acc_557_week_1_individual_assignme...

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acc_557_week_1_individual_assignme...

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Tootsie RollIndustries Inc. Loan PackageTeam AACC/561DateInstructorTootsie Roll Industries Inc. Loan PackageA good understanding of financial statements is an important factor in evaluating a company. The ability to decipher the information within a financial statement would give a better understanding about a company such as: the financial health of the company, if the company is a good investment, if the company should be extended loans and under what terms. It will be important evaluating the financial statement ratios of the Tootsie Roll Industries and using this information to evaluate why the company needs a loan, and in what ways the loan will affect the company. Let's first take a look at some of the financial ratios that will be used to evaluate the need for the additional funds in the form of a loan.Liquidity Ratio AnalysisThe current ratio for Tootsie Roll Industries is 3.63 (212,201/58,355). The company has a current ratio above 1, meaning it has enough current assets to cover its liabilities. The companies working capital figure would be (212,201- 58,355), equating to 153,846. Debts to assets ratio equal (857,856/191,921) for a ratio of 4.46Solvency Ratio AnalysisA look at Tootsie Roll's long-term viability is necessary to gain confidence in becoming a creditor. Solvency Ratios "measure the ability of the company to survive over a long period of time." (Kimmel, Weygandt, Kieso, 2009, pg. 54) The Debt to Total Assets Ratio measures how much

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