# Ratio calculation

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Calculate 7 ratios for two years for each category. Show the ratios in a table similar to this one below:

DEER PARK FINANCIAL RATIOS

20XX 20XX

Solvency Ratios

Solvency Ratio 1 0.60 0.51

Solvency Ratio 2 0.38 0.24

Liquidity Ratios

Liquidity Ratio 1 0.004 -0.031

Liquidity Ratio 2 1.02 0.83

Complete as Word Doc :

Provide "an explanation of each ratio". What you need to do is comment on the ratios themselves and the trend.

? For example, do you believe the company has adequate liquidity?

? Comment on the debt ratios and the trends-do you believe the company has too much debt?

? What about the profitability ratios and the trends?

? Is the trend from one year to the next getting stronger or weaker for all of the ratios? At the end of this section, make an overall statement of the team's opinion on the overall financial position of the company.

? What does each ratio mean specifically for Tootsie Roll Inc

Ratios below:

1. Liquidity

a. Current Ratio: for every dollar of liabilities this tells how much TR has in assets

b. Receivables Turnover: How liquid are the receivables

c. Average Collection period: Assess the effectiveness of TR's credit and collection policies

2. Solvency

a. Debt to total asset ratio: percent of total financing provided by creditors

b. Times interest earned ratio: TR's ability to meet interest payments as they come due.

3. Profitability

a. Return on assets ratio: measures the overall profitability of assets in terms of the income earned on each dollar invested in assets

b. Gross Profit Rate: Indicates TR's ability to maintain an adequate selling price above its cost of goods sold (chose this one since TR is concerned about costs they cannot pass on to customers p. A-12 & A-13).

#### Solution Summary

The solution calculates and explains some ratios for Tootsie Roll Inc