Assignment
Financial Statement Analysis Project
Each student is to analyze the 2016 and 2015 financial statements of Tootsie Roll Industries, Inc. The 2014 financial statements can be found by going to either:
1) www.sec.gov → Filings tab at top → Company Filings Search; next to company name type, Tootsie → Tootsie Roll Industries Inc. will appear → select the first 10K interactive documents for the 2016 and 2015 comparative financial statements. (You may need 2014 data to figure certain financial ratios in part 4 below).The "View Excel Document" link is helpful for parts 2 and 3 below.
2) www.tootsie.com → click Company tab and then financials from the dropdown menu. Click dropdown arrow and select 2016 for year to display in order to access the 2016 annual report and 10K. (The 2015 Annual Report is also available by selecting 2015).
For Tootsie Roll Industries, Inc.:
1. Answer the questions on the following pages. The answers can be found in the Tootsie Roll 2016 Annual Report.
2. Perform vertical analysis on the income statements and balance sheet information for fiscal periods 2016 and 2015. (The Excel format of the income statement and balance sheet can be downloaded from the SEC website by selecting "View Excel Documents" in the interactive data area.)
3. Perform horizontal analysis on the income statements and balance sheet information to show the dollar and percentage change between fiscal periods 2016 and 2015. (The Excel format of the income statement and balance sheet can be downloaded from the SEC website by selecting "View Excel Documents" in the interactive data area.)
4. Compute a selection of financial ratios relevant for evaluating Tootsie Roll's LIQUIDITY, SOLVENCY, PROFITABILITY and MARKET INDICATORS for fiscal 2016 and 2015. Please select a total of at least 10 financial ratios. For some of the ratios you may need to access fiscal 2014 balance sheet numbers which can be found on the 2014 Annual Report. Show calculations.
5. Write a report (between 2 to 3 pages, double-spaced, 12 point, Times Roman font, with good grammar and spelling) summarizing your findings in parts 2, 3 and 4.
→ Submit to the Financial Statement Analysis Project drop-box, your solutions to all five parts. Please use a maximum of two files (one for the Excel work and one for the Word work.) Clearly label your submissions with your name.
Official Company Name_________________________________________________________
State of Incorporation__________________________________________________________
City and State of Headquarters____________________________ ______________________
Stock Exchange Securities & Where Listed________________________________________
Ticker Symbol(s)______ Primary SIC Code_____ Fiscal Year End ___________________
Independent Auditor (City)______________________________________________________
Description of Product or Service________________________________________________
Company Size (Fiscal 2016): Total Assets ______________ Total Revenue _____________
Who is the Chairperson of the Board of Directors ___________________________________
Who is the Chief Executive Officer?_______________________________________________
Who is the President & Chief Operating Officer?_____________________________________
Who is the Chief Financial Officer? ________________________________________________
Who is the Corporate Controller? _________________________________________________
List the major sections of information included in the annual report.
List the names of all of the financial statements presented by the company.
Inventory valuation method & cost flow assumptions________________________________
Depreciation method used ______________________________________________________
How many consecutive years were cash dividends paid?
According to the unaudited Quarterly Financial Data (Note 14):
Which quarter of the year had the highest sales and was most profitable in 2016? What percentage of 2016 total product sales occurs in this quarter? Why do you think this quarter has the highest sales?
From the Consolidated Statements of Earnings and Retained Earnings:
What was the amount of the 2016 provision for income taxes. What percentage is the 2016 provision for income taxes of the 2016 earnings before income taxes.
What were the stock dividends in 2016 and in 2015?
What decreased Retained Earnings by about $22.2 million in 2016?
From the Statements of Financial Position:
Does the 2016 Net property, plant and equipment of about $180.9 million intended to reflect the market value of these assets? If no, what does it reflect?
Why are 2016 prepaid expenses of $7.1 million included on the balance sheet (i.e., statement of financial position) rather than on the income statement?
What is the 12/31/16 accounts payable balance and why is it included as part of current liabilities rather than as part of noncurrent liabilities?
What is the 12/31/15 retained earnings?
Describe the difference between retained earnings and contributed capital (such as common stock)?
What is the amount of Goodwill at the end of 2016 and 2015? Explain how goodwill is acquired.
Other:
Who is Tootsie Roll's independent audit firm?
From the Statements of Cash Flows:
Indicated the cash provided or used in Tootsie's Tootsie Roll's operating activities, investing activities, and financing activities?
Should the negative net cash flows from investing and from financing activities be viewed negatively? Explain.
What is the top item that accounts for the difference between net earnings and net cash provided by operating activities in 2016? Why is this item added to net earnings?
Information for Ratio Analysis:
Identify the amounts reported for each of the items below.
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2016
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2015
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2014
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TOTAL REVENUES
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PRODUCT SALES
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PRODUCT COST OF GOODS
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PRODUCT GROSS PROFIT
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EARNINGS BEFORE INCOME TAXES
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INTEREST EXPENSE (See Note 6)
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NET INCOME
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EARNINGS PER SHARE
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QUICK ASSETS
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CURRENT ASSETS
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ACCOUNTS RECEIVABLE, NET
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INVENTORY
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PROPERTY, PLANT & EQUIPMENT, NET
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TOTAL ASSETS
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CURRENT LIABILITIES
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LONG-TERM LIABILITIES
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TOTAL LIABILITIES
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TOTAL STOCKHOLDERS EQUITY
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