A Case Study Over the Breckenridge Brewery
them in the article.
Since the end of the time period of this case, which was 1998, Breckenridge has undergone several changes. There has been a considerable amount of consolidation in their business scope. Since Breckenridge Holding Company is not publicly traded, current financial information could not be attained. All of the Breckenridge brewpubs outside of Colorado have since closed down, and Breckenridge has scaled down the distribution of its beer from as many as 28 states in 1998 to 14 states now, including Colorado. This downsizing in the distribution was in response to stagnant growth in the craft beer industry and poor beer sales from its brewpubs and its retail distributors. In 1997 the growth rate for the industry was 3.3%, off its high of 51% just two years before. In 2002, the industry continues to maintain a 3.4% growth rate. There are currently four brewpubs either partially or entirely owned by Breckenridge. The original brewpub in Breckenridge is still operating along with the Blake Street brewpub across from Coors Field, the Kalamath Street brewpub, which is also the site of its largest brewery, and more recently Breckenridge opened a brewpub in Parker, Colorado. These Colorado sites have always been the most successful for Breckenridge, and therefore the survivors of the sluggish growth in the craft beer industry. A large part of their success had to do with the ski/mountain theme that the brewpubs held. The brewpub locations that have been closed since 1998 include Buffalo, Birmingham, Memphis, Omaha, and Tucson. Breckenridge has downsized its operations to focus of their core market, primarily in the Colorado area.
There are a number of financial ratios that can be performed on a company to see how it is doing both short term and long term. The current ratio is a short-term indicator of the company’s ability to pay its short-term liabilities from short-term assets. This is done by dividing current assets by current liabilities. This figure should always be above one, or the company does not have enough assets to meet its liabilities. Breckenridge Brewpub’s current ratio for 1998 was 1.76 and in 1997 it was 1.32. This shows that the company is able to pay its short-term liabilities with its short-term assets. Another ratio that was done on Breckenridge Brewpub was an acid test. This measures the company’s ability to pay off its short-term obligations from current assets, excluding inventory. This number should also be above one for a company to feel comfortable. In 1998 the ratio was at 2.24 and in 1997 it was at 1.54. This shows that the company should not have any problems meeting their debt obligations. The last financial ratio that was done on Breckenridge Brewpub was a debt to asset ratio. This measures the extent to which borrowed funds have been used to finance the company’s assets. In 1998 the debt to [next page]