The Inventory breakout figures reveal that the Finished Goods/Inventory ratio equalled 36.1 percent on 31 March 2008. This metric, which contributes to the Cash Management gauge, has risen by small amount. An increase in the Finished Goods ratio can be an early warning that Sales were below expectations. In this case, the increase is minor enough to be more of a yellow flag than a red flag.
| March 2008 | 3 mos. ago | 12 mos. ago | 5-year median | |
| Finished Goods/Inventory | 36.1% | 34.3% | 35.5% | 33.4% |
| Inventory/CGS | 26.9 days | 23.9 days | 27.0 days | 25.1 days |
There are other ways to look at Inventory. The Inventory/CGS ratio measures how many days it would take the company to reconstitute its Inventory at current costs. (An alternative Inventory measure determines how many days of sales are held at the prices customers pay.) The ratio is now at a value comparable to what it was in March 2007, which shows the total inventory level is stable. This lessens our concern about the Finished Goods ratio. However, the Inventory level has edged up near the top of its historic range.
The additional data in the 10-Q reduced the gauge scores from those we computed using BUD's preliminary report:
- Cash Management: 3 of 25 (down from 8)
- Growth: 15 of 25
- Profitability: 15 of 25
- Value: 8 of 25
- Overall: 39 of 100 (down from 43)
See our previous post for an examination of BUD's Income Statement. This review wasn't changed by the data in the 10-Q.
It's interesting to see in the 10-Q that BUD made $130.6 million in "Nonowner Changes in Shareholders Equity." This income, mostly foreign currency translation gains, isn't included in the $510.9 million Net Income figure. It is included in Comprehensive Income.
Net Income at Grupo Modelo fell from $313 to $255 million in the quarter.
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