The Hershey Co. is famous worldwide for its chocolate confections—the Hershey bar and those delightful Hershey Kisses. Tootsie Roll Industries is equally famous for its chewy Tootsie Roll and those flavorful Tootsie Roll Pops. Selected financial information about each company’s performance in 2018 follows:

Required:

1. Why is Tootsie Roll so much less profitable (in terms of ROA) than Hershey?

2. The industry-average ROA for confectioners is around 10%. Which company has the more valuable brand?

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Hershey Co. Tootsie Roll Industries $515.3 million $56.8 million Sales $7,791.1 million $1,171.1 million 19.2% Net income Return on assets (ROA) Profit margin Asset turnover 6.0% 16.4% 11.0% 1.18 0.55