12-53 Solvency Ratios Exhibit 12-17 contains the income statements and balance sheets of The Hershey Company for the years ended December 31, 2011, and December 31, 2010. Hershey manufactures and sells products under more than 80 brand names. 1. Compute the following ratios for 2011: (a) total-debt-to-total-assets, and (b) total-debt-tototal-equity. To be consistent with the source of industry data used in the problem, define total debt as short-term debt and long-term debt (including the current portion) only. This definition is not the one we have used in the text, so it is worth emphasizing that it does not include items such as accounts payable and accrued liabilities; only the items specified. 2. Assess Hershey's solvency compared with the following industry averages for the food processing industry as provided by Reuters and with ratios computed for Tootsie Roll, a competitor in the candy manufacturing, marketing, sales, and distribution industry. See a description of the food processing industry in problem 12-52. CONSOLIDATED BALANCE SHEETS \begin{tabular}{|c|c|c|} \hline & 2011 & 2010 \\ \hline \multicolumn{3}{|l|}{ Assets } \\ \hline \multicolumn{3}{|l|}{ Current assets: } \\ \hline Cash and cash equivalents & $693,686 & $884,642 \\ \hline Accounts receivable-trade & 399,499 & 390,061 \\ \hline Inventories & 648,953 & 533,622 \\ \hline Deferred income taxes & 136,861 & 55,760 \\ \hline Prepaid expenses and other & 167,559 & 141,132 \\ \hline Total current assets & 2,046,558 & 2,005,217 \\ \hline Property, plant, and equipment, net & 1,559,717 & 1,437,702 \\ \hline Goodwill & 516,745 & 524,134 \\ \hline Other intangibles & 111,913 & 123,080 \\ \hline Deferred income taxes & 38,544 & 21,387 \\ \hline Other assets & 138,722 & 161,212 \\ \hline Total assets & $4,412,199 & $4,272,732 \\ \hline \multicolumn{3}{|l|}{ Liabilities and Stockholders' Equity } \\ \hline \multicolumn{3}{|l|}{ Current liabilities: } \\ \hline Accounts payable & $420,017 & $410,655 \\ \hline Accrued liabilities & 612,186 & 593,308 \\ \hline Accrued income taxes & 1,899 & 9,402 \\ \hline Short-term debt & 42,080 & 24,088 \\ \hline Current portion of long-term debt & 97,593 & 261,392 \\ \hline Total current liabilities & 1,173,775 & 1,298,845 \\ \hline Long-term debt & 1,748,500 & 1,541,825 \\ \hline Other long-term liabilities & 617,276 & 494,461 \\ \hline Total liabilities & 3,539,551 & 3,335,131 \\ \hline \multicolumn{3}{|l|}{ Stockholders' equity: } \\ \hline \begin{tabular}{l} Common stock, shares issued: 299,269,702 in 2011 \\ and 299,195,325 in 2010 \end{tabular} & 299,269 & 299,195 \\ \hline \begin{tabular}{l} Class B Common stock, shares issued: 60,632,042 in \\ 2011 and 60,706,419 in 2010 \end{tabular} & 60,632 & 60,706 \\ \hline Additional paid-in-capital & 490,817 & 434,865 \\ \hline Retained earnings & 4,699,597 & 4,374,718 \\ \hline \begin{tabular}{l} Treasury-Common stock shares, at cost: \\ 134,695,826 in 2011 and 132,871,512 in 2010 \end{tabular} & (4,258,962) & (4,052,101) \\ \hline Accumulated other comprehensive loss & (442,331) & (215,067) \\ \hline The Hershey Company stockholders' equity & 849,022 & 902,316 \\ \hline Noncontrolling interests in subsidiaries & 23,626 & 35,285 \\ \hline Total stockholders' equity & 872,648 & 937,601 \\ \hline Total liabilities and stockholders' equity & $4,412,199 & $4,272,732 \\ \hline \end{tabular} CONSOLIDATED STATEMENT OF OPERATIONS