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

Instructions

(a) Based on the information contained in these financial statements, compute the current ratio for 2004 for each company.

Broadening Your Perspective What conclusions concerning the companies’ liquidity can be drawn from these ratios?

(b) Based on the information contained in these financial statements, compute the following 2004 ratios for each company.

(1) Debt to total assets.

(2) Times interest earned. (Hershey's total interest expense for 2004 was $67,919,000.)

What conclusions about the companies’ long-run solvency can be drawn from the ratios?

RESEARCH CASE