Kraft Foods Inc. will cut 1,600 positions in North America as it prepares to split its business in two. The company announced in August that it would split into two independent companies: a global snacks business and North American grocery business. Kraft said the moves are needed to help the businesses run more effectively.
1. Based on the article, what percentage of its workforce is Kraft cutting? In what area will most cuts take place?
2. Based on the article, calculate Kraft’s most current P/E ratio.
3. How does this P/E ratio compare with other companies in the industry and how would you interpret it?
Associated Press Staff. (2012). Kraft Foods to Cut Up to 1,600 Positions, The New York Times, Jan. 17 (Retrievable online at http://www.nytimes.com/aponline/2012/01/17/business/AP-US-Kraft-Jobs.html?ref=business)