Financial Accounting - Assignment Example

Although the companys liquidity position has improved from 2010 to 2012, the company should take further measures to improve its liquidity positions so that the short term obligations can be paid of whenever they are due. The profitability ratios are used to gauge the overall profitability of a company relative to its level of sales. The operating profit margin of the company registered an increase from 27.47% in 2010 to 31.98% in 2012. The operating profit increased on account of considerable decrease in the unusual expenses of the company.

This shows that the overall operational efficiency of the company has not improved and the increase in operating margin is the result of a decrease in unusual expenses of the company. Profit margin of the company witnessed a considerable increase from 11.09% in 2010 to 18.22% in 2012. The increase in operating profits of the company translated into better net profit of the company. Return on assets and return on equity of the company also showed signs of improvement on the back of an increase in the companys overall net income.

BEP ratio remained relatively stable in 2012 at 10.37% as compared to 10.49% in 2011. The debt management ratios helps in assessing the mix of companys debt relative to equity. Higher amount of debt on the balance sheet can be risky for the company as it has to make the fixed interest payments to the debt holders. InBevs total debt to total assets fell from 50.45% in 2010 to 48.25% in 2011 and increased slightly to 48.41% in 2012. The companys total debt increased in 2012, however subsequent increase in total assets led to a stable total debt to total assets ratio.

The asset management ratios helps in determining the efficiency of the assets in generating a companys revenues. The inventory turnover ratio of the company has shown slight improvement from 2010 to 2012. A steady increase in companys revenues along with subsequent increase in total inventory has led to a stable inventory ratio. This