MFE 6110 Financial Statement Analysis Assignment, Ohio University, USA
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Case - Ratio Analysis
Introduction
In this report, the financial ratio analysis of the three companies, which are Boston Beer Company Inc, Anheuser-Busch InBev NV and Molson Coors, LLC. The types of ratios which will be discussed in this report are activity ratio, liquidity ratio, solvency ratio, and profitability ratio.
1. Using the Activity Ratios, how well is each company performing over time? For 2017, how do the companies compare to each other?
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Boston Beer Company, Inc. Financial Ratio Analysis
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|
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2013
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2014
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2015
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2016
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2017
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Inventory Turnover
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0.7
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0.7
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0.8
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0.8
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0.8
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Days of Inventory on hand (DOH)
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560.9
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487.7
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429.6
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445.0
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456.0
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Receivable Turnover
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1.9
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1.7
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1.6
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1.8
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2.0
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Days of Sales Outstanding (DSO)
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190.4
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216.9
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230.1
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203.4
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182.9
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Working Capital Turnover
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123%
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93%
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85%
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91%
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130%
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Fixed Assets Turnover
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20%
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13%
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13%
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12%
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13%
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Total Assets Turnover
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17%
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15%
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15%
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15%
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15%
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Anheuser-Busch InBev NV Activity Ratio Analysis
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2013
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2014
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2015
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2016
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2017
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Inventory Turnover
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6.85
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6.46
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6.39
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5.41
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5.69
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Days of Inventory on hand (DOH)
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53.30
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56.47
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57.12
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67.48
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64.18
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Receivable Turnover
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9.93
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8.01
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8.30
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7.41
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7.89
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Days of Sales Outstanding (DSO)
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36.740073
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45.572278
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43.952977
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49.276375
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46.243156
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Working Capital Turnover
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528%
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254%
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227%
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116%
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227%
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Fixed Assets Turnover
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36%
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34%
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36%
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20%
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27%
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Total Assets Turnover
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31%
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30%
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31%
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17%
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24%
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Molson Coors, LLC Financial Ratio Analysis
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|
2013
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2014
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2015
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2016
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2017
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Inventory Turnover
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12.38
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12.45
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11.52
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7.85
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11.13
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Days of Inventory on hand (DOH)
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29.49
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29.32
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31.68
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46.50
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32.80
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Receivable Turnover
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5.68
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6.14
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6.22
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7.34
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12.89
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Days of Sales Outstanding (DSO)
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64.26
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59.42
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58.72
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49.73
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28.31
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Working Capital Turnover
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-226%
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-263%
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8536%
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-3146%
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23019%
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Fixed Assets Turnover
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35%
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38%
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32%
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18%
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39%
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Total Assets Turnover
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27%
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30%
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29%
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17%
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36%
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Analysis of the performance
The performance of Boston Beer Company is not consistent in this analysis as the turnover of the company has decreased. On the other hand, the receivable management and inventory management of the business is very efficient, and this is a good sign for the business.
The performance of Anheuser-Busch InBev NV is also not consistent as the turnover of the business has decreased in the recent year. On the other hand, the receivable management and inventory management of this company look efficient.
The performance of Molson Coors, LLC is also fluctuating as it turnover of the company has decreased in 2016 and again increased in 2017, which shows the inconsistency in the performance. Receivable management has become more efficient, but the inventory management of the company has become more inefficient.
Comparison of the liquidity ratios in 2017
The comparison of the three companies show that the performance of Molson Coors, LLC has been most efficient under the activity ratio as the turnover of this company is highest in most of the aspects of the business.
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2. Using the Liquidity Ratios, how well is each company performing over time? For 2017, how do the companies compare to each other?
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Boston Beer Company, Inc Ratio Analysis
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|
2013
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2014
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2015
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2016
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2017
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|
Current Ratio
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1.574056
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1.883453
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2.011515
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1.981875
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1.653892
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Quick Ratio
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1.033723
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1.417809
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1.503239
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1.464736
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1.15566
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Anheuser-Busch InBev NV Ratio Analysis
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2013
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2014
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2015
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2016
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2017
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Current Ratio
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1.49
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2.64
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2.94
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15.46
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3.72
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Quick Ratio
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1.32
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2.35
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2.65
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13.95
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3.29
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Molson Coors, LLC Ratio Analysis
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2013
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2014
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2015
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2016
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2017
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Current Ratio
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0.452446
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0.500079
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1.034341
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0.933213
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1.022314
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Quick Ratio
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0.39214
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0.436105
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0.887282
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0.678192
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0.745962
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Analysis of the performance
The performance of Boston Beer Company is adequate as the liquidity of the company is increasing and is above one, which means the company is becoming more capable of fulfilling its short term obligations.
