1: Refer to Note 1 in the Notes to the Consolidated Financial Statements. What method of depreciation does To
Industries Inc. use for their property, plant and equipment?
Straight-Line method
Question 2: : Refer to Note 1 in the Notes to the Consolidated Financial Statements. What method does Tootsie Roll Indu
to value its inventory?
The determination of fair value involves the use of estimates of future cash flows that involve considerable management
are based upon assumptions about expected future operating performance
Running head: Tootsie Roll Industries Inc. Balance Sheet
Question 3: Calculate Tootsie Roll Industry Inc’s fixed asset turnover and interpret it’s meaning. Show your work. (Hint: Fi
Turnover is calculated as Net Earnings/ Net Property, Plant and Equipment)
Fixed asset turnover=net earnings/net property,plant and equipment
Fixed asset turnover = (56,805+80,654+67,319)/(186,101+ 178,972 +180,905 )
Fixed asset turnover = 204778/545978
Question 4: Calculate Tootsie Roll Industry Inc’s accounts receivable turnover for the most recent year
your work. (Hint: Accounts Receivable Turnover is calculated as Total Sales/Average Accounts Receivable.)
Accounts recievable turnover = total sales/ average accounts receivable
= 515,251/(49,777+47,354+42,964 /3)
= 515,251/46698
Question 5: Calculate Tootsie Roll Industry Inc’s inventory turnover ratio for the most recent year and interpret its meanin
work. (Hint: Inventory turnover ratio is calculated as Product Cost of Goods Sold/Average Inventory.)
Inventory turnover ratio = 329,880/(54,524+54,827+57,531 /3)
= 329,880/55,627
= 5.9 ( the company is selling goods very quickly and that demand for their product exists.)
Question 6: Has the total current assets amount show an increasing or decreasing trend from one year to the next? What
accounts experienced the largest change? (Hint: To find the amount of change, subtract the prior year amount from the c
amount. Positive answers mean the account has increased by that amount, negative answers mean the account has decre
amount.)
Investments experienced the largest change. It experienced an initial decrease of 25,907 then an increase of 33,534
Question 7: Is the amount of current liabilities more or less than the long-term liabilities for the most recent year? What d
mean?
The amount of current liabilities is less than the long-term liabilities for the most recent year. The company has incurred le
expenses compared to long term expenses of over 12 months
Question 8: Is the total stockholders’ equity more or less than total liabilities for the most recent year? What does the res
Total stakeholders’ equity is less than the total liabilities. This means that the company does not have enough assets to co
liabilities.
Running head: Tootsie Roll Industries Inc. Balance Sheet
Question 9: Calculate the debt ratio and current ratio for your company for the most recent year. Generally speaking,
ratios tell you? (Hint: Debt ratio is calculated as Total Liabilities/Total Assets; Current ratio is calculated as Total Curr
Current Liabilities.)
Debt ratio = 190,137/726,720 = 0.26 (The company has more assets than debt)
Current ratio = 292,358/54,666 = 5.35 ( company has the financial resources to remain solvent
Question 10: What is the main reason for the change in stockholders’ equity? What is the largest component of stockhold
The main reason for the change in stakeholders’ equity is the amount of capital available for investment.
The Largest component of stakeholders’ equity is the Contributed capital.
Question 11: How many classes of common stock does the company have? For each class, how many shares are authorize
and outstanding? (To find outstanding shares, subtract any treasury stock for that class from the number issued to find th
outstanding.)
The company has two classes of common stock.
Class 1 – 120,000 authorized shares, 38,544 issued, (38,544-88)=38,456 outstanding shares
Class 2 – 120,000 authorized shares, 37,960 issued, (37,960-85)= 37,875 outstanding shares
Question 12: Calculate the Return on Stockholder’s Equity for the most recent year and interpret its meaning. Show your
Return on Stockholders Equity is calculated as Net Earnings/Average Total Equity.)
Return on stockholders equity = (56,805/(76,309+98,879+84,842 /3))*100%
= (56,805/260,030)*100%
= 22% (The company has a good ROE)
Reference:
https://last10k.com/sec-filings/tr/0001558370-18-001364.htm#link_fullReport.
Barton, J., & Simko, P. J. (2002). The balance sheet as an earnings management constraint.
