The financial statements of Hershey Foods are presented in Appendix B, following the financial statements for Tootsie Roll in Appendix A.

Instructions a

(a) Based on the information contained in these financial statements, determine the following values for each company:
(1) Profit margin ratio for 1998.
(2) Gross profit for 1998.
(3) Gross profit rate for 1998.
(4) Operating income for 1998.
(5) Percentage change in operating income from 1997 to 1998.
(6) Operating expenses to sales ratio for 1998.

(b) What conclusions concerning the relative profitability of the two companies can be drawn from these data?
RESEARCH CASE