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Module 04 Course Project - Tootsie Roll Industries Inc. Statement of Cash Flows

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.

In the References box, include an APA reference for all information retrieved, whether from the Tootsie Roll website 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

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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 2015 540,112 340,090 889 199,133 108,051 91,082 26,451 66,127 2014 543,525 340,933 947 201,645 117,722 83,923 28,434 62,860 Question 1: What is Tootsie Roll's Gross Profit Margin? (Hint: Divide Total Gross Margin by Total Revenue). What figure represent? Gross profit margin= 36.632% It shows the rate at which money is generated from sales after substracting cost of goods sold 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=12.32% Is shows the rate at which net profits are generated from sales in a company 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.) 2013= 0.93 2014= 0.99 2015= 1.04 Question 4: According to note 1 in the Notes to the Consolidated Financial Statements, how does Tootsie Roll Industries recognize revenue? manufacture and sales of candy product 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 trend has decreased over the past three years. There is a concern for the future of this company due to its trend This might be due to increased competition in the industry or entry of new firms into the market. 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? Net earnings has increased for the past three years. The reason being the company might have decrease the aftersales services, expenses and the suppliers might have decreased the prices of their products making the cost of goods sold. 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 net product sales has been decreasing and the net earnings has been increasing. This means that the company has been able to earn increasingly despite decrease in sales. The cost of goods rom the suppliers might have reduced. The company might have considered in reducing expenses incured in the company. This means that the company has been able to earn increasingly despite decrease in sales. The cost of goods rom the suppliers might have reduced. The company might have considered in reducing expenses incured in the company. References: (Hint! Citing a 10K and/or Annual Report: http://rasmussen.libanswers.com/faq/32821 ; APA Guide: http://guides.rasmussen.edu/apa ) https://www.last10k.com/sec-filings/tr/0001104659-13-016402.htm#ITEM8FinancialStatementsandSupplementary file:///H:/Annual%20Report%202015%20(pdf).pdf er from the Tootsie Roll website /32821 For general APA help, 2013 543,383 350,960 937 191,486 119,133 72,353 23,634 60,849 Total Revenue). What does this ng Net Earnings by Total Sales). Check the income statement w does Tootsie Roll Industries, Inc. hree years? Interpret this trend. this company due to its trend. ree years? Interpret this trend. have decrease the aftersales king the cost of goods sold. o items trending the same? ating decisions over the past The cost of goods rom the ncured in the company. The cost of goods rom the ncured in the company. q/32821 ; APA Guide: mentsandSupplementary 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. 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 2015 126,145 42,155 51,010 62,263 293,806 184,586 73,237 175,024 908,983 11,322 50,117 72,062 138,373 210,435 25,960 16,348 52,349 -1,992 698,548 908,983 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? The company uses a straight line of depreciation in valuation of property, plant and equipment Question 2: : Refer to Note 1 in the Notes to the Consolidated Financial Statements. What method does Tootsie Roll Indu to value its inventory? to value its inventory? It uses LIFO methods in valuation of inventory 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) 2015= net earnings/ fixed assets = 66127/499535 = 0.1324 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.) 2015= Total sales/account recevable =536692/51010 =10.52 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 turn over= cog/inventory =340090/62236 = 5.4654 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.) Total current assets have shown an increase Cash and cash equivalents have experience the largest change among the current assets Question 7: Is the amount of current liabilities more or less than the long-term liabilities for the most recent year? What d mean? Current liabilities are less than long term liabilities It means that the companies oporatioon relies most in long term liabilities that short term liabilities Question 8: Is the total stockholders' equity more or less than total liabilities for the most recent year? What does the res Total equity are more than total liabilities. This means that the companies oporations relies on on its equity mostly and not borrowings This means that the companies oporations relies on on its equity mostly and not borrowings 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= Total Liabilities/Total Assets Current ratio=Total Current Assets/Total Current Liabilities =210,437/908,983 = 293,806/72,064 =0.231 = 4.077 Question 10: What is the main reason for the change in stockholders' equity? What is the largest component of stockhold Change results in sales of stock and retained earnings The largest component is 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.) 2 classes of common stock.. Class A, 120,000 shares authorized and 37382 shares issued in 2015. Class , 40,000 shares authorized and 23542 shares issued in 2015. 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.) 