Question

Assess the success of their corporate strategy via 3 tests of a winning strategy. (Anheuser-Busch InBev)

Answer 1

Below mentioned are the 3 tests of a winning strtegy

1) gross profit margin ratio Analysis

The gross profit margin ratio analysis is an indicator of a company's financial health. It tells investors how much gross profit every dollar of revenue a company is earning. ... A higher gross profit margin indicates that a company can make a reasonable profit on sales, as long as it keeps overhead costs in control. It is a profitability ratio that compares the gross margin of a business to the net sales. This ratio measures how profitable a company sells its inventory or merchandise. In other words, the gross profit ratio is essentially the percentage mark up on merchandise from its cost. A company's cost of goods sold, or COGS, is one of the main factors that influences gross profit margin. A good margin will vary considerably by industry, but as a general rule of thumb, a 10% net profit margin is considered average, a 20% margin is considered high (or “good”), and a 5% margin is low.

2) The current ratio Analysis

Current ratio analysis is used to determine the liquidity of a business. The results of this analysis can then be used to grant credit or loans, or to decide whether to invest in a business. The current ratio is one of the most commonly used measures of the liquidity of a business. The current ratio is a popular metric used across the industry to assess a company's short-term liquidity with respect to its available assets and pending liabilities. In other words, it reflects a company's ability to generate enough cash to pay off all its debts once they become due.

3) The debt to assets ratio Analysis

The debt to total assets ratio is an indicator of a company's financial leverage. It tells you the percentage of a company's total assets that were financed by creditors. In other words, it is the total amount of a company's liabilities divided by the total amount of the company's assets. Generally, a ratio of 0.4 – 40 percent – or lower is considered a good debt ratio. A ratio above 0.6 is generally considered to be a poor ratio, since there's a risk that the business will not generate enough cash flow to service its debt.

Using the below steps we can reduce the debt to assets ratio

· By Increase the amount you pay monthly toward your debt. Extra payments can help lower your overall debt more quickly.

· By Avoid taking on more debt. ...

· By Postponed large purchases so you're using less credit. ...

· By Recalculate your debt-to-income ratio monthly to see if you're making progress.