Act 561 Tootsie Roll

Tootsie Roll Industries, Inc. Loan Package

Charles Royes

Tootsie Roll Industries, Inc.
Tootsie Roll Industries, Inc. has been in business since 1896 and is an established presence in the candy manufacturing industry with net sales in 2007 of $492.7 million. Tootsie Roll is publicly traded on the New York Stock Exchange with a current market capitalization of $1.43 billion. Tootsie Roll is committed to a culture of innovation and creativity and seeks to remain competitive within the industry by expanding its existing product lines through the introduction of Tootsie Roll Bubble Gum.
In order for Tootsie Roll Industries, Inc. to expand their growing candy line the organization needs a loan that will increase their liability by 10 percent. Team D has created a loan package detailing how Tootsie Roll will accomplish this. The loan package includes several types of liquidity, solvency, profitability ratios, and an explanation ratio, loan justification, how the company plans to use the loan, and how the loan may affect the company.
The Loan Package
Reason for the loan
Tootsie Roll Industries, Inc. intends to borrow $17.45 million dollars to fund the research, development, marketing, and launch the new line of bubble gum, Tootsie Roll Bubble Gum. Tootsie Roll Bubble Gum will come in the same six flavors as the existing line of Tootsie Roll candies. Tootsie Roll Bubble Gum will be produced in the same facilities alongside Tootsie Roll candy production with separate production lines dedicated to Tootsie Roll Bubble Gum (Tootsie Roll Industries, 2012).
Tootsie Roll Industries, Inc. requests a loan of $17.45 million with a repayment term of 10 years. The loan represents a 10 percent increase in total liabilities. Tootsie Roll does not currently have any outstanding bank borrowing and has working capital of $141.8 million. Tootsie Roll Industries cash from operations reached $90.1 million in 2007 and the company currently has $201.4 million in long-term...