Boston Beer Company Financial Ratios

In table 2 are the five-year financial ratio trend for Boston Beer Co. and comparison of the ratios to two of the company large competitors Heineken and Anheuser Bush. Small craft breweries, while competitors to Boston Beer Co. cannot be included in this evaluation, because they are privately owned and their financial information is not public. Both short-term and long-term Solvency ratios do provide information about the company ability to pay short- term and long-term obligations. The ratios for Boston Beer Co. while fluctuating little over the period of five years still shows that Boston Beer is better prepared to pay both short-term and long-term debt than either Heineken or Anheuser Bush. The Times Interest Earned and Cash Coverage ratio

In this category the Boston Beer Co. results are similar to Heineken, and much better than the financial ratios of Anheuser Bush. Comparing the profitability ratios, we can see that while the profit margin lays between the profit margins of Heineken and Anheuser Bush, the return on assets and equity is much higher than the returns of any of the two competitors. And all the profitability ratios for Boston Beer Co. are increasing over the last five years. The market values ratios measure how much investors are willing to pay per $1 of earnings (Price Earnings Ratio) and compare the market value of the investment to its historical cost (Market to Book Ratios). Both of these ratios are higher for the Boston Beer Co. and so is the Earning per Share Ratio. We can say that Boston Beer Co. has overall very good financial position because of its ability to pay short-term and long-term liability, and very good efficiency and

depends on distributors both for its supplies and for distribution of its products, care must be taken to develop good working relationship with all participants in the value chain. The law requires separation of beer producers, distributors, and retailers so there is no possibility of forward integration of the value chain, but the Boston Beer Co. can still provide additional value to its distributors through program like Freshest Beer Program, which saved participating distributors storage space worth of about two weeks of Boston Beer Co. inventory and the cost of energy used for storing the beer in cool temperatures. The fact that Boston Beer Co. is repeatedly voted one of the best breweries in the USA will assure customer interest and high inventory turnover. However, the Three -Tier System does not prevent backward integration and the Boston Beer Co. should research this possibility to ensure supply of high quality ingredients which are vital to produce high quality beer. Different types of hops (bittering or aroma hops) are added in different production stages and the final taste of the beer is the result of combination of different hop varieties, research could be done to find out which hop varieties are similar enough that they could be substituted during the production of beer without the change of taste. If substitutes could be found, that could decrease dependency on specific distributors and hop