In terms of financial leverage, the charts indicate a ratio of 4.7 for Anheuser Busch and a ratio of 1.4 for Boston Beer. The numbers show a high risk in case of Anheuser Busch (surpassing more than twice the industry mean of 2) and a very stable Boston Beer corporation. It seems that the winning strategy is to develop gradually, to offer your products to an increasing number of possible consumers, but not to overdue it and stick to your fundamental beliefs (in the case of Boston Beer - developing traditional beer with finest ingredients). Again, we notice the same financial reckless approach in the of Anheuser and the traditional stable financial approach for Boston Beer.
The Return on Assets for Anheuser-Busch was of 12.6% for 2006, while the same ratio for Boston Beer amounted 11.8%. Similar figures, with a slight advantage in the case of Anheuser-Busch, highlight the fact that both companies use their existent assets for obtaining profits and revenues in a correct manner.
Computer Industry
Compaq Computer Corporation was founded in 1982 and its main field of activity is the production of American Personal Computers, nowadays representing the second largest computer company in the world and the largest supplier of personal computers. In 2002, the company was acquired by the Hewlett Packard conglomerate. The company focused on producing computer systems that were compatible with the majority of software on the market and this issue was innovative a couple of decades ago.The competitors of HP Compaq are important computer manufacturing companies, such as Dell, Lenovo, Gateway, Sony and Toshiba. The financial figures for HP group registered a total level of revenues in 2006 of 91,658 million dollars and a gross profit of 220,231 million dollars. Compaq has initiatives and programs for promoting environmental friendly application for its clients and its business partners. The company distributes its products in more than 100 countries through a network of carefully selected marketing partners, according to some strict performance and quality service criteria.
Gateway was founded in 1985 by Ted Waitt and now represents one of the main promoters in innovation through the technology industry. The shares of the company are traded in the New York Stock Exchange starting with 1997. Gateway was acquired in 2007 by Taiwan giant Acer Inc. And represents now the third largest Personal Computer corporation in the world. Gateway sell their products through exclusive and non-exclusive retailers, by own sales force and by telephone. Also great consideration is paid to Internet order processing system. The company's social objectives include treating customers with qualitative products and services, fact that influenced the overall customer loyalty to the company. The innovative orientation of the company can be depicted by being the first entity to offer systems with colour monitors as standard and to explore the convergence between PC and Television. As a continuation of this trend, Gateway's most successful product is the Plasma monitor, with high fidelity colours and impressive performance.
Comparing the two entities, Compaq's current ratio of 1.35 states that the corporation has a good position in terms of meeting the short-term obligation by using its short-term assets. However, Gateway presents itself with a Current ratio of 1.88, indicating that the liquidity of Gateway is superior to that of Compaq. The differences between the two are not sufficient to draw a conclusion on differences, although the thesis previously explained, according to which the smaller traditional start-up tends to have a more prudent financial approach is viable here as well.
The interesting figure of 1.01 for the Leverage ratio in case of Gateway indicates that the entire assets of the company are in the possession of shareholders, due to extensive capitalization. The financial leverage for Compaq is proven by the Debt to Equity indicator of 6.53, stipulating that only a small part (approximately 15% of Debt is covered by shareholder's contributions).
Return on Assets, our indicator of profitability, is 8.25 for Compaq and a worrying - 24.5% for Gateway. This profitability indicators state that the company's assets were evaluated at a lower value than the market value, and this could be a possible explanation for the Gateway negative result. Also Compaq is affected in terms of liquidity and financial leverage by the fact that the Compaq brand was incorporated into HP, and actual Compaq resides on some personal consumer oriented products.
Healthcare
Johnson and Johnson
Johnson & Johnson's was set up in New Jersey in 1886 and registered an impressive 73 years of consecutive sales increase and 44 years of dividend increase. Employing 120,000 people at global level the company focuses in the production and sale of broadline healthcare...
Ratio Analysis: Midwest Health Plan Inc. Financial ratios are critical for decision making purposes. Some of those who utilize information derived from the analysis of financial statements include but they are not limited to lenders, managers, the government and stockholders. In this text, I amongst other things compute two financial ratios from Midwest Health Plan, Inc. In an attempt to determine the financial health of the organization. Midwest Health Plan, Inc. Ratio
Ratio Analysis a) The price-earnings ratio reflects two things -- the company's earnings and the market price. By no means is there a law that says one firm's P/E ratio should be in line with either the market or the competitors. First, an explanation of the earnings. The earnings component of the P/E is past-looking. The profit margin for HRG is fairly low -- 1.7% - reflecting that its earnings are
The ratios are symptoms rather than problems. Thus, we see the emergence of ratios as a diagnosis tool rather (Johnson, 2008). These tools must then be used in concert with more in-depth analysis techniques and the collect and interpretation of other information. Ratio analysis alone will yield little and the prevailing thought today supports finding better ways to integrate ratio analysis within the context of overall understanding of a
Arrow Company and Plume Inc. Ratio Analysis Arrow Company and Plume Inc. Financial Ratio Computations Ratio Computation Arrow Company Computation Plume Inc. Rate of Return on Equity (ROE) $610,000/$2,189,200 $887,000/$2,682,000 Return on Assets $610,000/$3,855,700 $887,000/$4,477,500 Gross Margin $1,720,000/$4,175,000 $2,117,000/$4,705,000 Inventory Turnover $2,550,000/$435,000 $2,800,000/$595,000 The Collection Period $380,000/($4,175,000/365) $585,500/($4,705,000/365) Fixed Asset Turnover $4,175,000/1,695,000 $4,705,000/$2,512,000 Debt to Assets Ratio $1,601,500/$3,855,700 $1,790,500/$4,477,500 Debt to Equity Ratio $1,601,500/$2,189,200 $1,790,500/$2,682,000 Current Ratio $2,105,700/$845,500 $1,940,500/$1,375,000 Acid Test ($2,105,700 - $435,000)/$845,500 ($1,940,500 - $595,000)/$1,375,000 Analysis: Interpretation From the ratios computed in Table 1 above, it may be possible to tell which company is in better financial health than the other. To begin with, we can
7% The company tangible assets consist of the plant, property, equipment such as the fleet of aircrafts that the company uses for its business operations. Other tangible assets include various building the company is using for business operations. The company tangible assets also include company computers, brand names and various computer software than the company is using to improve its business operations. However, the company intangible assets declined by 1.2% between
The data must be absolutely correct. 3. Effects of Price Level Changes: Price levels changes often make the comparison of figures difficult over a period of time. Changes in price affect the cost of production, sales and also the value of the assets. Therefore, it is necessary to make proper adjustment for price-level changes before any comparison. 4. Quality factors are ignored: Ratio analysis is a technique of quantitative analysis and
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now