This document provides historical financial information for Tootsie Roll Industries for the years 2016-2018. It includes income statements and balance sheets for each year. Key figures shown include total assets increasing from $920 million in 2016 to $947 million in 2018. Total current assets also increased over this period from $299 million to $304 million. Total liabilities remained relatively steady between $197-208 million. Total shareholder equity increased from $711 million in 2016 to $751 million in 2018. The notes provide calculations for various financial ratios over 2016-2018 such as current ratio, debt-to-equity ratio, and profit margin.

1. Historical AnalysisHistorical Financial Analysis Dec. 2018Dec.
2017 Dec. 2016 CURRENT ASSETS:Cash and cash
equivalents$110,899.00$96,314.00$119,145.00Restricted
cash$388.00$406.00$382.00Investments$75,140.00$41,606.00$
67,513.00Accounts receivable trade, less allowances of $1,921
and $1,884$49,777.00$47,354.00$42,964.00Other
receivables$2,941.00$5,425.00$3,299.00Inventories:Finished
goods and work-in-process$32,159.00$31,922.00$34,631.00Raw
materials and supplies$22,365.00$22,905.00$22,900.00Income
taxes receivable$12,974.00$1,444.00Prepaid
expenses$10,377.00$12,014.00$5,702.00Deferred income
taxes —$1,320.00Total current
assets$304,046.00$270,920.00$299,300.00PROPERTY, PLANT
AND EQUIPMENT, at
cost:Land$21,726.00$21,962.00$22,081.00Buildings$121,780.0
0$118,491.00$116,398.00Machinery and
equipment$401,037.00$381,665.00$369,802.00Construction in
progress$3,408.00$4,866.00$3,546.00$526,984.00$511,827.00L
ess—Accumulated
depreciation$361,850.00$348,012.00$330,922.00Net property,
plant and
equipment$168,101.00$178,972.00$180,905.00OTHER
ASSETS:Goodwill$73,237.00$73,237.00$73,237.00Trademarks
$175,024.00$175,024.00$175,024.00Investments$170,409.00$1
90,510.00$164,665.00Split dollar officer life
insurance$26,042.00$26,042.00$26,042.00Prepaid expenses and
other$11,980.00$15,817.00$602.00Deferred income
taxes$522.00$424.00$326.00Total other
assets$457,214.00$481,054.00$439,896.00Total
assets$947,361.00$930,946.00$920,101.00CURRENT
LIABILITIES:Accounts
payable$11,817.00$11,928.00$10,320.00Bank
loans$373.00$440.00$336.00Dividends
payable$5,772.00$5,660.00$5,573.00Accrued

2. liabilities$42,849.00$45,157.00$46,300.00Postretirement health
care benefits$580.00$603.00$513.00Deferred income
taxes$61,391.00 —$519.00Total current
liabilities$61,391.00$63,788.00$63,561.00NONCURRENT
LIABILITIES:Deferred income
taxes$43,941.00$41,457.00$46,060.00Bank loans$373.00 —
$230.00Postretirement health care
benefits$7,500.00$12,894.00$11,615.00Industrial development
bonds$3,816.00$7,500.00$7,500.00Liability for uncertain tax
positions$3,816.00$4,817.00$5,185.00Deferred compensation
and other liabilities$43,941.00$66,686.00$74,412.00Total
noncurrent
liabilities$135,473.00$133,354.00$145,002.00TOOTSIE ROLL
INDUSTRIES, INC. SHAREHOLDERS’ EQUITY:Common
stock, $.69-4/9 par value— 120,000 shares authorized— 37,960
and 37,701, respectively,
issued$26,767.00$26,361.00$26,181.00Class B common stock,
$.69-4/9 par value— 40,000 shares authorized— 24,891 and
24,221, respectively,
issued$17,767.00$17,285.00$16,820.00Capital in excess of par
value$696,535.00$656,752.00$646,768.00Retained
earnings$33,764.00$57,225.00$43,833.00Accumulated other
comprehensive loss-$22,222.00-$21,791.00-$20,246.00Treasury
stock (at cost)— 85 shares and 83 shares, respectively-
$1,992.00-$1,992.00-$1,992.00Total Tootsie Roll Industries,
Inc. shareholders’
equity$750,622.00$733,840.00$711,364.00Noncontrolling
interests-$125.00-$36.00$174.00Total
equity$750,497.00$711,538.00Total liabilities
$196,864.00$0.00$197,142.00$0.00$208,563.00Total liabilities
and shareholders’
equity$947,361.00947361%$930,946.00930946%$920,101.0092
0101%947361:930946:920101Ratio9473.61:9309.46:9201.01
Notes Historical AnalysisThe debt-to-equity (D/E) ratio is
calculated by dividing a company's total liabilities by its
shareholder equity. These numbers are available on the balance

