Debt and Equity
Hershey and Tootsie
Go to the website of Hershey and Tootsie. Download and read the financial commands (IS, BS, SCF, SE) and the germane(predicate) footnotes (Summary of Significant Accounting Policies and footnotes discussing debt, commitments and contingencies).
Debt Calculations
From the financial information work and interpret the following balances.
present-day(prenominal) ratio = Current assets / Current liabilities
full debt to assets= Total liabilities / Total assets
Times delight pull in=Net income + interest + taxes / interest
Hersheys net interest depreciate on the income statement is net of interest income. Tootsie does not keep back interest expense on the income statement. For both companies, try to abide by the gross interest expense (not interest paid, which is on the statement of cash flows).
http://www.youtube.com/watch?
v=Th3IVHu3eVI
Equity
From the financial information steer and interpret the following ratios:
Price/ Earnings ratio= address price at year end / EPS
(you can work over year end share price from Yahoo finance)
roe=Net income / avg shareholders equity
Dividend payout ratio=Cash dividends declare / Net income
The following is for information purposes only. Since debt and equity levels are nigh related there is an analysis called the DuPont model that systematically breaks hard roe into components so that each can be evaluated.
ROE = NI xEBTxEBITxSalesxTotal assets
EBTEBITSalesTotal assetsCommon equity
EBT = earnings before taxes. The first-year ratio measures the proportion of earnings before tax that is unplowed by the company.
EBIT = earnings before interest and taxes. The second ratio measures the effect of interest; it indicates the proportion of earnings before interest and tax that is retained after paying interest. It should be considered unneurotic with the leverage component...If you want to get a full essay, straddle it on our website: Orderessay
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