The Hershey Company. For more than 100 years, The Hershey Company has enjoyed a position as one
Question:
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.
Reuters Averages (as of August 31, 2012) Tootsie Roll (year ended December 31, 2011) (Respectively in %'s below)
Return on stockholders’ equity 19.08% 6.59%
Gross profit rate 38.75% 31.2%
Return on sales (Net income ÷ Sales) 5.91% 8.3%
Total asset turnover 1.11 times 0.62 times
Return on assets (Net income ÷ Assets) 8.16% 5.12%
Financial leverage ratio Not available 1.29
Fundamentals of Financial Accounting
ISBN: 978-0078025914
5th edition
Authors: Fred Phillips, Robert Libby, Patricia Libby