2015= 66127/698548 = 0.0947 It shows how much profit a company generates from the money invested by shareholders References: https://www.last10k.com/sfile:///H:/Annual%20Report%202015%20(pdf).pdfec-filings/tr/0001104659 016402.htm#ITEM8FinancialStatementsandSupplementary n the text boxes below. ar 2, etc. Example: If eplace Year 2 with 2014, trieved, whether from the Tootsie Roll website outside sources. swers.com/faq/32821 For general APA help, 2014 100,108 39,450 43,253 70,379 264,621 190,081 73,237 175,024 910,386 11,641 46,482 64,459 154,791 219,250 25,892 15,894 64,927 -1,992 691,136 910,386 2013 88,283 33,572 40,721 61,856 240,111 196,916 73,237 175,024 888,409 9,153 45,580 60,121 147,983 208,104 25,702 15,455 73,109 -1,992 680,305 888,409 ements. What method of depreciation does Tootsie Roll plant and equipment tements. What method does Tootsie Roll Industries Inc. use 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.) 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 urrent assets erm liabilities for the most recent year? What does the result hat short term liabilities s for the most recent year? What does the result mean? d not borrowings d not borrowings the most recent year. Generally speaking, what do these ; Current ratio is calculated as Total Current Assets/Total ssets/Total Current Liabilities What is the largest component of stockholders' equity? For each class, how many shares are authorized, issued, or that class from the number issued to find the number ent year and interpret its meaning. Show your work. (Hint: by shareholders filings/tr/0001104659-13- 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 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 2015 2014 66127 91073 -8523 -53912 26037 100108 126145 62860 88769 -30459 -44664 11823 88283 100108 Question 1: Which method of reporting cash flows from operations does the company use? Indirect method 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? The difference is due to the adjustments needed to convert the total net earnings to the cash amount from operating activ Depreciation is tha largest adjustment 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? sale and maturity available for sale securities have created the larges cash inflow Purchase from available for sale securities have created the largest cash outflow Investing activities brought more use of cash in the company.. this is showsn by the diference between cash inflows and ca outflows in investing activities 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? Financial ativities provided use of cash. Stock repurchase has been decreasing towards the positive value. divideds have been increasing towards the negative value 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? Cash provided by oporations covers investing and financing activities It means the overal amount of cash in the company is increasing 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? To the Board of Directors and Shareholders of Tootsie Roll Industries, In Question 2: What is management responsible for? The managment is responsible for financial statements, maintaining effective internal control over financial reporting and assessment of the effectiveness of internal control over financial reporting. Question 3: What is the auditor responsible for? The auditor is responsible for examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the o financial statement presentation Question 4: Does the auditor give absolute assurance that the financials are free of material error? yes Question 5: What is the level of assurance given by the auditor? Reasonable Question 6: What policies and procedures does a company's internal control over financial reporting include? (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disp of the assets of the company. (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statement accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being m only in accordance with authorizations of management and directors of the company. (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition company’s assets that could have a material effect on the financial statements. Question 7: What audit firm signed the audit letter? IL audit firm in Chicago References: https://www.last10k.com/sec-filings/tr/0001104659-13-016402.htm#ITEM8FinancialStatementsandSupplementary file:///C:/Users/INTELI~1/AppData/Local/Temp/62efbc99055192cb96e37d2cbd3f16b6.pdf from the Tootsie Roll website 2821 For general APA help, 2013 60849 109823 -47963 -37425 24421 63826 88283 these two figures are different. Are operating section for the most mount from operating activities. ash outflow? Did investing activities between cash inflows and cash ented? What are the stock esting and financing activities? What to the end of the year? Has it unting Firm." Address the following ver financial reporting and for its d disclosures in the financial ement, and evaluating the overall orting include? the transactions and dispositions ation of financial statements in of the company are being made quisition, use, or disposition of the ntsandSupplementary 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 1 540,112 340,090 889 199,133 108,051 91,082 26,451 66,127 Year 1 126,145 42,155 51,010 62,263 293,806 184,586 73,237 175,024 908,983 11,322 50,117 72,062 138,373 210,435 25,960 16,348 52,349 Treasury Stock Total Equity Total liabilities and Shareholders Equity -1,992 698,548 908,983 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 2 543,525 340,933 947 201,645 117,722 83,923 28,434 62,860 Year 2 100,108 39,450 43,253 70,379 264,621 190,081 73,237 175,024 910,386 11,641 46,482 64,459 154,791 219,250 25,892 15,894 64,927 Year 3 Vertical Analysis Vertical Analysis Year 1 Year 2 Vertical Analysis Vertical Analysis Year 1 Year 2 543,383 350,960 937 191,486 119,133 72,353 23,634 60,849 Year 3 88,283 33,572 40,721 61,856 240,111 196,916 73,237 175,024 888,409 9,153 45,580 60,121 147,983 208,104 25,702 15,455 73,109 -1,992 691,136 910,386 -1,992 680,305 888,409 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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Explanation & Answer

