Question

In: Accounting

Visit one of the following online resources: Yahoo Finance D&B Hoovers - providers of business and...

Visit one of the following online resources:

Yahoo Finance

D&B Hoovers - providers of business and industry data, business analytics etc.

MSU's globalEDGE - a source for international business related resources.

Calculate the following ratios for Hershey Company (Use the template provided)

Liquidity Ratios: 1) Current Ratio 2)Quick Ratio

Leverage Ratios: 1) Debt-to-Total-Assets Ratio 2) Debt-to-Equity Ratio 3) Long-Term 4) Debt-to-Equity Ratio 5) Times-Interest-Earned Ratio

Activity Ratios: 1) Inventory Turnover Fixed Assets 2) Turnover Accounts Receivable 3) Turnover Average Collection Period

Profitability Ratios: 1) Gross Profit Margin 2) Operating Profit Margin 3) Return on Total Assets 4) Return on Stockholders’ Equity 5) Earnings Per Share 6) Price-Earnings Ratio

3) What do the ratios calculated communicate about the financial strengths and weaknesses of Hershey?

4) Based on your calculations, would you invest in Hershey Company, why or why not?

Chart:

*All of the #DIV/0! need to be filled with the answers of the calculations. Please state which source above used to calculate all of the data.  

Historical Ratios Projected Ratios
12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018
Current Ratio #DIV/0! #DIV/0! Current Ratio #DIV/0! #DIV/0! #DIV/0!
Quick Ratio #DIV/0! #DIV/0! Quick Ratio #DIV/0! #DIV/0! #DIV/0!
Total Debt-to-Total-Assets Ratio #DIV/0! #DIV/0! Debt-to-Total-Assets Ratio #DIV/0! #DIV/0! #DIV/0!
Total Debt-to-Equity Ratio #DIV/0! #DIV/0! Debt-to-Equity Ratio #DIV/0! #DIV/0! #DIV/0!
Times-Interest-Earned Ratio #DIV/0! #DIV/0! Times-Interest-Earned Ratio #DIV/0! #DIV/0! #DIV/0!
Inventory Turnover #DIV/0! #DIV/0! Inventory Turnover #DIV/0! #DIV/0! #DIV/0!
Fixed Assets Turnover #DIV/0! #DIV/0! Fixed Assets Turnover #DIV/0! #DIV/0! #DIV/0!
Total Assets Turnover #DIV/0! #DIV/0! Total Assets Turnover #DIV/0! #DIV/0! #DIV/0!
Accounts Receivable Turnover #DIV/0! #DIV/0! Accounts Receivable Turnover #DIV/0! #DIV/0! #DIV/0!
Average Collection Period #DIV/0! #DIV/0! Average Collection Period #DIV/0! #DIV/0! #DIV/0!
Gross Profit Margin % #DIV/0! #DIV/0! Gross Profit Margin % #DIV/0! #DIV/0! #DIV/0!
Operating Profit Margin % #DIV/0! #DIV/0! Operating Profit Margin % #DIV/0! #DIV/0! #DIV/0!
ROA % #DIV/0! #DIV/0! ROA % #DIV/0! #DIV/0! #DIV/0!
ROE % #DIV/0! #DIV/0! ROE % #DIV/0! #DIV/0! #DIV/0!

