FIN 550 Module One Activity Template Spreadsheet

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School

Southern New Hampshire University *

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550

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Finance

Date

Jan 9, 2024

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xlsx

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Uploaded by SargentSandpiperMaster672

RATIO ANALYSIS Note: change the column names to your industry and selected companies Numbers are (in Thousands) RATIOS Beverages Food processing Pepsico,Inc Profitability Ratios (%) Gross Margin 54.00% 53.47% EBITDA Margin 19.37% 17.77% Operating Margin 19.04% 12.93% Pre-Tax Margin 15.42% 12.39% Effective Tax Rate 18.00% 15.33% Financial Strength Quick Ratio 1.03 0.61 Current Ratio 1.69 0.83 LT Debt to Equity 0.57 2.08 Total Debt to Equity 1.02 4.38 Interest Coverage 1.85 10.57 Valuation Ratios Price/Earnings Ratio 27.84 23.05 Price to Sales P/S 4.43 2.84 Price to Book P/B 10.35 14.51 Free Cash Flow per Share 1.06 7.83 Management Effectiveness (%) Return On Assets 7.78% 9.94% Return On Investment 10.23% 24.88%

Return On Equity 22.12% 48.55% Efficiency Receivable Turnover 9.15 8.58 Inventory Turnover 7.78 8.48 Total Asset Turnover 0.56 0.94 Free Cash Flow/Net Income 0.58 0.66 What is Ratio Analysis? Briefly explain and cite your resources: Ratio analysis is a technique used to evaluate and interpret a company’s financial health and performance of a company. By comparing different financial metrics, fi are grouped in 5 main categories: 1.Liquidity Ratios such as quick ratios and current ratios. These ratios assess a com 2.Profitability Ratios such as Gross Profit, Net profit, ROA, and ROE measure a com 3.Solvency Ratios such as Debt to equity and interest coverage ratio evaluate a co 4.Efficiency Ratios such as inventory turnover, A/R turnover and asset turnover rati 5.Valuation Ratios such as price to earnings (P/E) ratio help investors assess a com In conclusion, ratio analysis is the most effective when it’s used together with othe Based on the ratio analysis above, in which company would you be willing to inves While performing this ratio analysis I gained a better knowledge on the financial h investment. The reason for my decision was mostly driven by how the valuation ra Pepsico in all the Profitability and Solvency ratios. The fact that Pepsico over-perfo also took in consideration that the EPS for MNST is 1.13, while Pepsico's is 7.84. Fo Southern New Hampshire University. (2023). https://www-mergentintellect-com.e Ehrhardt, M. C., & Brigham, E. F. (2009). Corporate finance: A focused approa MNST #monster beverage. CSIMarket. (n.d.). https://csimarket.com/stocks/MNST Monster Beverage Corp Mnst Operating Performance. Morningstar, Inc. (2023). htt First Research. (2023). https://mergent.firstresearch.com/ National beverage pre-tax profit margin 2010-2023: Fizz. Macrotrends. (2023). htt Nonalcoholic beverages industry. Nonalcoholic Beverages Industry Efficiency, Reve

Monster beverage corp 50.30% 26.12% 25.11% 25.11% 24.20% 3.82 4.76 0.00 0.18 - 31.58 8.26 15.10 0.84 15.50% 14.80%

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16.96% 6.21 4.00 0.78 1.10 statements by examining various r finance professionals can evaluate mpany’s ability to meet its short-te mpany's ability to generate profits ompany's long-term financial stabil tios measure how effectively a com mpany's market value and decide if er financial analysis tools and whe st and why? health of both companies. Even tho atios all pointed towards MNST sto ormed Monster and the Industry in or all these reasons I believe Pepsi ezproxy.snhu.edu/index.php/searc ach. South-Western Cengage Learn T-Return-on-Investment-ROI.html ttps://www.morningstar.com/stoc ttps://www.macrotrends.net/stock enue per Employee, Inventory and