Running head: Tootsie Roll Industries Inc. Balance Sheet
2017
96.314
41.606
47.354
54.827
242.118
178.972
73.237
175.024
669.351
11.928
45.157
57.085
133.354
190.439
26.361
17.285
57.225
-1.992
98.879
289.318
2016
119.145
67.513
42.964
57.531
289.169
180.905
73.237
175.024
718.335
10.320
46.300
56.620
145.002
201.622
26.181
16.820
43.833
-1.992
84.842
286.464
ements. What method of depreciation does Tootsie Roll
tements. What method does Tootsie Roll Industries Inc. use
h flows that involve considerable management judgment and
Running head: Tootsie Roll Industries Inc. Balance Sheet
terpret it’s meaning. Show your work. (Hint: Fixed Asset
ver for the most recent year and interpret its meaning. Show
/Average Accounts Receivable.)
r the most recent year and interpret its meaning. Show your
Sold/Average Inventory.)
nd that demand for their product exists.)
trend from one year to the next? What account or
nge, subtract the prior year amount from the current year
negative answers mean the account has decreased by that
ase of 25,907 then an increase of 33,534
erm liabilities for the most recent year? What does the result
most recent year. The company has incurred less short term
s for the most recent year? What does the result mean?
he company does not have enough assets to cover its
Running head: Tootsie Roll Industries Inc. Balance Sheet
the most recent year. Generally speaking, what do these
; Current ratio is calculated as Total Current Assets/Total
s to remain solvent in the short-term.)
What is the largest component of stockholders’ equity?
pital available for investment.
For each class, how many shares are authorized, issued,
or that class from the number issued to find the number
standing shares
utstanding shares
ent year and interpret its meaning. Show your work. (Hint:
ment constraint. The accounting review, 77(s-1), 1-27.
Required: Complete the purple areas of the chart, and the questions in the text boxes below.
List the years in order of most recent as year 1, next most recent as year 2, etc. Example: If
the most recent fiscal year was 2015, then replace Year 1 with 2015, replace Year 2 with 2014,
and replace Year 3 with 2013.
In the References box, include an APA reference for all information retrieved, whether from the Tootsie Roll we
itself, specific forms (i.e. 10k) from the Tootsie Roll website, or other outside sources.
Instructions for citing a 10k or Annual Report: http://rasmussen.libanswers.com/faq/32821 For general APA he
visit the APA Guide: http://guides.rasmussen.edu/apa
Tootsie Roll Industries Inc.
Statement of Cash Flows
Year 1
Year 2
Net Earnings
Net Cash Provided by Operating Activities
Net Cash Used in Investing Activities
Net Cash Used in Financing Activities
Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at Beginning of Year
Cash and Cash Equivalents at End of Year
Question 1: Which method of reporting cash flows from operations does the company use?
Question 2: Compare net earnings to the net cash provided by operating activities. Explain why these two figures are differ
these two numbers trending in the same direction? What is the largest adjustment item in the operating section for the m
recent year?
Question 3: What items in the investing section have created the largest cash inflow? Largest cash outflow? Did investing a
provide cash or use cash in each of the three years presented? How can you tell?
Question 4: Did the financing activities provide cash or use cash in each of the three years presented? What are the stock
repurchase trends of the company? What are the dividend trends of the company?
Question 5: Does the cash provided by operations cover the amounts of cash used for both investing and financing activitie
does this result mean for the overall amount of cash in the company from the start of the year to the end of the year? Has
increased or decreased? Should this be a concenr for the company?
Now, locate the Auditors Report, titled “Report of Independent Registered Public Accounting Firm.” Address the
questions related to this report.
Question 1: Who is the letter addressed to?
Question 2: What is management responsible for?
Question 3: What is the auditor responsible for?
Question 4: Does the auditor give absolute assurance that the financials are free of material error?
Question 5: What is the level of assurance given by the auditor?
Question 6: What policies and procedures does a company’s internal control over financial reporting include?
Question 7: What audit firm signed the audit letter?
References: (Hint! Citing a 10K and/or Annual Report: http://rasmussen.libanswers.com/faq/32821 ; APA Guide:
http://guides.rasmussen.edu/apa )
from the Tootsie Roll website
2821 For general APA help,
Year 3
these two figures are different. Are
operating section for the most
ash outflow? Did investing activities
ented? What are the stock
esting and financing activities? What
to the end of the year? Has it
unting Firm.” Address the following
orting include?
2821 ; APA Guide:
Required: Complete the purple cells for horizontal and vertical analysis for Tootsie Roll Industries using the follo
Vertical Analysis: (Financial Statement item/base amount), where your base amount is Total Revenue for the
Horizontal Analysis: (Current year-base year)/base year
Then, complete the purple cells in the financial ratios below. You will use the analyses on this tab of the workbo
In the References box, include an APA reference for all information retrieved, whether from the Tootsie Roll we
itself, specific forms (i.e. 10k) from the Tootsie Roll website, or other outside sources.
