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- April 13, 2020

# Individual Case Analysis 1

1

INDIVIDUAL CASE ANALYSIS

Individual Case Analysis1

Your Name (First M.Last)

School or InstitutionName (University at Place or Town, State)

Exercise 4C

All the calculations below are donebased on the 2014 financial results of Hershey’s.

Hershey’s current assets were$2,247,047. Their total current liabilities in that year were$1,935,647. So, Hershey company’s current ratio was ($2,247,047 /$1,935,647) = 1.16.

The Quick ratio is calculated bydividing the Current Assets minus Inventories by the Currentliabilities of the company. The value of Hershey’s Inventories was$801,036. Consequently, Hershey company’s Quick ratio was{($2,247,047-$801,036) / $1,935,647} = 0.75.

TheDebt-to-total asset ratio is calculated by dividing the total debt bytotal assets. In 2014, Hershey’s total debt or total liabilitieswere $4,109,986. Their total assets were $5,629,516. As a result,Hershey company’s Debt-to-total asset ratio was ($4,109,986 /$5,629,516) = 0.73 in 2014.

We calculate ‘Debt-to-equity’ ratiodividing the total amount of debt by total stockholder`s equity. In2014, the company’s total stockholder`s equity was $ 1,519,530. So,Hershey company`s debt-to-equity ratio was ($4,109,986/ $1,519,530) = 2.70.

The Long-term debt-to-equity ratio iscalculated by dividing total long-term debt of the company by totalstockholder’s equity. Hershey Company’s total long-term debt was$1,548,963. So, their Long-term debt-to-equity ratio was ($1,548,963/ $1,519,530) = 1.02.

The Time-Interest-Earned ratio iscalculated by dividing total income before interest and taxes bytotal interest expenses. In 2014, their total income before interestand taxes were $1,389,575. And their total interest expenses were$83,532. Subsequently, Hershey company’s Time-Interest-Earned ratiowas ($1,389,575 / $83,532) = 16.6.

TheInventory turnover of the company is calculated by dividing the totalamount of sales by the total amount of inventory with finished goods.In 2014, the total sales of Hershey’s company was $7,421,768. And,the total amount of inventory with finished goods were $801,036. As aresult, the Inventory turnover of Hershey company was ($7,421,768 /$801,036) = 9.27.

TheFixed assets turnover of the company is calculated by dividing thetotal amount of sales by the amount of fixed assets. The amount totalfixed assets of the company was $2,151,901. Hence, as of December 31,2014, the Fixed assets turnover of Hershey company was ($7,421,768 /$2,151,901) = 3.45.

TheTotal assets turnover of the company is calculated by dividing thetotal amount of sales by the amount of total assets. In 2014, thetotal assets of the company were $5,629,516. Accordingly, the totalAssets turnover of Hershey`s company was ($7,421,768 / $5,629,516) =1.32.

TheAccounts receivable turnover of the company is calculated by dividingthe Annual credit sales by the total accounts receivable. Thecompany’s net credit sales were $7,421.8 and the total amount ofaccounts receivable was $596,940. So, Hershey company’s Accountsreceivable turnover was ($7,421.8 / $596,940) = 0.012.

TheAverage collection period is calculated by dividing the totalaccounts receivable by the total credit sales/365 days. In 2014, thetotal accounts receivable (net) of the company was $596,940. Thetotal annual credits sales were $7,421,768. So, credit sales/365 dayswas 20333.62. As a result, the Average collection period of Hershey`scompany was ($596,940 / 20333.62) = 29.36 days.

Grossprofit margin is calculated by dividing the amount of sales minus thecost of goods sold by the total amount of sales. In 2014, thecompany’s total amount of sales was $7,421,768. The total cost ofgoods sold was $4,085,602. So, sales minus cost of goods sold wouldbe ($7,421,768 – $4,085,602) = $3,336,166. So, as of December 31,2014, Hershey company’s Gross profit margin was ($3,336,166 /$7,421,768) = 0.45, or 45 %.