ANALYSIS MNST is overperforming both Pepsico and the industry. MNST is overperforming both Pepsico and the industry. MNST is overperforming both Pepsico and the industry. Both companies have a healthy gross profit margin, however Pepsico's ratio is performing closer to the Industry's and overperforming MNST. EBITDA margin indicates the company's overall health and profitability. MNST is outperforming both Pepsico and the industry.Pepsico has higher operating costs compared to the industry and MNST. The quick ratio measures a company's ability to meet short-term obligations with liquid assets. The higher the ratio, the better the company is in. A number below 1 ususally signals financial distress. According to this ratio alone, MNST is overperforming and the Industry. The current ratio measures a company’s ability to pay short-term debts with its current assets. When looking at this ratio alon clear that MNST is overperforming Pepsico and the Industry. The long-term debt to equity ratio shows how much of a business' assets are financed by long-term financial obligations, such loans. This ratio shows that MNST has no long term debt and is overperforming Pepsico, which is underperforming compared Industry. Debt-to-equity ratio is used to evaluate a company's financial leverage. A ratio less than 1 means that the company does not h much debt. Pepsico has much more debt than MNST does. An interest coverage ratio is a metric that helps lenders determine if the borrowing party can easily pay the interests on time.A higher interest coverage ratio indicates stronger financial health. Pepsico is outperforming the industry. MNST has a 0 interest coverage, but that is due to the fact that they do not have any debt. P/E is a way to value a company by comparing the price of a stock to its earnings .When a companies PE is higher that means t stock price is over valued and there is a chance the price will go down in the future. This ratio shows us that MNST stock prices overvalued compared to Pesico's and the industry. The P/S ratio shows how much investors are willing to pay per dollar of sales for a stock. A low ratio could imply the stock is undervalued, while a higher-than-average ratio could indicate that the stock is overvalued.One of the downsides of the P/S ra that it doesn’t take into account whether the company makes any earnings or whether it will ever make earnings. P/B ratio compares a company's current market value to its book value. In this case MNST and Pepsico are over valued when compared to the Industry . This ratio measures how much free cash flow is available to each outstanding share of a company’s stock. This measure provid insight into a company’s ability to generate cash, which could be used for dividends, share buybacks, or reinvestment in the bu The lower the number, the better the value of the stock. This is because a lower ratio indicates that the company is undervalu respect to its cash flows.MNST is overperforming Pepsico in respect to this ratio. ROA indicates how profitable a company is in relation to its total assets.The higher ratio shows the investors that a company is to earn more money with a smaller investment. In regard to this ratio MNST is outperforming Pepsico and the industry. This metric measures how much money is earned compared to the amount of money spent on an investment. Pepsico is over performing MNST. Eventhough MNST is not performing as good as Pepsico, it is overperforming compared to the Industry.

References ROE measures how efficiently a company generates its profits. The higher the ROE, the better a company is at converting its e financing into profits.Pepsico is overperfroming MNST and the Indistry. MNST is not only underperformig compared to Pepsico also to the Industry. This measure shows how effective a business is at collecting debt and extending credit. The higher the number means that the company is collecting its receivables quicker. Both Pepsico and MNST are underperformig compared to the Industry, but Pepsi overperfroming compared to MSNT. This ratio measures how often a company replaces inventory relative to its cost of sales. Generally, the higher the ratio, the be low inventory turnover ratio might be a sign of weak sales or excessive inventory. Pepsico is overperfroming compared to MN the Industry. This ratio measures the efficiency of a company's assets in generating revenue or sales. A higher ratio implies that the compan efficient in generating sales from its asset base.In this case Pepsico is overperforming the Industry and MNST. This ratio measures how much free cash flow a company has generated in relation to its net income. Ideally this measure shou 1, we can see that MNST is overperforming compared to Pepsico and the industry by generating a higher FCF over net income ratios extracted from these statements. These ratios help analysts, investors, and stakeholders to better understand the financ a company's operational efficiency, profitability, liquidity, solvency, and overall financial stability. The most common types of r erm obligations. A higher liquidity ratio suggests better short-term financial health. in relation to its sales, assets, or equity. lity and its ability to meet long-term debt obligations. mpany utilizes its assets and resources. f this company is a good investment. en comparing a company's ratios to those of its competitors or industry benchmarks.(Ehrhardt & Brigham, 2009) ough Monster beverages over-performed Pepsico and the Industry on more metrics, my opinion is that Pepsico would be a bett ock prices being over-valued. The fact that MNST has no debt is very impressive and that is the main reason why it over-perfor n efficiency and management effectiveness, and its stock price is not over valued, it means that is a better investment than MN ico would make a better investment. ch/index ning. cks/xnas/mnst/performance ks/charts/FIZZ/national-beverage/pre-tax-profit-margin d Receivable Turnover Ratios Q2 2023. (2023). https://csimarket.com/Industry/industry_Efficiency.php?ind=502

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Comparison P M M M M M M M M M P P P M M P

P P P P M

Both companies have a healthy gross profit margin, however Pepsico's ratio is performi EBITDA margin indicates the company's overall health and profitability. MNST is outperf MNST is overperforming both Pepsico and the industry. We see the same story in the pre-tax margin with MSNT outperforming both the industr MNST is overperforming both Pepsico and the industry.

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