Instructions for citing a 10k or Annual Report: http://rasmussen.libanswers.com/faq/32821 For general APA he
visit the APA Guide: http://guides.rasmussen.edu/apa
Tootsie Roll Industries Inc.
Income Statement
Total Revenue
Product Cost of Goods Sold
Rental and Royalty Cost
Total Gross Margin
Selling, Marketing and Administrative Expenses
Earnings from Operations
Income Taxes
Net Earnings
Balance Sheet
Cash and Cash Equivalents
Investments
Accounts Receivable Trade
Inventory (Add: FG and WIP + RM & supplies lines)
Total Current Assets
Net Property, Plant and Equipment
Goodwill
Trademarks
Total Assets
Accounts Payable
Accrued Liabilities
Total Current Liabilities
Total Noncurrent Liabilities
Total liabilities (Add total current liab + total noncurrent)
Common Stock
Class B Common Stock
Retained Earnings
Year 1
515.251
329.880
867
188.173
117.691
70.482
16.401
56.805
Year 1
110.899
75.140
49.777
54.524
292.358
186.101
73.237
175.024
726.720
11.817
42.849
54.666
135.473
190.139
26.767
17.767
33.767
Treasury Stock
Total Equity
Total liabilities and Shareholders Equity
-1.992
76.309
266.448
Tootsie Roll Industries
Formula
Liquidity Ratios
Current Ratio
Acid Test Ratio
*Total Current
Assets/Total Current
Liabilities
*(Cash & Cash
Equivalents
+Iinvestments +
Accounts Receivable
Trade)/Total Current
Liabilities
Asset Management Ratio
Inventory Turnover
*Product Cost of
Goods Sold/Average
Inventory
(remember, Avg Inv is
beginning year inv +
ending year inv,
result divided by 2.)
Solvency Ratios
Debt ratio
Times Interest Earned Ratio
*Total
Liabilities/Total
Assets
*Operating
Income/Interest
Expense
Profitability Ratios
Gross Profit Percent
*Total Gross
Margin/Total
Revenue
Return on Net Sales
*Net Earnings/Total
Sales
Earnings Per Share (EPS)
**Locate in research
(on company income
statement)
Market Analysis
Price Earning Ratio
**Locate in research
(on Internet)
Dividend Yield
**Locate in research
(on Internet)
*Calculated by Author
**Located in research
References: (Hint! Citing a 10K and/or Annual Report: http://rasmussen.libanswers.com/faq/32821 ; APA
Guide: http://guides.rasmussen.edu/apa )
sis for Tootsie Roll Industries using the following formulas:
e your base amount is Total Revenue for the income statement and Total Assets for the balance sheet.
l use the analyses on this tab of the workbook to create your final project.
etrieved, whether from the Tootsie Roll website
outside sources.
nswers.com/faq/32821 For general APA help,
Year 2
515.674
326.411
972
191.906
121.484
70.422
3.907
80.654
Year 2
96.314
41.606
47.354
54.827
242.118
178.972
73.237
175.024
669.351
11.928
45.157
57.085
133.354
190.439
26.361
17.285
57.225
Year 3
Vertical Analysis
Vertical Analysis
Year 1
Year 2
Vertical Analysis
Vertical Analysis
Year 1
Year 2
517.373
320.869
1.019
199.212
107.979
91.233
30.593
67.319
Year 3
119.145
67.513
42.964
57.531
289.169
180.905
73.237
175.024
718.335
10.320
46.300
56.620
145.002
201.622
26.181
16.820
43.833
-1.992
98.879
289.318
-1.992
84.842
286.464
TRI
TRI
Competition or
Industry Ratio**
Year 1
Year 2
Year 1
Ratio Benchmarks
Greater than 1.
Ideally greater than 1,
but likely will be less
than 1.
Depends on industry,
higher is better
Less than 67%
Higher the better,
unless interest exp is
0.
Depends on industry,
higher is better
banswers.com/faq/32821 ; APA
Depends on industry,
higher is better
Depends on
company. Would
want to see stay
stable or increase,
not decrease.
Depends on
company. Remaining
steady is good.
Depends on
company. Remaining
steady is good.
lance sheet.
Horizontal Analysis
Year 3 to 1
Horizontal Analysis
Year 3 to 1
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