Question

Comparative analysis between both companies on which is stronger and give a detailed reason

BROWN FORMAN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	2017	2018
Total Assets	4,625	4,976
Total Liabilities	3,255	3,660
Total stockholders' equity	1,370	1,316

PERNOD RICARD
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
	2017	2018
Total Assets	30,088	29,558
Total Current Liabilities	4,256	3,743
Total Shareholders' Equity	13,886	14,798

Answer 1

The position of Pernod Ricard is better than Brown Forman Corporation. The reasons behind this statement are as follows:

(a) The amount of liabilities of Pernod Ricard has decreased in 2018 by around 12%. Whereas the liabilities of Brown Forman Corporation have increased by around 12.5%. It shows that the liabilities of are timely paid-off by Pernod Ricard.

(b) The amount of liabilities of Brown Forman Corporation is around 74% of its total assets whereas the liabilities of Pernod Ricard are only around 13% of the value of total assets. It is a bad signal for Brown Forman Corporation because it may get stuck in liquidity crunch if the liabilities are not met at time.

(c) The value of stockholders’ equity of Pernod Ricard is almost 87% of its total assets which is a good sign of financial health because equity consists of stock of company, retained profits and the balances of reserves and surplus. It means that the company is in good stage of profitability. While on the other hand, the amount of stockholders’ equity of Brown Forman Corporation is only around 25% of its total assets. It shows that company does not have much of retained profits and reserves.