Tootsie Roll Essay

Loan Application for Tootsie Roll Industries Learning Team C Hal Lane, Glorina Tukes ACC 561 21 March 2013 Instructor: Argelia Zaucha

Loan Application for Tootsie Roll Industries Tootsie Roll Industries, Inc. has been engaged in the manufacture and sale of confectionery products for 111 years. Our products are primarily sold under the familiar brand names such as Tootsie Roll, Tootsie Roll Pops, Caramel Apple Pops, Child's Play, Charms and Double Bubble (Kimmel, Weygandt, Kieso, 2009). This application is for a small business loan in the amount of 17.5 million which is equivalent to 10 percent of our current assets. This loan will finance the physical growth of the company to expand its operational space to accommodate increases in orders for product, equipment, and staff. We have current buyers that are requesting an increase in product and new buyers interested in making purchases that will require an increase in production. Within a year of obtaining the requested funds we internal projections indicate net sales should increase to approximately 550 million, a 13 percent increases from current sales. Our confectionary products are consumed year round with peaks during various holiday seasons and this unique opportunity allows us to continue expanding our market share. Sound financial analysis coupled with a proven professional management team clearly demonstrates our credit worthiness as we seek your approval for this loan request. Resumes of the senior management team and additional financial documents are available for your review if desired.
Financial Analysis
As reported in the discussion and analysis section of the 2007 Annual Report in Accounting, Tootsie Roll Industries cash flow from operations and returns from short-term investments should future financing needs (pg A-7, para.1). Our desire to expand operational space to accommodate increases in orders for product could be accomplished by liquidating current assets; however this immediate opportunity for this expansion opportunity is best suited by external financing. The attached balance provides an overall assessment of the company's financial position. The balance sheet shows total assets of Tootsie Roll Incorporated as $812,725 million, total liabilities as $174,795 million, and share holders’ equity as $638,230 million. The statement of cash flows provides insight to our various sources of cash. In 2007 we generated over $90 million from various operating activities, while spending just over $43 million in various investing activities. The combined earning statement reveals total revenue for 2007 was in excess of $497 million, with a total gross margin slightly more than t $168 million and retained earnings in the amount of $156 million. The attached financial documents are provided as enclosures to this application. Additional calculations for various liquidity, solvency and profitability ratios are also attached to demonstrates Tootsie Roll Industries Inc credit worthiness and ability to repay this loan. As documented in the attached financial analysis reports, we have nearly $142 million in working capital. Our current ratio of 3.45:1 coupled with our current cash to debt coverage of 1.50:1 clearly demonstrates our ability to pay maturing obligations and meet any immediate need for cash in the near future. Additional liquidity ratios are available upon request. Complementing various liquidity indicators, our solvency

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