Tootsie Roll Industry Loan Package

Learning Team D is presenting the publicly held company, Tootsie Roll Industries, Inc., a loan package. Tootsie Roll manufactures confectionary items. In addition to its sales in the U. S., Tootsie Roll’s profits grew in Asia, Canada, Central and South America, Europe and Mexico. The loan package Team D is proposing consists of: financial ratios, justification for the loan, how the company plans to use the proceeds and how loan approval will affect the company.

Tootsie Roll Industries has proven dedicated to the expansion and growth of the

company. Obviously, Tootsie Roll Industries, Inc. must have a plan to use the proceeds of this

loan. The biggest portion of proceeds from this loan will be used for investing in new energy

efficient equipment. As stated in the corporate principles, “Tootsie sets the industry standard at

delivering the highest quality product at the lowest possible price, a robust yet efficient

operations model.” (Tootsie, 2012). Energy costs are increasing each year so this is a necessary

move for our company to decrease future expenditures. These renovations over the next 10 years

could save over $500,000 in energy costs. These savings will be used to pay down liabilities,

purchase new equipment, and additional company expansion.

In addition, Tootsie Roll Industries will use the proceeds to expand on the distribution

center so the company can keep up with demand during key periods, one of these is Halloween.

The addition revenue generated from the distribution improvements will allow the company to

repay the loan sooner. Taking on this loan will increase pressure upon the company. Additional

debt is accumulated so scrutiny will be on the executives championing the distribution

improvement effort to see if they succeed. Failures to repay this loan by the set due date will

adversely affect future loan decisions so it is imperative the distribution center is a success.

Another impact the new will have is added scrutiny to financial statements. During the course of

the loan the company will need to have accurate financial statements as well as increased

communication with the bank so the bank has an idea of what is happening at the company. In

this time of economic downturn, banks are