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.
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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%
%
%
A Common Size Balance Sheet can be prepared by dividing each line
item by the amount of Total Assets for that year.
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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)
Total Assets turnover = ______________ =
Average collection period = ________________ =
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