Gan Bei with Bud in China

Author's Avatar
Aug 24, 2005
Before I explain what Gan Bei is, I'd like to talk about Bud, a.k.a Budweiser. Reportedly Warren Buffett bought shares of Anheuser-Busch (BUD, Financial), makers of the popular beer brand. There must be something in BUD that is pleasing the sage's eyes and mind. Return On Equity, for example, is a whopping 85%. The return on capital deployed (total asset - current liability) is 19% - the company is tremendously efficient at turning capital into profit. No wonder it is so highly leveraged, with a debt/equity ratio of more than 3. It is a no-brainer: borrowing cash at single digit interests, and churning out profit at 19%. In this case beer is better than cash.