Anheuser Busch Companies Essay

2954 words - 12 pages

From the time when August Busch III, delivered a case of Budweiser to Franklin Roosevelt in 1933, to the present year of 2005, Anheuser Busch has been one of the largest brewers. They have been named one of "America's Most Admired Companies" by Fortune Magazine and are ranked 142 in the Fortune 500. August Busch III is the President and CEO of the company. When he resigns, Patrick Stokes will take his place as the first President and CEO to be a non-family member. This company not only owns international breweries, but also own amusement parks and manufactures cans. They are continuously seeking better sales by investing in top breweries and introducing new products. Their Budweiser Select and B to the E have not yet improved sales as hoped.

Anheuser-Busch experienced a successful year in 2004. The company managed to increase shareholders equity and its total assets by about $1.5 billion. This included a $37 million increase in cash, which is used in capital expenditures, dividends, and other business investments. Looking at the statement of cash flows, it shows that the company paid out $57.4 million more in dividends to its shareholders, which increased annual dividends to $.83 per share to $.93 per share. Also capital expenditures increased from $993 million in 2003 to $1.1 billion in 2004. The continued improvement that the company is experiencing with all of its business segments, and higher revenue per barrel and higher beer sales volume are reasons for the increase of $175 million in income before taxes. Along with this increase, Anheuser-Busch also experienced an increase of $59 million in equity income, net tax; due to the implementation of successful price increases. In 2004, both gross and net sales increased for Anheuser-Busch; gross sales increasing by almost $1 billion and net sales increasing by around $800 million. These higher sales and lower costs in aluminum and recycling operations helped to also increase the companies operating income $162 million from the previous year as well as increasing the net income $164 million. Although costs of sales were $9 billion for the year of 2004, which was an increase of $533 million from the previous year, Anheuser-Busch is always working towards cutting costs throughout its business system. Modifications to brewing, packaging, and shipping techniques have helped the company experience long-term savings. In addition to the numbers included in the financial statements, further analysis can be performed using financial ratios.

Anheuser Busch's Current Ratio is 0.92. This ratio measures the company's short-term liquidity and states that they have $0.92 in current assets for every $1.00 in current liabilities. This is far below the industry average of 1.28. A current ratio of less than 1 indicates a negative net working capital, but this is not necessarily a bad thing for Anheuser Busch, given their recent 50% purchase of Grupo Modelo, a Mexican Beer Company, and their...

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