The financial statements of The Hershey Company are presented in Appendix B, following the financial statements for

Question:

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

Instructions

(a) Based on the information in these financial statements, compute the 2009 return on common stockholders’ equity, debt to total assets ratio, and return on assets ratio for each company.

(b) What conclusions concerning the companies’ profitability can be drawn from these ratios?
Which company relies more on debt to boost its return to common shareholders?

(c) Compute the payout ratio for each company. Which pays out a higher percentage of its earnings?
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