Refer to the financial statements of Tootsie Roll Industries and the accompanying notes to its financial statements in Appendix A.

Instructions

(a) Calculate the receivables turnover ratio and average collection period for 1998.

(b) Calculate the credit risk ratio for 1998 and 1997.

(c) Did Tootsie Roll have any potentially significant credit risks in 1998? (Hint: Review Note 11 to the financial statements.)

(d) What conclusions can you draw from the information in parts (a)-(c)?

COMPARATIVE ANALYSIS PROBLEM: Tootsie Roll vs. Hershey Foods