Sara Lee, Ratio Analyis

Topics: Financial ratio, Ratio, P/E ratio Pages: 7 (1672 words) Published: April 1, 2012
Answer Template: Individual Project Assignment

Part 1.

|Give a brief description of company: | | | |Sara Lee Corporation is engaged in manufacturing and marketing of branded products for consumers throughout the world focusing primarily | |on the meats, bakery, and beverage categories. The company has presence in Americas, Europe, Africa, Asia, and Australia. Sara Lee is the| |owner of approximately 25,000 active trademark registrations and applications. Sara Lee operates through five business divisions: | |international beverage, North American retail, North American fresh bakery, North American foodservice, and international bakery. | |(datamonitor,2010) | | |

|Is the company financially healthy?: | | | |First I have calculated the financial ratios; financial ratios illustrate relationships between different aspects of a business’s operations.| | | |The acid test ratio provides a stricter definition of the company’s ability to make payments on current obligations. Ideally, this ration | |should be 1:1. Sara Lee is doing okay, Sara Lee has a ratio for 2010 of 1.12 and for 2009 1,08. However, the danger in the future for Sara | |Lee is that it has not enough money to meet its current obligation if it is under 1:1. | | | |Receivable turnover measures how fast a company’s sales can be collected. Sara lee has in 2009 a ratio of 9.13 and in 2010 a ratio of 8.92. | |In 2010 this means that in 2010 the company could collect it receivables in 41 days, also this is okay. | | | |Inventory turnover finds out how often the company buys and sells its inventory per year. Sara Lee is doing this 6,23 times in 2009 and 8,85 | |times in 2010. | | | |Payables turn over measures how many times per year it takes the company on average to pay its bills. In 2009 Sara lee had a ratio of 7,03 | |and in 2010 6,71 times. In 2010 this means that Sara lee needed on average 54 days to pay its bills. | | | |Profit margin tells you the profit per sales dollar after all expenses are deducted from the sales. For Sara lee this means that they | |generate 3,49 cents in 2009 and 4,9 cents in 2010 on every dollar they sell, which is not much. | |...
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