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Analysis of the Financial

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Analysis of the financial

By analyzing Sara Lee's financial ratios we were able to get a better understanding of how Sara Lee stands within its respective industry.

Ratios 2011 2010 Industry comparison

Current ratio Current Assets 4,584 3,780

Current Liabilites 4,122 2,584

1.11 1.46 1.20

quick ratio Current Assets-Inventory 3878 3085

current Liabilites 4,122 2,584

0.94 1.19 0.60

Cash Ratio Cash and Cas equivalents 2,066 955

Current Liabilites 4,122 2,584

0.50 0.37

Total debt ratio total asset- total equity 7,559 7,321

total asset 9,533 8,836

0.79 0.83

Total Debt to equity total debt 1936 2627

total equity 1974 1515

0.98 1.73 0.83

From the Current Ratio the industry comparison was 1.20; while in 2010 was 1.46 then decrease to 1.11. This is mean that their current asset is increasing while their current liabilities were Increasing of 61% from $2584 to $4122 (in million). In the consolidate balance sheets, Notes Payable increased by $3105(million) from $2075. The corporation did not use utilize cash to repay the commercial paper borrowing in previous year. Therefore, the cash has not been used.

Meanwhile the quick ratio was decreasing from 1.19 to 0.94 meanwhile the comparison of industry was 0.60. The company does not manage their asset well, and they spend most on property plant and equipment.

Debt ratio was decrease from 0.83 to 0.79 means that the company's manage well their debt by reducing some equity. While their total debt to equity also decreased from 1.73 in 2010 and 0.98 in 2011, compare to industries, was better in 2011 which is mean less debt.

Debt to equity which is below 1 is good. As the analysis, the debt was managed well in 2011, from 1.73 in 2010 to 0.98 in 2011. Which is mean that the company can handle its interest and principal payments.

Asset Turnover

Total Asset turnover Sales 8,681 8,339

Total assets 9,533 8,836

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