BBoston Beer/Lion Brewery
Lion Brewery 1996
191,116/ (96,553+ 76,690)/2 26,439,000/ (15,954,000+14,441,000)/2
=191,116/86,622 = 2.21 times =26,439,000/15,197,500 = 1.74 times
Boston Beer produces $2.21 in sales for each $1.00 invested in average total assets, while Lion Brewery produces $1.74 in sales for each $1.00 invested in assets.
Overall, according to the return on asset ratio computed, Boston Beer’s overall earning power and profitability surpasses that of Lion brewery.
Return on asset = Net income / Average total assets
Boston Beer 1996 Lion Brewery 1996
8,385/86,621.5=9.68% 1,096,000/ 15,197,500 = 7.21%
According the current and quick ratios calculated below, both companies would be able to meet their short term debt as they become due, being that both ratios are positive. In the short term, as the quick ratio suggests, Boston Beer is more liquid than Lion Brewery, and thus, are better able to pay long term debt.
Overall, both companies in 1996 are able to meet their debts when they become due, but Lion Brewery is in a better position to do so than Boston Beer.
Current Ratio: current assets/current liability
Boston Beer 1996 Lion Brewery 1996
77,691/29,922 = 2.59 times 6,311,000/2,885,000 = 2.19 times
Boston Beer 1995 Lion Brewery 1995
65,283/20,017 = 3.26 times 4,756,000/4,702,000 = 1.01 times
Quick ratio: (cash+ marketable securities+ receivables)/ current liabilities
Boston Beer 1996 Lion Brewery 1996
(5,060+ 35926+ 18109)/29,922 (1,992,000+ 2,001,000)/2,885,000
= 1.97 times =1.38%
Boston Beer 1995 Lion Brewery 1995
(1,877+34,730+16,265)/20,017 2,476,000/4,702,000
= 2.64 times =0.53 times
Debt to equity ratio =Total liabilities/ stockholders’ equity
Boston Beer 1996 Lion Brewery 1996
31,722/64,831 = 0.49 times 3,334,000/12,620,000=0.26 [next page]