3. sheet of a company's financial statements. The ratio is used to
evaluate a company's financial leverageThe company's profits
have been increasing over the three year span of 2016, 2017,
2018.
FormulasLiquidity Ratios:Dec. 2018Dec. 2017Dec. 2016Current
Ratio4.9534.2474.709Compares current assets and current
liabilitiesWorking Capital$ 242,655.00$ 207,132.00$
235,739.00Shows if a company has more current assets than
current liabilitesSolvency Ratios:Debt to Assets
Ratio0.2080.2120.227Explains a company's financial
leverageFree Cash Flow$ 50,339.00$ 3,679.00$
60,194.00Explains cash flow from operationsProfitability
Ratios:Profit Margin0.1100.1560.130Company's
profitabilityPayout Ratio0.4040.2800.330Total dividends paid
to shareholdersReturn on Assets0.0600.0870.074Ability to
turnover assetsGross Profit Rate0.3650.3720.385Revenue left
Financial Statements
Week 3 Project: Tootsie, Inc.
Financial Analysis: Prepare a financial analysis (spreadsheet) in
Excel using the company's financial statements. The spreadsheet
should include historical financial statements (balance sheet and
income statement), projected financial statements (balance sheet
and income statement), a three year ratio analysis of the
company's historical financial statements, and a three year ratio
analysis of the company's projected financial statements.
Incorporate several types of liquidity, solvency, and
profitability ratios. Include industry comparisons and list your
assumptions.
Accounting Periods: The assigned accounting periods for the
historical and projected financial statements and ratio analysis
are as follows.
Complete a three year historical analysis for the periods ending
12/31/16, 12/31/17, and 12/31/18 and a three year projected

4. analysis for the periods ending 12/31/19, 12/31/20, and
12/31/21.
Spreadsheet: Complete your historical analysis and projections
via an Excel spreadsheet. Enter the income statement for the
period ending 12/31/2016, 12/31/17, 12/31/2018, 12/31/2019,
12/31/2020, and 12/31/2021 in one tab. Enter the balance sheet
for the aforementioned years in a separate tab of your
spreadsheet. Column A of each tab will list the account names
such as, in part, Net Product Sales, Rental and Royalty
Revenue, Cash and cash equivalents, etc. Each column
thereafter will list the annual accounting numbers. Add a
separate column for each year.
Your team is required to include an income statement and
balance sheet for each year. The format of your team’s financial
statements should be consistent and conform with the
company’s 10-K. With respect to the income statement, include
the accounts net product sales through net earnings attributable
to Tootsie Roll Industries, Inc. Exclude all accounts listed
below net earnings attributable to Tootsie Roll Industries,
Inc. Create an additional tab that uses formulas to calculate
your team’s ratio analysis. The formulas extract data from the
financial statements. Incorporate benchmarking ratios and
analysis. Further, your team should list all assumptions used to
prepare a financial analysis of the company. The reasons and
justifications for the new loan will impact the projected
financial statements and related ratio computations for the years
2019 - 2021.
The financial statements for Tootsie, Inc. are published via the
company’s web site. Alternatively, you can use the following
links to the Securities and Exchange Commission. The
information included herein contains, in part, income statement
and balance sheet information for the periods ending 12/31/16
through 12/31/18.

5. In order to produce a quality spreadsheet in an efficient manner
my suggestion is to perform the following steps.
1. Open the link listed at the bottom of this thread, select
financial statements and subsequently select consolidated
statement of earnings and retained earnings.
2. At the top left side of the document is the following: Print
Document View Excel Document
Select View Excel Document
3. Save and view the Excel document. Included therein is a copy
of, in part, the income statement and balance sheet. The income
statement tab is titled consolidated statement of earnings. The
balance sheet tab is titled consolidated statement of financial
position. You will only use the income statement and balance
sheet.
4. Copy the income statement and balance sheet information
from the downloaded document to a NEW spreadsheet. Income
Statement: Accounts listed below net earnings attributable to
Tootsie Roll Industries, Inc. are not required. Balance
Sheet: Information below Total Liabilities and Shareholders
Equity is not required. The new spreadsheet is your working
document that will be turned in with your final project.
5. Repeat the above steps to obtain the 2015 and 2016 balance
sheets (see link below).
6. End Result: Income Statement - Six Years = Six
Columns. Balance Sheet - Seven Years = Seven Columns.
7. Create a separate tab for ratio analysis and assumptions
The following are links to the financial statements. The first
SEC internet site includes all required financial statements with
the exception of the 2015 and 2016 balance sheet.
https://www.sec.gov/cgi-
bin/viewer?action=view&cik=98677&accession_number=00015
58370-19-001395&xbrl_type=v

