EXHIBIT 12-17 The Hershey Company CONSOLIDATED BALANCE SHEETS 2011 2010Years End
ID: 2558433 • Letter: E
Question
EXHIBIT 12-17 The Hershey Company CONSOLIDATED BALANCE SHEETS 2011 2010Years Ended December 31, 2011, and December 31, 2010 (S in thousands, except Current assets: Cash and cash equivalents Accounts receivable--trade 693.686 884642 per share data) 390,061 399,499 64895355,760 136,861 Deferred income taxes Prepaid expenses and other 2,046,558 2,005,217 1,559,717 1,437.702 Total current assets Property, plant, and equipment, net 524,134 516.745 123,080 Other intangibles Deferred income taxes Other assets 111,913 38,544 138722 21,387 Total assets Liabilities and Stockholders' Equity Current liabilities: s 420,017 410,655 Accrued liabilities Accrued income taxes 1,899 9,402 24,088 Short term debt 97.593 1.173,775 Total current liabilities Long term debt Other long term liabilities 1,298,845 1.748.500 1,541,825 617.276 494,461 Total liabilities Stockholders' equity. 3,539.551 3.335,131 Common stock, shares issued: 299,269,702 in 2011 299,195 60,706 434,865 and 299,195,325 in 2010 Class B Common stock, shares issued: 60,632,042 in 2011 and 60,706,419 in 2010 Additional paid-in-capital Retained earmings Treasury Common stock shares, at cost 490,817 4,699,597 4,374,718 134,695,826 in 2011 and 132,871.512 in 2010 (4,258,962) (4,052,101) Accumulated other comprehensive loss The Hershey Company stockholders equity 902,316 Noncontrolling interests in subsidiaries Total stockholders' equity Total liabilities and stockholders' equity $4412.199Explanation / Answer
(1).
(a). Total-debt-to-total-assets ratio for 2011 = 80.22%
Explanation;
Total-debt-to-total-assets ratio = Total liabilities / Total assets
Total liabilities = $3539551
Total assets = $4412199
Now let’s put these values in given formula;
Total-debt-to-total-assets ratio = $3539551 / $4412199 = 80.61%
(b). Total-debt-to-total shareholders’ equity ratio for 2011 = 405.22%
Explanation;
Total-debt-to-total shareholders’ equity ratio = Total liabilities / Total shareholders’ equity
Total liabilities = $3539551
Total shareholders’ equity = $872648
Now let’s put these values in given formula;
Total-debt-to-total shareholders’ equity ratio = $3539551 / $872648 = 405.61%
(2).
Total debt to total assets ratio of Reuters and Tootsie Roll is zero and total debt to total assets ratio of Hershey is 80.22%. It means that Hershey company have sufficient amount of debts in its’ capital structure and this use of debts can generate postive profitability results due to leverage impact of debts’ funds. Overall it may increase EPS if other factors are positive.
Total debt to shareholders ratio of Reuters company is 46.05% and for Tootsie Roll it is zero but for Hershey it is 405.61%. It means that Hershey company is highly finnaced by debts in compare to other two companies. Although it is true that use of debts generate positive results but it is also true that excess use of debts will reduce profitability and EPS as well because excess use will increase burden of interest payment and also increase interest rates. Apart from this it will also increase financial risk for the company. Thus overall we will say that excess use of debt is not good hence ratio of 405.61% is unsatisfactory.
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