Income Statement

All numbers in thousands

Revenue 12/31/2017 12/31/2016 12/31/2015 12/31/2014
Total Revenue 7,515,426 7,440,181 7,386,626 7,421,768
Cost of Revenue 4,065,760 4,224,184 3,987,842 4,083,980
Gross Profit 3,449,666 3,215,997 3,398,784 3,337,788
Operating Expenses
Research Development - 47,268 49,281 47,554
Selling General and Administrative 1,896,643 1,846,894 1,889,241 1,834,513
Non Recurring - - - -
Others - - - -
Total Operating Expenses 5,962,403 6,118,346 5,926,364 5,966,047
Operating Income or Loss 1,553,023 1,321,835 1,460,262 1,455,721
Income from Continuing Operations
Total Other Income/Expenses Net -442,355 -222,354 -558,415 -149,678
Earnings Before Interest and Taxes 1,553,023 1,321,835 1,460,262 1,455,721
Interest Expense -98,282 -91,948 -109,309 -87,598
Income Before Tax 1,110,668 1,099,481 901,847 1,306,043
Income Tax Expense 354,131 379,437 388,896 459,131
Minority Interest - 41,831 49,465 64,468
Net Income From Continuing Ops 756,537 720,044 512,951 846,912
Non-recurring Events
Discontinued Operations - - - -
Extraordinary Items - - - -
Effect Of Accounting Changes - - - -
Other Items - - - -
Net Income
Net Income 782,981 720,044 512,951 846,912
Preferred Stock And Other Adjustments - - - -
Net Income Applicable To Common Shares 782,981 720,044 512,951 846,912

Balance Sheet

All numbers in thousands

Period Ending 12/31/2017 12/31/2016 12/31/2015 12/31/2014
Current Assets
Cash And Cash Equivalents 380,179 296,967 346,529 374,854
Short Term Investments - - - 97,131
Net Receivables 588,262 581,381 599,073 634,800
Inventory 752,836 745,678 750,970 801,036
Other Current Assets - - - 147,573
Total Current Assets 2,001,910 1,816,778 1,848,598 2,247,047
Long Term Investments - - - -
Property Plant and Equipment 2,106,697 2,177,248 2,240,460 2,151,901
Goodwill 821,061 812,344 684,252 792,955
Intangible Assets 369,156 588,038 447,309 358,093
Accumulated Amortization - - - -
Other Assets 254,902 129,925 123,752 72,874
Deferred Long Term Asset Charges 3,023 56,861 36,390 -
Total Assets 5,553,726 5,524,333 5,344,371 5,622,870
Current Liabilities
Accounts Payable 523,229 522,536 474,266 482,017
Short/Current Long Term Debt 2,920,480 2,980,169 2,460,826 2,177,818
Other Current Liabilities 17,723 3,207 95,268 103,500
Total Current Liabilities 2,076,543 1,909,443 2,217,912 1,935,647
Long Term Debt 2,061,023 2,347,455 1,597,390 1,542,317
Other Liabilities 484,595 439,748 481,607 625,376
Deferred Long Term Liability Charges - - - -
Minority Interest - 41,831 49,465 64,468
Negative Goodwill - - - -
Total Liabilities 4,622,161 4,696,646 4,296,909 4,103,340
Stockholders' Equity
Misc. Stocks Options Warrants - - - -
Redeemable Preferred Stock - - - -
Preferred Stock - - - -
Common Stock 931,565 359,901 359,901 359,901
Retained Earnings - 6,115,961 5,897,603 5,860,784
Treasury Stock - -6,559,863 -6,043,384 -5,519,809
Capital Surplus - 869,857 783,877 754,186
Other Stockholder Equity - -375,888 -371,025 -358,573
Total Stockholder Equity 931,565 785,856 997,997 1,455,062
Net Tangible Assets -258,652 -614,526 -133,564 304,014

Cash Flow

All numbers in thousands

Period Ending 12/31/2017 12/31/2016 12/31/2015 12/31/2014
Net Income 782,981 720,044 512,951 846,912
Operating Activities, Cash Flows Provided By or Used In
Depreciation - 301,837 244,928 211,532
Adjustments To Net Income - 67,037 365,241 24,240
Changes In Accounts Receivables - 21,096 -24,440 -67,464
Changes In Liabilities - -72,295 29,406 -59,102
Changes In Inventories - 13,965 52,049 -88,497
Changes In Other Operating Activities - -68,209 34,321 -23,244
Total Cash Flow From Operating Activities - 983,475 1,214,456 844,377
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures - -269,476 -356,810 -370,789
Investments - -44,255 64,596 -97,131
Other Cash flows from Investing Activities - - - -
Total Cash Flows From Investing Activities - -595,454 -477,255 -862,573
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid - -499,475 -476,132 -440,414
Sale Purchase of Stock - 102,722 72,719 122,306
Net Borrowings - 568,560 254,305 119,124
Other Cash Flows from Financing Activities - -13,700 -23,431 56,437
Total Cash Flows From Financing Activities - -434,443 -755,162 -719,302
Effect Of Exchange Rate Changes - -3,140 -10,364 -6,156
Change In Cash and Cash Equivalents - -49,562 -28,325 -743,654

