Paper

Running head: TOOTSIE ROLL INDUSTRIES INC. LOAN PACKAGE

Tootsie Roll Industries Inc. Loan Package

Brian Lamora, Josef Hernandez, Lynduel Mattair

ACC/561

May 14, 2012

Donald Schroedle

Tootsie Roll Industries Inc

Tootsie Roll Industries Inc., is among America’s favorite candy manufacturers. With annual sales swiftly approaching almost half-a-billion dollars, the current goal of the executive team is to increase the company’s total liabilities by 10%. Team A will prepare a loan package which includes Tootsie Roll Industries ratio analysis, justification for the loan request, and explain how the company plans use the proceeds from the loan and how the loan approval may affect the company overall (Tootsie Roll Industries Website 2012).

Liquidity ratio

Liquid ratios provide information about a company’s financial ability to pay back short term debt. The current ratio is figured out by dividing assets by liabilities to determine its ability to pay back short-term debt. Investors and creditors will look at this information and the higher the number is over 1:1 will determine if the company is healthy enough to pay back its short-term debt.

Current ratio |Assets |Liabilities |Ratio | |2007 |199,726 |57,972 |3.44:1 | |2006 |190,917 |62,211 |3.06:1 | |

The information in the table above shows that the company is in the 3:1 ratio for financial health. The Data provided would lower the liability of creditors because the company has three times the amount in assets to pay back any debt. Shareholders on the other hand may like to see the number a little lower because it will show that money is being reinvested in the company. The Quick ratio for determining the liquidity of a company is similar to the current ratio minus the inventory as an asset. The quick ratio subtracts the inventory because it may not be as liquid and able to be sold off quickly.

Quick Ratio |Current assets |Inventory |Current Liabilities...