Attached.

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
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
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

2015

2014
540,112
340,090
889
199,133
108,051
91,082
26,451
66,127

543,525
340,933
947
201,645
117,722
83,923
28,434
62,860

Question 1: What is Tootsie Roll's Gross Profit Margin? (Hint: Divide Total Gross Margin by Total Revenue). W
does this figure represent?
Gross profit margin= 36.87%
These are the returns expressed as a ratio of sales or as a percentage.

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=12.24%
These are the net returns expressed as a ratio or percentage of the sales.

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.)
2013= 0.93
2014= 0.99
2015= 1.04

Question 4: According to note 1 in the Notes to the Consolidated Financial Statements, how does Tootsie Roll
Industries, Inc. recognize revenue?
By manufacture and sale of candy products.

Question 5: Has Net Product Sales shown an increasing or decreasing trend over the past three years? Interpret t
trend. Should this be a concern for the company? Why or why not?

Over the past three years, the net sales have gone down. This trend raises a concern for the future of this compan
This could be due to high competition in the industry.

Question 6: Has the Net Earnings shown an increasing or decreasing trend over the past three years? Interpret th
trend. Should this be a concern for the company? Why or why not?
Net earnings have shown an increase in the past three years. The company might have decreased the aftersales
services, expenses and the suppliers might have decreased the prices of their products making the cost of goods
sold.

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
the past three years.

The net product sales have been going down and the net earnings have been going up.
Despite decrease in sales the company has been experiencing increased earnings. Cost of goods rom the supplier
might have reduced. The company should consider reducing expenses incured.

Despite decrease in sales the company has been experiencing increased earnings. Cost of goods rom the supplier
might have reduced. The company should consider reducing expenses incured.

References:

https://www.last10k.com/sec-filings/tr/0001104659-13-016402.htm#ITEM8FinancialStatementsandSupplement
file:///H:/Annual%20Report%202015%20(pdf).pdf

with 2014,

ther from the Tootsie Roll website

q/32821 For general APA help,

2013
543,383
350,960
937
191,486
119,133
72,353
23,634
60,849

Margin by Total Revenue). What

by dividing Net Earnings by

(Hint: Check the income

nts, how does Tootsie Roll

past three years? Interpret this

for the future of this company.

past three years? Interpret this

ve decreased the aftersales
s making the cost of goods

ese two items trending the
mpany's operating decisions over

st of goods rom the suppliers

st of goods rom the suppliers

alStatementsandSupplementary

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 ...


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