Profit Analysis The profitability of Campbell Soup is better than that of its competitor in Heinz. Campbell Soup’s profit margin is higher than Heinz meaning that they make more profit from every sale they make. They also have a better gross profit ratio which means they have a better rev from each item sold. Campbell Soup’s return on investment was also better than Heinz meaning that they retained more money into the business that they can use in investing activities. Even though Heinz has better quality of income we still believe that Campbell is more profitable.
Solvency ratios tell us the ability of the company to repay ones debt. Campbell’s higher debt to asset ratio means that they have generated more debts than Heinz. Campbell is better off at the capital acquisitions ratio because it tells that Campbell was able to repay all of its expenses with operating income, which is good because that tells us that they don’t have to rely on investment money to pay off some of their investments. So overall I think that Campbell is the better company.
Liquidity ratios infer to a company’s ability to convert assets to cash and pay their short term debts. Campbell’s receivables turnover ratio is better than Heinz and informs us that Campbell receives their money from customers much quicker than Heinz which helps the company with paying of their liabilities. Campbell again has a better inventory turnover ratio and that says that the company sells their inventory as soon as they get their product. Heinz has a better chance of paying of their liabilities because they have a better current asset ratio.