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Financial Analysis and management relates to procedures contributes in evaluation and detailed assessment of fiscal and operating performance of a corporation take momentous and reliable business or financial decisions. This system lets investors and shareholders to make logical decisions related to investment made in securities and shares of a company. The study's main goal is to provide an explanation about how financial data can be analysed through various financial elements of company (Blum and Dacorogna, 2014). In this study, financial recommendations are provided to beer-manufacturer company related to which corporation either Farsons or Heineken is better, for supply of their beer and other beverage products. In this study, a horizontal, vertical and ratio analysis is carried out against both firms. A cash flow evaluation is also carried out in this study along with working capital to offer valid suggestions for beer manufacturer.
Overview of Companies:
Simonds Farsons Cisk plc:
It is leading food and beverage corporation which is engaged in operations related to brewing, producing or manufacturing, selling of beers brands and other beverages and soft-drinks. Company is public limited corporation and company's securities are listed and trading in Malta's stock and securities exchange. Corporation was formed in year 1928 and has grown rapidly since then, due to which company has a trustworthy business image and unique brand value (About Farsons. 2019).
Company is beer manufacturer that operates throughout the globe and engaged in operations like production, brewing, marketing, distribution and sale of beer and ciders. Company has huge marketing-channel and network due to company's sales are much greater than its core competitors. Company also launching innovative drinks and beer flavours time-to-time, having a wider range of beer brands (About Heiniken. 2019).
Evaluation Of Overall Financial Performance And Financial Position Of Heiniken And Farsons
Vertical analysis of the financial statements:
Vertical analysis is a method of evaluating the financial reports by taking one component of financial statement as a basic factor (generally total revenue) and then contrasting other factors with this in order to determine how other factors influence an organization's revenues (El Kasmioui and Ceulemans, 2012). In given case, vertical analysis has been done with respect to both corporation's annual financial statements of 4years form year 2015 to year 2018 which are attached in appendices, based on this data following is analysis of vertical FS of companies, as follows:
Vertical analysis of Income Statement:
Simonds Farsons Cisk plc:
Sales figures are taken as base for whole analysis. It has been analysed from vertical P&L of company that while sales of company Farsons is 100 percent then cost of sales are 63.29 percent in year2015, 61.18percent in year 2016, 61.36percent in year-2017 and 61.05percent in year-2018. The purpose of such a vertical review is to decide whether Farsons Plc is able to pay-off their distributors promptly to recommend the beer-manufacturer. Above decline in cost of revenue percent indicates that company's operating effectiveness has been increased over this period. Company's gross-margin percentages was 38.95 percent in 2018 which was 38.64percent, 38.82percent and 37.97percent respectively in year-2017, 2016 and 2015. While net-profit margins were 10.13percent, 12.94percent, 13.64percent and 14.74percent continuously in year-2015, 2016, 2017 and 2018 (Annual Report of Farsons. 2019). Overall trends shows that company's gross-margin and net-profit margins have been increased over the period 2015 to 2018.
Vertical P&L of company Heineken exhibits that cost of sales of company are 47.25percent, 46.61percent, 46.23percent and 48.71percent of aggregate sales amount respectively in year-2015,2016,2017 and 2018. In year 2018, company's cost of revenue has been improved which indicate that company's operating efficiency has been decreased. Gross profit percentages are 52.75percent, 53.39percent, 53.77percent and 51.29percent respectively in year-2015, 2016,2017 and 2018. Trends gross profit percent shows that also in year 2018 company's gross-margin has been dropped due to increased cost of sales. While Net profit proportion company was 4.67percent in year 2015 which was dropped to 4.28% with ups and down. In 2016 net-profit was 3.75% while in year 2017 it was reached to 4.46percent. Aggregate changes in NP percentage shows that company after 2017, corporation's net-profit generation capacity has been declined (Annual Report of Heinik