Prepare internal financial evaluation (IFE) and financial ratios for Hershey\'s
ID: 428335 • Letter: P
Question
Prepare internal financial evaluation (IFE) and financial ratios for Hershey's Company. For the Financial Ratios make sure to use the revenue statement and balance sheet in the exercise portion of the chapter. Using the IFE and Financial Ratios, as well as an analysis, describe how Hershey is performing internally. Make sure to use important details from the IFE and Financial Ratio results and the critical reflections to draw conclusions. Post the analysis and conclusions in narrative form. Make sure to include key data from the exercises.
Please include proper references and citations accordingly. Thank you.
Explanation / Answer
Internal Financial Evaluation of Hershey company are
-Top line= $7515 Mn
Bottom line- $783 Mn
Operating income margin= 20.4%
EBT= 14.78%
From IFE we can say that the company has sound financial and sufficient funds to operate. It is having 20.4% of operating income which means every dollar invested has 20 cents of income. From the report it seems that financial prudence is maintained and there is less chance of financial fraud in the company.
Key financial Ratios
Return on assets= 14.14%
Return on Capital employed- 22.36%
Net Margin= 10.42%
Current Ratio= 0.96
Quick Ratio= 0.47
Financial Leverage= 6.07
Debt/Equity= 2.25
From both IFE and key financial ratios, we can say that the company has healthy working capital and have maintained proper working capital management. The current ratio stands at 0.96 which is better than the industry standard and quick ratio is at 0.47. Cash conversion cycle is also healthy. It is getting return of 22.36 cents per every dollar of capital employed in the system. The return is quite healthy. Efficiency of the company is also good and have maintained 2.25 debt equity ratio.