Solutions

Expert Solution

A B C D E F G H
2 Income Statement:
3 Revenue 12/31/2017 12/31/2016 12/31/2015 12/31/2014
4 Total Revenue 7,515,426 7,440,181 7,386,626 7,421,768
5 Cost of Revenue 4,065,760 4,224,184 3,987,842 4,083,980
6 Gross Profit 3,449,666 3,215,997 3,398,784 3,337,788
7 Operating Expenses
8 Research Development - 47,268 49,281 47,554
9 Selling General and Administrative 1,896,643 1,846,894 1,889,241 1,834,513
10 Non Recurring - - - -
11 Others - - - -
12 Total Operating Expenses 5,962,403 6,118,346 5,926,364 5,966,047
13 Operating Income or Loss 1,553,023 1,321,835 1,460,262 1,455,721
14 Income from Continuing Operations
15 Total Other Income/Expenses Net -442,355 -222,354 -558,415 -149,678
16 Earnings Before Interest and Taxes 1,553,023 1,321,835 1,460,262 1,455,721
17 Interest Expense -98,282 -91,948 -109,309 -87,598
18 Income Before Tax 1,110,668 1,099,481 901,847 1,306,043
19 Income Tax Expense 354,131 379,437 388,896 459,131
20 Minority Interest - 41,831 49,465 64,468
21 Net Income From Continuing Ops 756,537 720,044 512,951 846,912
22 Non-recurring Events
23 Discontinued Operations - - - -
24 Extraordinary Items - - - -
25 Effect Of Accounting Changes - - - -
26 Other Items - - - -
27 Net Income
28 Net Income 782,981 720,044 512,951 846,912
29 Preferred Stock And Other Adjustments - - - -
30 Net Income Applicable To Common Shares 782,981 720,044 512,951 846,912
31
32 Balance sheet
33 Period Ending 12/31/2017 12/31/2016 12/31/2015 12/31/2014
34 Current Assets
35 Cash And Cash Equivalents 380,179 296,967 346,529 374,854
36 Short Term Investments - - - 97,131
37 Net Receivables 588,262 581,381 599,073 634,800
38 Inventory 752,836 745,678 750,970 801,036
39 Other Current Assets - - - 147,573
40 Total Current Assets 2,001,910 1,816,778 1,848,598 2,247,047
41 Long Term Investments - - - -
42 Property Plant and Equipment 2,106,697 2,177,248 2,240,460 2,151,901
43 Goodwill 821,061 812,344 684,252 792,955
44 Intangible Assets 369,156 588,038 447,309 358,093
45 Accumulated Amortization - - - -
46 Other Assets 254,902 129,925 123,752 72,874
47 Deferred Long Term Asset Charges 3,023 56,861 36,390 -
48 Total Assets 5,553,726 5,524,333 5,344,371 5,622,870
