Thursday, June 13, 2019

Pepsi Co bid for quaker oats Case Study Example | Topics and Well Written Essays - 250 words

Pepsi Co bid for quaker oats - Case Study ExampleThe quick ratio of Pepsi in 2000 was 0.89. champion had a quick ratio of 0.87 in fiscal year 2000.Gross margin is a financial metric that measures the broad profitability of a company. Pepsi had a blunt margin in 2000 of $8,595 million. Its gross margin percentage was 61.27%. protagonist in 2000 had a gross margin of $2,240 million with a gross margin percentage of 55.37%. Pepsis gross margin percentage is better than Quaker by 5.89% which implies that its broad profitability is superior. During 2000 Pepsi had a net income of $1,572 million, while Quaker had a net income of $309 million. The net margin measures the absolute profitability of a firm. The formula to calculate net margin is net income divided by sales. Pepsis net margin in fiscal year 2000 was 11.21%. Its net margin is better than Quakers 7.64% result. Return on assets (ROA) measures how well management has diligent its assets (Garrison & Noreen, 2003). Pepsis return o n assets of 8.90% is inferior to Quakers metric of 12.30%.The ratio analysis performed on these two companies shows mixed results. The short term liquid of these two companies is similar with Pepsi holding a minor edge of 0.01 and 0.02 in the current and quick ratio. The broad profitability of Pepsi is better, but the absolute profitability of Quaker is superior. The return on assets of Quaker is much better than Pepsi. Overall based on the ratio analysis Quaker had a better financial surgical operation than Pepsi. The acquisition of Quaker by Pepsi makes sense from a financial standpoint. Buying Quaker will not impose any constraint in the liquidity position of the firm since both companies had similar current asset and quick ratio results. The profitability of Pepsi will be enhanced by the acquisition payable to the fact that Quakers net margin and return on assets was superior to Pepsi. From a marketing

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