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. booster had a quick ratio of 0.87 in fiscal year 2000.Gross margin is a financial metric that measures the tolerant profitability of a company. Pepsi had a coarse margin in 2000 of $8,595 million. Its crude margin percentage was 61.27%. Quaker in 2000 had a gross margin of $2,240 million with a gross margin percentage of 55.37%. Pepsis gross margin percentage is reform than Quaker by 5.89% which implies that its wide of the mark 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 unassailable 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 employed its assets (Garrison & Noreen, 2003). Pepsis return on 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 liquidity of these two companies is similar with Pepsi holding a minor edge of 0.01 and 0.02 in the incumbent 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 writ of execution 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 ascribable to the fact that Quakers net margin and return on assets was superior to Pepsi. From a merchandise