Acc/561 Assignment Business Plan

Profitability Ratios The current profitability ratios are as shown in the table below Tootsie Roll Industries Inc.ActualRatiosProfitability ratios201520162017Gross Margin ratio373837Net Margin Ratio171916Return on Equity131412Return on Assets10119Interest cover Profitability ratios measure the profitability of a company. The companys profitability ratios have remained fairly stable despite the declining trend in gross revenue. On average the company earned 37 percent gross margin and 17 percent net margin. The profitability translated into an average 13 percent return on equity and 10 percent return on assets (Kimmel, Weygandt, Kieso, 2016). It is expected that the profitability ratios will remain stable in the next three years. The projected profitability ratios for the next three years are shown in the table below. Tootsie Roll Industries Inc. Projected Ratios Profitability ratios201820192020Gross Margin ratio373737Net Margin Ratio171717Return on Equity121212Return on Assets101010Interest cover91 93 95 The company does not have an outstanding loan and therefore the interest cover is for the proposed loan for 20 million at 5 annual interest and 3 year moratorium on principal repayment. Liquidity Ratios Tootsie Roll Industries Inc.Actual RatiosLiquidity Ratios201520162017Cash Ratio1.81.91.5Quick Ratio3.33.93.2Current Ratio4.14.74.2 According to the liquidity ratios of the past three years Tootsie Roll Industries Inc. is a fairly liquid company. The company has enough