49 Current Liabilities
50 Accounts Payable 523,229 522,536 474,266 482,017
51 Short/Current Long Term Debt 2,920,480 2,980,169 2,460,826 2,177,818
52 Other Current Liabilities 17,723 3,207 95,268 103,500
53 Total Current Liabilities 2,076,543 1,909,443 2,217,912 1,935,647
54 Long Term Debt 2,061,023 2,347,455 1,597,390 1,542,317
55 Other Liabilities 484,595 439,748 481,607 625,376
56 Deferred Long Term Liability Charges - - - -
57 Minority Interest - 41,831 49,465 64,468
58 Negative Goodwill - - - -
59 Total Liabilities 4,622,161 4,696,646 4,296,909 4,103,340
60 Stockholders' Equity
61 Misc. Stocks Options Warrants - - - -
62 Redeemable Preferred Stock - - - -
63 Preferred Stock - - - -
64 Common Stock 931,565 359,901 359,901 359,901
65 Retained Earnings - 6,115,961 5,897,603 5,860,784
66 Treasury Stock - -6,559,863 -6,043,384 -5,519,809
67 Capital Surplus - 869,857 783,877 754,186
68 Other Stockholder Equity - -375,888 -371,025 -358,573
69 Total Stockholder Equity 931,565 785,856 997,997 1,455,062
70 Net Tangible Assets -258,652 -614,526 -133,564 304,014
71
72
73 Ratios
74 12/31/2017 12/31/2016 12/31/2015 12/31/2014
75 Current Ratio =Current Assets/ Current Liabilities 0.964059015 0.951470141 0.833485729 1.160876441
76 Quick Ratio = (Cash +Marketable Security+Acc. Rec.)/Current Liabilities 0.466371753 0.46000221 0.426347844 0.521610604
77 Total Debt-to-Total-Assets Ratio 0.896965929 0.964392262 0.75934399 0.661607862
78 Total Debt-to-Equity Ratio 5.347456162 6.779389608 4.066360921 2.55668487
79 Times-Interest-Earned Ratio 15.80170326 14.37589725 13.35902808 16.61819905
80 Inventory Turnover 5.426389076 5.644859713 5.138951782
81 Fixed Assets Turnover 3.508647287 3.368344399 3.363396588
82 Total Assets Turnover 1.356812777 1.369101781 1.3470345
83 Accounts Receivable Turnover 12.85080319 12.60562631 11.9730734
84 Average Collection Period 28.40289393 28.95532447 30.4850716
85 Gross Profit Margin % 0.459011372 0.432247146 0.460126721 0.449729498
86 Operating Profit Margin % 0.206644707 0.177661672 0.197689987 0.196142078
87 ROA % 0.141357073 0.132498594 0.093542396
88 ROE % 0.911810208 0.807290735 0.418213341
89