6. https://www.sec.gov/cgi-
bin/viewer?action=view&cik=98677&accession_number=00015
58370-17-001046&xbrl_type=v
Your team needs the 2015 balance sheet in order to, in part,
prepare a ratio analysis of the company. Example: If you are
computing the 2016 return on assets ratio (net income / average
total assets), the denominator is based on total assets as of
1/1/16 and 12/31/16. Total assets as of 1/1/16 is equal to the
12/31/15 balance (2015 balance sheet). To calculate the average
you need to add the two numbers and divide by 2.
As discussed, my suggestion is to enter the historical and
projected data for the income statement in one tab. Enter the
historical and projected data for the balance sheet in a separate
tab. Create a separate tab for the ratio analysis and assumptions.
I want to encourage everyone in our class to develop/use critical
thinking and problem solving skills. As a result, please do not
hesitate to use a different format if you believe the presentation
makes sense from a preparation and business perspective.
Projections: The following is an article that discusses the
fundamentals of common size financial statements and
projections. The information contained therein will provide
guidance regarding the utilization of financial results (2016 -
2018) in order to prepare projections (2019 - 2021). My
suggestion is to use vertical analysis (i.e. as compared to
horizontal analysis). With respect to your spreadsheet, add a
column between the years 12/31/16, 12/31/2017 and
12/31/2018. Use the column to calculate a vertical analysis for
each item listed with the income statement and balance sheet.
http://www.accountingformanagement.org/vertical-analysis-of-
financial-statements/
With respect to the income statement, the first step is to express
each income statement item (2016 - 2018) as a percentage of
sales (vertical analysis). The next step is to forecast sales (2019

7. - 2021). After you project sales for each year (2019 - 2021) you
need to calculate the remaining items listed on the income
statement as a percentage of sales. Example: Based on your
historical analysis (2016 - 2018) assume product cost of goods
sold ranges between 62.72% and 66.48% of sales. My
suggestion is to average the years (2016 - 2018). An estimated
cost of goods sold percentage is approximately 64.60% of sales.
The resulting percentage (64.60%) is then applied to your
team’s forecast sales figures for the periods 2019 - 2021 in
order to derive projected cost of goods sold. Please see the
example included via the link above for further guidance.
Finally, provide support and list all assumptions.
The preparation of a projected balance sheet is different
compared to an income statement. There are multiple methods
to prepare a projected balance sheet. A simplified approach is to
average each item on the balance sheet for the year 2016 - 2018.
Sum 2016, 2017 and 2018 and divide by three. Example:
Investment 2016=67,513 2017=41,606 2018=75,140 Total =
184,259/3=61,420. The result is your 2019 estimate. Averaging
may not apply to every account. For instance, you may need to
modify certain accounts impacted by your team’s business
proposals. Example: An investment in fixed assets. With respect
to your projections, there is not necessarily a right or wrong
answer. However, I expect your team to use critical thinking
and analysis via incorporating quality assumptions.
For projection/calculation purposes, total revenue (i.e. sales) for
the periods 2016 - 2018 is as follows.
2016: 521,100
2017: 519,289
2018: 518,920

8. Projected sales is an estimate based on, in part, prior sales
results, management expectations of future growth or lack
thereof, and analysis of key metrics such as competition or
future changes to your business plan. With respect to this
project, your team should discuss the business and develop a
conclusion. For instance, if sales typically increase 2% per year
then a 10% top line growth rate is excessive unless you can
justify why this makes sense. Finally and consistent with
project requirements, list the assumptions and factors that
influenced your team’s conclusion in a separate tab of your
team’s spreadsheet.
The following is an article that will help you understand the
process. However, you need to consider the fact that we are
forecasting sales for a multinational corporation not a small
business.
http://www.entrepreneur.com/article/77674#
Benchmarking: One option is to identify the organization's
competitors and separately research historical performance for
each company. For additional information please see the link
below and select “ANALYSIS”. Select Financial Health and
Management Effectiveness.
Using the same internet site, select “RELATED” at the top of
the page. The company’s major competitors are listed therein. If
you cannot locate the specific information you are looking for
my suggestion is to compute key ratios separately via an
analysis of their current and prior year(s) financial
statements. The process is not time consuming if you set-up an
excel spreadsheet with formulas.
http://www.msn.com/en-us/money/stockdetails/analysis/fi-
126.1.TR.NYS
For additional financial information related to Mondelez
International, Inc. and The Hershey Company review the
following internet sites. Select Analysis (Key Statistics /

9. Growth / Profitability / Price Ratios). Financial data is also
listed at the bottom and includes financial health and
management effectiveness. There is additional competitor data
available via selecting the RELATED tab.
https://www.msn.com/en-us/money/stockdetails/analysis/fi-
126.1.MDLZ.NAS
https://www.msn.com/en-us/money/stockdetails/analysis/fi-
56.1.HSHY34.BSP
Business Plan: Prepare a business plan that includes a synopsis,
marketing and sales analysis, product line narrative, funding
request/purpose of loan, and a financial summary using the
results from your spreadsheet. It is important to collaborate
with everyone on the team and discuss how the request/purpose
of the loan and financial analysis will impact each section of the
business plan.
10-K: The following is a link to the company's most recent 10-
K. The information incorporated therein will help you with the
preparation of the business plan.
https://www.sec.gov/Archives/edgar/data/98677/0001558370190
01395/tr-20181231x10k.htm
Annual Report: The following is a link to the annual report. The
information incorporated therein will help you with the
preparation of the business plan.
Select 2018 as the year to display. The 2018 annual report is
listed under the Annual Reports heading.
http://tootsie.com/financials/
For additional details regarding business plans please review
the following internet site.
http://www.sba.gov/category/navigation-structure/starting-
managing-business/starting-business/writing-business-plan