TheOperating profit margin is calculated by dividing the amount ofearnings before interests and taxes by the total amount of sales.Hershey Company’s total amount of earnings before interests andtaxes were $1,389,575. And total sales were $7,421,768. Consequently,the company’s Operating profit margin was 0.19, or in percentage,it would be 19%.

TheNet profit margin is calculated by dividing the Net income by thetotal amount of sales. In 2014, the company`s net income was $846,912and the total amount of sales were $7,421,768. Therefore, as ofDecember 31, 2014, Hershey company`s Net profit margin was ($846,912/ $7,421,768) = 0.1142 or in percentage, it would be 11.41%.

TheReturn of Total Assets in calculated by dividing the Net income bythe amount of total assets. In 2014, the company`s net income was$846,912 and the total amount of assets were $5,629,516.Consequently, as of December 31, 2014, Hershey company`s Return ofTotal assets would be ($846,912 / $5,629,516) = 0.15, or 15%.

TheReturn of Stockholder’s Equity is calculated by dividing Net profitby total stockholder’s equity. Hershey Company’s net income was$846,912, and the total amount of stockholder’s equity was$1,519,530. As a result, Hershey Company’s Return of Stockholder’sEquity was ($846,912 / $1,519,530) = 55 %.

EarningsPer Share is calculated by dividing Net income by the total number ofshares of common stock outstanding. In 2014, the net income was$846,912 and the total number of outstanding shares was 299,281,967.So, Hershey company’s Earnings per share was ($846,912 /299,281,967) = $0.0028.

Priceearnings ratio is calculated by dividing the Market price per shareby the Earnings per share. In 2014, the company`s market price pershare was $84.05 and as calculated above, the Earning per Share was0.0028. So, as of December 31, 2014, Hershey Company`s Price earningsratio was ($84.05 / 0.0028) = 30018.

Growthratios

Thisratio exemplifies the compounded annualized rate of growth of acompany`s revenues, dividends, and earnings. Growth ratio has 4different sections, such as sales, net income, earnings per share,and dividends per share. But in this report, we will only talk aboutthe sales and net income growth ratios (Bennis, Warren, &Goldsmith, 2010).

Thecompany`s net sale in 2012 was $6644.3 and in 2014 it was $7421.8.The difference between the net sale of these years was ($7421.8 -$6644.3) =$777.5. So, the growth rate in sales of Hershey companyfrom 2012 to 2014 was ($777.5/$6644.3) =0.11 or in percentage, itwould be 11%

Thecompany’s net income in 2012 was $1707.5 and in 2014 it was$1956.2. The difference between the net income of these years was($1956.2 – $1707.5) =$248.7. Consequently, the growth rate in netincome ($248.7/1707.5) =0.15 or 15%.

Calculatingand analyzing these ratios are very important in order to get a clearpicture of the performance of a company.

Thecase study of Tiffany & Co

Thiscase is about Tiffany & Co. that wants to grow the sales of herstores and plans to add new stores in other countries.

Answerto Q1

Tiffanyshouldn’t rapidly add stores. The company can add new stores in thesame country and wait to see if its net sales and incomes are growingin a healthy manner. After that, Tiffany can think about openingbranches in other countries. Rapidly adding stores might take a tollon Tiffany’s profits.

Answerto Q2

Theloss in Tiffany & Co.`s annual sale might not have been onlybecause of their unprecedented qualities. While their design andquality in jewellery remain the same, other outlets are coming withdifferent materials with different prices. Online jewellery retailersare also causing this downgrade, because these retailers offer awider range of products and services along with low price and thefacility of home delivery.

Answerto Q3

TheTiffany blue box is an international symbol of style and glamor.While it may have been a symbol of fashion in the old world, nowadayscustomers are considering it to be just an overpriced box with thesame range of styles and colours. Tiffany and Co. have been unable toimplement variety and creativity into their merchandise and it hasmade them unattractive to the existing and new customers.

References

Bennis, Warren G andJoan Goldsmith. Learning To Lead. 1st ed. New York: Basic Books,

2010. Print.

*HSY HistoricalPrices | The Hershey Company Common Stock*. (2016). *YahooFinance*.

Retrieved 15 November 2016, fromhttps://finance.yahoo.com/quote/HSY/history?ltr=