The performance of Anheuser-Busch InBev NV is adequate as the liquidity of the company is increasing and above one, which means the company is becoming more capable of fulfilling its short term obligations. Although there has been a significant decrease in the last year liquidity ratio, still the ratios are above one, which is more than adequate.
The performance of Molson Coors, LLC is not adequate as the company's liquidity is under one, but there is a good sign as the company liquidity ratio is increasing in the recent year which means the company has become more efficient in term of its cash and liability management in recent year.
Comparison of the activity ratios in 2017
The comparison of the three companies shows that the performance of Boston Beer company is most efficient under these ratios as it is the only company whose ratio is constantly increasing and is above 1 in all assessed year.
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3. Using the Solvency Ratios, how well is each company performing over time? For 2017, how do the companies compare to each other?
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Boston Beer Company, Inc Ratio Analysis
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|
2013
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2014
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2015
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2016
|
2017
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DEBT TO Assets Ratio
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0.319732
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0.279316
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0.285382
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0.283514
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0.256496
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Debt to Capital Ratio
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0.47001
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0.387572
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0.39935
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0.395701
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0.344982
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Financial Leverage Ratio
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1.47001
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1.387572
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1.39935
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1.395701
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1.344982
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Anheuser-Busch InBev NV Ratio Analysis
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2013
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2014
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2015
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2016
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2017
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DEBT TO Assets Ratio
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0.32
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0.32
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0.32
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0.39
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0.39
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Debt to Capital Ratio
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0.46
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0.48
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0.48
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0.63
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0.65
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Financial Leverage Ratio
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1.46
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1.48
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1.48
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1.63
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1.65
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Molson Coors, LLC Ratio Analysis
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|
2013
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2014
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2015
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2016
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2017
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DEBT TO Assets Ratio
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0.44
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0.44
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0.42
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0.60
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0.56
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Debt to Capital Ratio
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0.80
|
0.77
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0.74
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1.52
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1.25
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Financial Leverage Ratio
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1.80
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1.77
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1.74
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2.52
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2.25
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Analysis of the performance
The performance of Boston Beer Company is adequate as the debt of the business is controlled, which means the fixed finance cost of the business is also controlled. This is a good sign for the sustainability of the business.
The performance of Anheuser-Busch InBev NV is adequate, but the debt portion of the business is increasing, which is not a good sign for the sustainability of the business.
The performance of Molson Coors, LLC is not adequate, but the debt portion of the business is higher than equity in recent years, and this is not a good sign for business sustainability.
Comparison of the solvency ratios in 2017
The comparison of the three companies shows that the performance of three companies shows that Boston Beer company is most adequate as the debt portion of that company is controlled and decreasing in a recent year whereas the solvency ratio show debt portion of the company is increasing in the recent year. Also, Molson Coors show higher portion of debt component in its capital structure compared to its equity component.
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4. Using the Profitability Ratios, how well is each company performing over time? For 2017, how do the companies compare to each other?
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Boston Beer Company, Inc Ratio Analysis
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|
2013
|
2014
|
2015
|
2016
|
2017
|
|
Pretax Margin
|
15%
|
16%
|
108%
|
102%
|
135%
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Net Profit Margin
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9%
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10%
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103%
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96%
|
115%
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Anheuser-Busch InBev NV Liquidity Ratio Analysis
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|
2013
|
2014
|
2015
|
2016
|
2017
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|
Pretax Margin
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11%
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15%
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11%
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17%
|
12%
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Net Profit Margin
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652%
|
423%
|
427%
|
106%
|
286%
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Molson Coors, LLC Ratio Analysis
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|
2013
|
2014
|
2015
|
2016
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2017
|
|
Pretax Margin
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16%
|
14%
|
11%
|
62%
|
13%
|
|
Net Profit Margin
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14%
|
12%
|
10%
|
41%
|
13%
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Analysis of the performance
The performance of Boston Beer Company is not consistent and inadequate as the most of the income of the business is generated from other activities of the business rather than its operation and also there is high fluctuation in the performance of the business.
The performance of Anheuser-Busch InBev NV is also not adequate as most of the income of the business is earned from the other income of the business.
The performance of Molson Coors, LLC, is adequate as the company's profitability is increasing, but there is consistency in the net profit generation, which should be looked into by the company.
Comparison of the profitability ratios in 2017
The comparison of the three companies show that the performance of two of the three companies is earning its profit from other income and only Molson Coors, LLC has been able to generate its profit from its operation. This is why the performance of Molson Coors, LLC is most adequate under these ratios.
Conclusion
In this report, the different aspects of the financial performance of these three companies had been done, and it has been found that the performance of these three companies has not been consistent.
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