Chapter 17, Problem 3BTN

To determine

Concept Introduction:

Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.

Profit Margin Ratio:

Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:

Profit Margin = Net Income / Sales

Requirement-1:

To Calculate:

The profit margin ratio of Hershey Company for the years ending Dec. 31, 2016 and Dec. 31, 2015

To determine

Concept Introduction:

Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.

Requirement-2:

To Calculate:

The Gross profit margin ratio of Hershey Company for the years ending Dec. 31, 2016 and Dec. 31, 2015

To determine

Concept Introduction:

Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.

Return on total Assets:

The Return on total assets is profitability ratio that measures the percentage of profit earned on average assets invested in the business. Return on asset is calculated by dividing the net income by average total assets. The formula to calculate Return on assets is as follows:

  $Returnonassets=\frac{Netincome}{AverageTotalAssets}$

Note: Average total assets are calculated as an average of beginning and ending total assets. The formula to calculate the average total assets is as follows:

  $AveragetotalAssets=\frac{\left(Beginningtotalassets+Endingtotalassets\right)}{2}$

Requirement-3:

To Calculate:

The Return on total assets of Hershey Company for the years ending Dec. 31, 2016 and Dec. 31, 2015

To determine

Concept Introduction:

Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.

Return on Common Stockholder's Equity:

Return on Equity is the rate of return earned by the Stockholders on their investment in the company. It is calculated with the help of following formula:

  $\mathrm{Re}turnonEquity=\frac{NetIncome}{AverageStockholder’sEquity}$

The Average stock holder's equity calculated with the help of following formula:

  $Averagestockholder’sequity=\frac{( Beginningstockholder’sequity+Endingstockholder’sequity)}{2}$

Requirement-4:

To Calculate:

The Return on Common Stockholder's Equity of Hershey Company for the years ending Dec. 31, 2016 and Dec. 31, 2015

To determine

Concept Introduction:

Financial Statement analysis is done using the components of financial statement. These components are Balance sheet, Income statement, Statement of Cash flows etc. Annual report of a company contains financial statement of that year and previous year for comparison. If the company has subsidiaries or segments, the financial statement shall be consolidated for whole business of the company.

Earnings per share:

The Earnings per share is the amount of net income earned by each common share outstanding. The Earnings per share calculated by with help of following formula:

  $\text{Earnings per share=}\frac{\text{Net Income - Preferred Dividend}}{\text{Number of Common Shares Outstanding}}$

Requirement-4:

To Indicate:

The Basic Net Income per common share of Hershey Company for the years ending Dec. 31, 2016 and Dec. 31, 2015