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SYSCO

SYSCO. Financial Statement Analysis: A Focus on Relevant Ratios. SYSCO - Introduction. Broadline foodservice distributor History Number one player – $30.8 billion sales, almost $1 billion net income Main competitors: U.S. Foodservice (subsidiary of Ahold) - $19.8 billion sales

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SYSCO

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  1. SYSCO Financial Statement Analysis: A Focus on Relevant Ratios

  2. SYSCO - Introduction • Broadline foodservice distributor • History • Number one player – $30.8 billion sales, almost $1 billion net income • Main competitors: • U.S. Foodservice (subsidiary of Ahold) - $19.8 billion sales • Aramark - $11 billion sales • PFG - $6.6 billion sales

  3. Liquidity - Numbers

  4. Liquidity Ratios • Current ratio is below industry and trending lower • Quick ratio - same • Higher fuel costs and major geographical disruptions / low-margin business • SYSCO upgrading systems and supply chain, provoking higher near-term debt

  5. Profitability Ratios

  6. Profitability – Analysis • SYSCO is significantly more profitable than the industry on a consistent basis and by all measures • General upward trend with growth • Buying power affords lower COGS

  7. Debt Ratios

  8. Debt - Analysis • Debt ratios higher than industry • Position as #1 player probably affords SYSCO more stable cash flows • Relatively low debt ratios stem from high receivables, higher average collection period (not necessarily good) • Very high Interest Coverage numbers (Times Interest Earned) enables SYSCO to carry more debt

  9. Asset Management Ratios

  10. Asset Management Analysis • Slightly high Inventory Turnover probably reflects SYSCO’s clout as #1 player • SYSCO likely uses its buying power to purchase in large blocks, thereby lowering turnover • Strategy reflected in profitability • Average collection period reflects SYSCO’s greater number of national chain (corporate) accounts • SYSCO certainly dictates a higher Average payment period because of market position

  11. Summary • SYSCO is consistently profitable but may need to address liquidity to forestall downward trend • SYSCO needs to be sure not to let acquisitions and higher costs create perfect storm affecting liquidity • Most variations are positive and reflect SYSCO’s dominance in the foodservice distribution industry

  12. Sources • SYSCO, Inc. 2005 Annual Report • Yahoo! Finance Section • www.moneycentral.com

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