Name that company

I sprouted in 1927 in Augusta, Ga., as a hardwood lumber yard. Today I’m one of the world’s top makers and distributors of tissue, pulp, paper, packaging, building products and related chemicals. I employ more than 55,000 people at 300 facilities in the United States, Canada and 11 other nations. I take in about $20 billion annually, and my consumer brand names include Quilted Northern, Angel Soft, Brawny, Sparkle, Soft ‘n Gentle, Mardi Gras, So-Dri, Vanity Fair and Dixie. You’ll find many of my offerings at Home Depot and Lowe’s. Who am I?

Last week’s question and answer

I trace my history back to 1894 and the Lancaster Caramel Co. In 1903, I began building the world’s largest chocolate plant, to mass-produce milk chocolate. Today I sell more than $4 billion of goods annually. My brands include Almond Joy, Jolly Rancher, Kit Kat, Milk Duds, Rolo, Heath Bar, Bubble Yum, Ice Breakers, Reese’s, Sweet Escapes, Twizzlers, Whoppers, York, Mauna Loa and SmartZone bars. With no children of his own, in 1909 my founder built a school for children whose family lives have been disrupted. Today more than a thousand kids learn on its 10,000-acre campus. Who am I? (Answer: Hershey)

To the point

What are these “points” I read about in financial articles? – A.F., Cincinnati

There are several different kinds of points in the financial universe. When securing a mortgage, in order to get a lower interest rate, you usually have the option of paying some points upfront, each of which is 1 percent of the value of the loan. Indexes such as the Dow Jones industrial average often are quoted in points, not dollars, even though their components may be stock prices. Finally, a “basis point” is one one-hundredth of a percentage point. So an interest rate that rises from 6 percent to 6.5 percent has advanced 50 basis points. We hope we’ve made our points.

I’ve been told that to determine a company’s value, I should check the relationship of current assets to current liabilities. Does that make sense? – C.J., Syracuse, N.Y.

When you divide a company’s current assets by its current liabilities, you’ve got its “current ratio,” which tells you if it has sufficient short-term assets (such as cash and expected payments) to cover its short-term obligations (such as payments and interest due). The “quick ratio,” which subtracts inventories from current assets before dividing by current liabilities, is a bit more meaningful.

A company’s debt situation is good to know, but it’s just a tiny piece of its profile, telling you nothing about its profitability, long-term debt, growth rate, competitive position or valuation. Ideally, you should examine a company from many different angles, crunching a lot of numbers, such as profit margins, growth rates, and more. Checking out a firm’s management is smart, too.

Retirement killers

Want a comfy, happy retirement? Then avoid these mistakes:

¢ Cracking your nest egg before retirement. Some 45 percent of workers cash in their 401(k) plans when they switch jobs. When you change jobs, you can transfer the money from your employer-sponsored retirement plan to an IRA, which will allow the money to continue growing tax-deferred.

¢ Spending your retirement money too early. If you’re not saving enough now (aim for at least 10 percent of your salary), you may not be able to retire later.

¢ Having no clue about how much to save. Online calculators at www.choosetosave.org /calculators and www.ssa.gov /retire2 can help.

¢ Spending your retirement savings too fast. How much can you take out each year and be almost certain that you won’t outlive your savings? Just 4 percent a year. That’s the withdrawal rate that would have sustained a mix of stocks and bonds over most 30-year historical periods.

¢ Ignoring asset allocation. Unless you’re a master stock-picker, keep the bulk of your assets in a broadly diversified, regularly rebalanced portfolio of stocks and bonds.

¢ Letting Uncle Sam eat your retirement. Make smart decisions about what you hold in your tax-advantaged accounts, such as IRAs. Remember that capital gains on stocks are taxed a maximum of 15 percent, while corporate bond interest is taxed as ordinary income (up to 35 percent).

¢ Paying too much for advice does a lot for your broker’s retirement, not yours. Paying just 1 percent a year on a $100,000 portfolio over 20 years could result in your forking over more than that amount in fees. Make sure the advice you’re getting is paying for itself and more.

¢ Retiring permanently when you really just needed a break. If you’re in your 60s, you may have two or three decades ahead of you. Now is the time, before you retire, to explore part-time or project work that you might want to take on in retirement.

Learn more at http://money .cnn.com/retirement. And take advantage of a free trial of our retirement newsletter at www.ruleyourretirement.com.

Smart but dumb

The smart thing we did was to purchase 100 shares of National Penn Bank in 1984 for about $2,350. There have been lots of stock dividends paid and stock splits since then. We now own 1,970 shares, worth around $50,000. This is a well-managed bank that has received numerous distinctions. Our big mistake was not signing up to have the cash dividends reinvested in additional shares of stock. Had we done so, we would now have an additional 556 shares, worth an additional $14,500. – Robert E. Rochelle, Reading, Pa.

The Fool Responds: You were indeed smart, but you’re right – you could have been smarter. Reinvesting dividends is a great way to painlessly turbo-charge your investment. You usually won’t miss getting that cash, and each share it buys will soon be kicking out dividends of its own. Some brokerages will reinvest dividends for you – ask yours, or learn more about finding a new one at www.broker.fool.com.

Sanderson farms

Third-quarter results from Sanderson Farms (Nasdaq: SAFM) caused some clucking in the henhouse, with disappointing results from this poultry producer leading to a 10 percent plucking in the share price.

Sales were down 10 percent in the quarter, led by an 11 percent drop in average pricing. Chicken is a commodity item, after all, and prices have dropped from last year’s levels for every producer. That said, Sanderson Farms seems to have been hit worse than others – Gold Kist (Nasdaq: GKIS), Tyson (NYSE: TSN) and Pilgrim’s Pride (NYSE: PPC) all reported better quarterly sales performance with either higher volume increases and/or better pricing.

Profit margins also were down for the quarter. But on a more positive note, even with the year-on-year decline, Sanderson Farms still appears to be the most profitable chicken producer in the market.

Commodity businesses are not typically enticing, but Sanderson Farms warrants some attention. A high-teens return on assets is great for almost any company, let alone one in this line of business, and companies with industry-leading margins are, by definition, somewhat scarce.

Sanderson Farms is efficient at farming and processing. Though there are some worries about future chicken gluts, export markets are still hot, and more and more fast-food joints are increasing the number of chicken items on their menus.

This well-run company is worth watching.