The Hershey Company’s Ratios

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The Hershey Company’s Ratios University of Phoenix ACC561 The Hershey Company’s Ratios It all started with a decision in 1894 by Milton Hershey’s “when he decided to produce a sweet chocolate as a coating for his caramels” (The Hershey Company [THC], n.d., chapter 1). Located in Landacaster, PA an enterprise was born and the name was Hershey Chocolate Company. At the time when chocolate was a luxury for the wealthy, Mr. Hershey “created mass production to lower the per-unit cost and make milk chocolate affordable to all” (THC, chap 1). Let’s fast forward to the present, the Hershey Company current market situation is that they are “the leading North America manufacture of chocolate and non-chocolate confectionery and grocery products”(THC, chap 8). So how did the Hershey Company become the top leading manufacturer of chocolate? We will discuss a few financial analysts such as ratio analysis which are used for evaluating the financial health and performance of a company. There are many Ratio analysts but the paper will be discussing only five ratio analyses which are current ratio, debt to total assets ratio, free cash flow, return on assets ratio, and asset turnover ratio. “Current Ratio’s expresses the relationship of current assets to current liabilities. Current ratio is widely used for evaluating liquidity and short-term debt paying ability” (Kimmel, Weygandt, & Kieso, , p. 710). For 2013 the Hershey Company had current assets of $2,487.3 million and current liabilities of $1408.0. To calculate the current ratio you take the current assets which is $2,487.3 million dived by the current liabilities which is $1408.0 million and the current ratio equals 1.8 percent. What this measures tells us it that the Hershey Company “current ratio of 1.8 means that for every dollar of current liabilities, it has $1.8 of current assets” (Kimmel et al., p.710).

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