# Dr Pepper Essay

1933 Words8 Pages
Financial Ratio Analysis of Dr. Pepper Snapple Group Liquidity ratios for a company help whomever is analyzing the data determine the company’s liquidity. When a company has good liquidity they are able to pay off their short term debt without having to take out any additional financing. We will look at Dr. Pepper Snapple Group’s current ratio for 2009 and 2010. The current ratio is calculated by taking the company’s current assets and dividing it by the current liabilities. It shows how many times the current assets can cover the current liabilities. 2009 Current Ratio | 2010 Current Ratio | 1279/854= 1.497 | 1309/1338= .98 | In 2009 Dr. Pepper was looking alright having about \$1.50 in assets to ever \$1.00 in liabilities. In 2010 there was a dramatic decrease with the ratio dropping to \$.98 in assets to every \$ 1.00 in liabilities. This is a problem for Dr. Pepper. Having a ratio below one likely means they had to take out some sort of financing to cover their obligations for the year without some sort of financing. Seeing a current ratio of below one is a scare for many investors because, a ratio of below 1 raises issues with the company’s financial well-being. Debt Management Ratios Debt management ratios show to what extent a company uses borrowed funds to finance its operations. These ratios are important to a company because creditors use them to determine the riskiness of the company’s financial position. Using the debt ratio we can determine how much of Dr. Pepper Snapple Group’s assets are provided through debt. The debt ratio is found by taking the company’s total debt and dividing it by the total assets of the company. Here is the debt ratio for 2009 and 2010 2009 Debt Ratio | 2010 Debt Ratio | 5589/8776= .636 | 6400/8859= .72 | By using this ratio we can see that in 2009 Dr. Pepper Snapple Group had a decent amount more