Tootsie Roll Exercises

TOOTSIE ROLL EXERCISE

Using a Statement of Cash Flows

Statement of Cash Flows for Tootsie Roll Industries, Inc. appears in Appendix A.

1. Focus on the statement of cash flows for the year ended December 31, 1998, and respond to the following:
1. Describe the major reasons why the company's cash and cash equivalents increased by $20,311,000 during the year.
2. Assuming that the company had not purchased shares of its own stock during 1998, calculate the amount of:
• Cash flows for the year from financing activities.
• Cash and cash equivalents at the end of the year.
3. Calculate the amount of the company's free cash flow.
4. From a cash flow perspective do you believe the company's performance was better in the year ended December 31, 1998, than in the prior year? Justify your answer.
2. Comparing 1999 and 1998, what were the primary changes in cash flows that occurred? Is the company's cash position stronger or weaker at the end of 1999 than 1998?