resolve proble. 12-53 with the exhibit 12-37.

12-54 Profitability Ratios Exhibit 12-17 contains income statements and balance sheets of The Hershey Company. For more than 100 years, The Hershey Company has enjoyed a position as one of North America's largest manufacturers of quality chocolate and confectionery products. Today, The Hershey Company and its subsidiaries export to approximately 70 countries worldwide. 1. Compute the following ratios for 2011: (a) ROE, (b) gross profit rate, (c) return on sales, (d) total asset turnover, (e) ROA (with after-tax net income in the numerator), and (f) financial leverage ratio. Note that to be consistent with the industry averages used in the problem, return on sales and ROA are computed with after-tax net income, not EBIT in the numerator. 2. Assess Hershey's profitability in 2011 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 \begin{tabular}{|c|c|c|c|c|} \hline & \multicolumn{4}{|c|}{ For Years Ended } \\ \hline & & \begin{tabular}{c} ecember 31 , \\ 2011 \end{tabular} & & \begin{tabular}{l} ecember 31 , \\ 2010 \end{tabular} \\ \hline Net sales & & 6,080,788 & & 5,671,009 \\ \hline \multicolumn{5}{|l|}{ Costs and expenses: } \\ \hline Cost of sales & & 3,548,896 & & 3,255,801 \\ \hline Selling, marketing, and administrative & & 1,477,750 & & 1,426,477 \\ \hline Business realignment and impairment charges, net & & (886) & & 83,433 \\ \hline Total costs and expenses & & 5,025,760 & & 4,765,711 \\ \hline Income before interest and income taxes & & 1,055,028 & & 905,298 \\ \hline Interest expense, net & & 92,183 & & 96,434 \\ \hline Income before income taxes & & 962,845 & & 808,864 \\ \hline Provision for income taxes & & 333,883 & & 299,065 \\ \hline Net income & & 628,962 & $ & 509,799 \\ \hline \begin{tabular}{l} Net income per common share-Basic-Class B \\ Common stock \end{tabular} & $ & 2.58 & $ & 2.08 \\ \hline \begin{tabular}{l} Net income per common share-Diluted-Class B \\ Common stock \end{tabular} & $ & 2.56 & $ & 2.07 \\ \hline Net income per common share-Basic-Common stock & $ & 2.85 & $ & 2.29 \\ \hline Net income per common share-Diluted-Common stock & $ & 2.74 & $ & 2.21 \\ \hline \end{tabular}