Formula sheet

A B C D E F G H
2 Income Statement:
3 Revenue 43100 42735 42369 42004
4 Total Revenue 7515426 7440181 7386626 7421768
5 Cost of Revenue 4065760 4224184 3987842 4083980
6 Gross Profit 3449666 3215997 3398784 3337788
7 Operating Expenses
8 Research Development - 47268 49281 47554
9 Selling General and Administrative 1896643 1846894 1889241 1834513
10 Non Recurring - - - -
11 Others - - - -
12 Total Operating Expenses 5962403 6118346 5926364 5966047
13 Operating Income or Loss 1553023 1321835 1460262 1455721
14 Income from Continuing Operations
15 Total Other Income/Expenses Net -442355 -222354 -558415 -149678
16 Earnings Before Interest and Taxes 1553023 1321835 1460262 1455721
17 Interest Expense -98282 -91948 -109309 -87598
18 Income Before Tax 1110668 1099481 901847 1306043
19 Income Tax Expense 354131 379437 388896 459131
20 Minority Interest - 41831 49465 64468
21 Net Income From Continuing Ops 756537 720044 512951 846912
22 Non-recurring Events
23 Discontinued Operations - - - -
24 Extraordinary Items - - - -
25 Effect Of Accounting Changes - - - -
26 Other Items - - - -
27 Net Income
28 Net Income 782981 720044 512951 846912
29 Preferred Stock And Other Adjustments - - - -
30 Net Income Applicable To Common Shares 782981 720044 512951 846912
31
32 Balance sheet
33 Period Ending 43100 42735 42369 42004
34 Current Assets
35 Cash And Cash Equivalents 380179 296967 346529 374854
36 Short Term Investments - - - 97131
37 Net Receivables 588262 581381 599073 634800
38 Inventory 752836 745678 750970 801036
39 Other Current Assets - - - 147573
40 Total Current Assets 2001910 1816778 1848598 2247047
41 Long Term Investments - - - -
42 Property Plant and Equipment 2106697 2177248 2240460 2151901
43 Goodwill 821061 812344 684252 792955
44 Intangible Assets 369156 588038 447309 358093
45 Accumulated Amortization - - - -
46 Other Assets 254902 129925 123752 72874
47 Deferred Long Term Asset Charges 3023 56861 36390 -
48 Total Assets 5553726 5524333 5344371 5622870
49 Current Liabilities
50 Accounts Payable 523229 522536 474266 482017
51 Short/Current Long Term Debt 2920480 2980169 2460826 2177818
52 Other Current Liabilities 17723 3207 95268 103500
53 Total Current Liabilities 2076543 1909443 2217912 1935647
54 Long Term Debt 2061023 2347455 1597390 1542317
55 Other Liabilities 484595 439748 481607 625376
56 Deferred Long Term Liability Charges - - - -
57 Minority Interest - 41831 49465 64468
58 Negative Goodwill - - - -
59 Total Liabilities 4622161 4696646 4296909 4103340
60 Stockholders' Equity
61 Misc. Stocks Options Warrants - - - -
62 Redeemable Preferred Stock - - - -
63 Preferred Stock - - - -
64 Common Stock 931565 359901 359901 359901
65 Retained Earnings - 6115961 5897603 5860784
66 Treasury Stock - -6559863 -6043384 -5519809
67 Capital Surplus - 869857 783877 754186
68 Other Stockholder Equity - -375888 -371025 -358573
69 Total Stockholder Equity 931565 785856 997997 1455062
70 Net Tangible Assets -258652 -614526 -133564 304014
71
72
73 Ratios
74 43100 42735 42369 42004
75 Current Ratio =Current Assets/ Current Liabilities =D40/D53 =E40/E53 =F40/F53 =G40/G53
76 Quick Ratio = (Cash +Marketable Security+Acc. Rec.)/Current Liabilities =(D35+D37)/D53 =(E35+E37)/E53 =(F35+F37)/F53 =(G35+G37)/G53
77 Total Debt-to-Total-Assets Ratio =(D54+D51)/D48 =(E54+E51)/E48 =(F54+F51)/F48 =(G54+G51)/G48
78 Total Debt-to-Equity Ratio =(D54+D51)/D69 =(E54+E51)/E69 =(F54+F51)/F69 =(G54+G51)/G69
79 Times-Interest-Earned Ratio =D13/(-D17) =E13/(-E17) =F13/(-F17) =G13/(-G17)
80 Inventory Turnover =D5/((D38+E38)/2) =E5/((E38+F38)/2) =F5/((F38+G38)/2)
81 Fixed Assets Turnover =D4/((D42+E42)/2) =E4/((E42+F42)/2) =F4/((F42+G42)/2)
82 Total Assets Turnover =D4/((D48+E48)/2) =E4/((E48+F48)/2) =F4/((F48+G48)/2)
83 Accounts Receivable Turnover =D4/((D37+E37)/2) =E4/((E37+F37)/2) =F4/((F37+G37)/2)
84 Average Collection Period =365/D83 =365/E83 =365/F83
85 Gross Profit Margin % =D6/D4 =E6/E4 =F6/F4 =G6/G4
86 Operating Profit Margin % =D13/D4 =E13/E4 =F13/F4 =G13/G4
87 ROA % =D28/((D48+E48)/2) =E28/((E48+F48)/2) =F28/((F48+G48)/2)
88 ROE % =D30/((D69+E69)/2) =E30/((E69+F69)/2) =F30/((F69+G69)/2)
89

ekkarill92 answered 1 year ago
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