Anheuser-Busch Financial Analysis Worksheet


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Anheuser-Busch Financial Analysis Worksheet

  1. 1. Anheuser-Busch Financial Analysis Worksheet One of the key objectives of business is to perform well financially. Most managers use financial information as an indicator of the health of the business. In fact, outstanding financial performance over competitors can be considered an indicator that the chosen strategy is successful. Consequently, students of strategy must have a basic understanding of financial analysis. This course assumes no prior knowledge of accounting or financial analysis. We will learn some basic analytic techniques that will help us to assess the success or failure of the firms we study in class. This worksheet will allow you to practice the mechanics of the calculations at home, so that you can listen and learn about the meaning behind these numbers in class. So for right now, don't worry if you don't know what "SG&A" or "Accounts Receivables" is. Your next lecture will explain these concepts more fully. The three methods we will learn are Percent Change Analysis, Common Size Analysis, and Ratio Analysis. For this homework assignment, you are going to focus on an American company called Anheuser-Busch. Anheuser-Busch is a large diversified company which manufactures beer, beverages, and packaging materials, and also runs theme parks. Below you will find the two most important financial statements for the company: the Statement of Profit and Loss (which is often called the Income Statement) and the Balance Sheet. 1
  2. 2. I.Percent Change Analysis: Used to show how much Sales Revenue (from the Profit and Loss Statement) is changing over time. Positive percentages indicate that revenue is growing. Negative percentages indicate that revenue is shrinking. The formula to use is: % Change = Later Yr Revs – Earlier Yr Revs X 100 Earlier Year Revenues Using the formula above, calculate Anheuser-Busch's percent change in revenues from 1992 to 1993, and then 1993 to 1994. 92-93 % Change = __________________ = 93-94 % Change = __________________ = II.Common Size Analysis: Shows how each part of a financial statement compares to the whole picture. Very useful for comparing the relative success of industry competitors which are different size companies. Common Size Analysis can be used with Profit and Loss statements as well as with Balance Sheets. To complete a Common Size Statement of Profit and Loss, divide each line item by the amount of Sales Revenue for that year and convert it to a percentage. For example, "Cost of goods sold for 1994" / "Sales revenue" for 1994" = .646 which converts to 64.6%. Using this methodology, prepare a Common Size Statement of Profit and Loss for Anheuser-Busch for 1994, for 1993, and for 1992. Write your common size percentages for the year next to the original figures. % % % 100% 64.6% 2
  3. 3. A Common Size Balance Sheet can be prepared by dividing each line item by the amount of Total Assets for that year. Below, complete a Common Size Balance Sheet for Anheuser-Busch for 1994. Again, put your common size percentages right next to the original figures. % III. Ratio Analysis: Ratio analysis is the most widely used form of financial analysis. A ratio is one number, divided by another number from the financial statements. Ratios are often compared to those of industry competitors or to a known "standard" of financial health. You have the formulas for many ratios provided on pages C6-C7 in the middle of your text. Use the formulas in your textbook to calculate the following ratios for Anheuser-Busch for 1994. You may have to hunt around the Profit & Loss Statement and Balance Sheet to find the appropriate values to plug in! Gross profit margin = __________________ = Operating profit margin = ________________ = Current Ratio = _______________ = Debt to assets ratio = ______________ = (Hint: Liabilities are the same thing as debt) 3
  4. 4. Total Assets turnover = ______________ = Average collection period = ________________ = 4