Financial Analysis of Anheuser-Busch Inbev, Sab Miller, Heineken and Carlsberg

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Financial Analysis Of Anheuser-Busch Inbev, SAB Miller, Heineken And Carlsberg

Autor: Greek 18 December 2011

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Financial Analysis of Anheuser-Busch Inbev, SAB Miller, Heineken and Carlsberg

Anheuser-Busch Inbev, SAB Miller, Heineken and Carlsberg are the four leading companies in the beer market with a combined market share of about 50%. All of them has great revenues, but are they really profitable and liquid?

Each firm has low current and quick ratio values as well as a negative working capital, which can indicate that they do not have enough current assets to cover their short term obligations. To find this out further analysis is required regarding that how fast they can collect their receivables and how many times a year they need to pay their suppliers. These ratios are also important to determine their working capital policy. All the above mentioned companies have aggressive working capital policy, which means that they tend to use their customers' money to maintain their inventory. This requires a high inventory turnover, also a high receivable turnover and a low payable turnover.

Finally their long-term financial policy does deserve a word. Every business finances its operation with a bigger proportion of debt than equity. They do it for a reason: debt is cheaper than equity, because the interest paid is tax-deductible and also can generate additional earnings to shareholders. On the other hand it has its disadvantages as well, such as the risk of bankruptcy.

Introduction

In three parts I will examine the companies' performance, liquidity, working capital policy and debt management compared with each other to find out if it is worth to invest in the food and beverage industry, especially in beer. In part one we can find out how liquid the firms are. In the second part I'll examine their working capital policy, while the third part of the assignment reveals the debt management of each company.

Part 1: Performance and liquidity analysis

To measure a company's performance and liquidity we need to look into the company processes and compare them with the industry norms where the firm operates, or pick some competitors from the same segment and examine their results in comparison with our company's performance to determine its financial strength, effectiveness of money